Solventum Corp. (SOLV)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 3.79 | 4.09 | 3.93 | 4.00 | — |
| Receivables turnover | — | — | — | — | — |
| Payables turnover | — | — | — | — | — |
| Working capital turnover | 15.12 | 7.16 | 8.84 | 10.44 | — |
Solventum Corp.'s activity ratios provide insights into the efficiency of its operations in managing its inventory, receivables, payables, and working capital.
1. Inventory Turnover:
- The inventory turnover ratio indicates how efficiently the company is managing its inventory. Solventum Corp. had an inventory turnover of 4.00 in 2021, which declined slightly to 3.93 in 2022, increased to 4.09 in 2023, and then decreased to 3.79 in 2024. A higher turnover ratio suggests that the company is selling its inventory more frequently, which could indicate effective inventory management.
2. Receivables Turnover:
- Solventum Corp. did not provide data for its receivables turnover ratio for the years examined. This ratio would have shown how quickly the company is collecting payments from its customers, indicating the effectiveness of its credit and collection policies.
3. Payables Turnover:
- Similarly, data was not available for Solventum Corp.'s payables turnover ratio. This ratio would have revealed how quickly the company is paying its suppliers, providing insights into its payment practices and relationships with vendors.
4. Working Capital Turnover:
- The working capital turnover ratio measures how efficiently a company is using its working capital to generate sales. Solventum Corp. had a working capital turnover of 10.44 in 2021, which declined to 8.84 in 2022, further decreased to 7.16 in 2023, and then significantly increased to 15.12 in 2024. A higher working capital turnover ratio indicates that the company is generating more sales relative to its working capital, which could signal effective resource utilization.
Overall, while Solventum Corp. demonstrated varying trends in its activity ratios over the years, further analysis and comparison with industry benchmarks would be beneficial to assess the company's operational efficiency in a more comprehensive manner.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 96.21 | 89.27 | 92.76 | 91.36 | — |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
Based on the provided data for Solventum Corp., the activity ratios can be analyzed as follows:
1. Days of Inventory on Hand (DOH):
- December 31, 2020: Not available
- December 31, 2021: 91.36 days
- December 31, 2022: 92.76 days
- December 31, 2023: 89.27 days
- December 31, 2024: 96.21 days
The DOH measures how many days, on average, the company holds inventory before it is sold. Generally, a lower number of days indicates efficient inventory management. In this case, there has been a slight increase in the days of inventory on hand from 2021 to 2024, indicating that Solventum Corp. might be carrying more inventory relative to its sales.
2. Days of Sales Outstanding (DSO):
- All dates: Not available
The DSO ratio represents the average number of days it takes for the company to collect its accounts receivable. Unfortunately, data for this ratio is not available for Solventum Corp., so we are unable to assess the efficiency of the company in collecting payments from customers.
3. Number of Days of Payables:
- All dates: Not available
The number of days of payables ratio indicates the average number of days a company takes to pay its suppliers. Without the data for this ratio provided, we cannot evaluate how long Solventum Corp. takes to settle its payables.
Overall, based on the available information for Solventum Corp., we can see that the company's inventory holding period has increased over the years, which may suggest a need to reassess inventory management strategies. However, without data on DSO and payables, a comprehensive analysis of the company's overall working capital efficiency is limited.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | — | — | — | — | — |
| Total asset turnover | 0.57 | 0.57 | 0.60 | 0.58 | — |
The fixed asset turnover ratio for Solventum Corp. is not available for the years 2020 through 2024, as indicated in the data provided.
In terms of total asset turnover, Solventum Corp. has maintained a consistent performance over the last five years. The total asset turnover ratio was 0.58 in 2021, slightly improving to 0.60 in 2022, and then slightly declining to 0.57 in both 2023 and 2024. This indicates that Solventum Corp. generated $0.58 to $0.60 in sales for each dollar of assets in 2021 and 2022, and $0.57 in sales for each dollar of assets in 2023 and 2024.
Overall, a total asset turnover ratio of less than 1 suggests that the company may not be efficiently utilizing its assets to generate sales. However, fluctuations in this ratio over the years may also reflect changes in the company's business model, industry conditions, or asset management strategies. Further analysis and comparison with industry peers would provide a clearer picture of Solventum Corp.'s long-term activity efficiency.