Solventum Corp. (SOLV)

Short-term

Turnover ratios

Based on the provided activity ratios for Solventum Corp., we can derive the following insights:

1. Inventory Turnover:
- Solventum Corp.'s inventory turnover has shown a consistent improvement over the years, increasing from 3.93 in 2022 to 4.24 in 2023. This indicates that the company is selling its inventory more efficiently and effectively converting inventory into sales.
- A higher inventory turnover ratio suggests that Solventum is managing its inventory levels well, minimizing holding costs, and potentially reducing the risk of obsolete inventory.

2. Receivables Turnover:
- The data does not include information on the receivables turnover ratio in any of the years provided. This suggests that the specific data necessary to calculate this ratio might not be available or that Solventum may not disclose this information.

3. Payables Turnover:
- No information is available for the payables turnover ratio for any of the years provided. This ratio could have provided insights into how quickly Solventum is paying its suppliers, which could indicate its liquidity position and the effectiveness of its working capital management.

4. Working Capital Turnover:
- Solventum's working capital turnover has shown a decline from 10.44 in 2021 to 7.20 in 2023. A decrease in this ratio could indicate that the company is less efficient in generating sales revenue from its working capital investment.
- However, it's worth noting that despite the declining trend, a working capital turnover ratio of 7.20 in 2023 still indicates that Solventum is generating $7.20 in sales for every dollar of working capital invested.

In conclusion, Solventum Corp. has displayed improvements in its inventory turnover, but there is a lack of available information regarding receivables turnover and payables turnover. The decline in working capital turnover warrants further analysis to understand its implications on the company's operational efficiency and liquidity management.

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Average number of days

Based on the provided data for Solventum Corp., we can analyze the activity ratios as follows:

1. Days of Inventory on Hand (DOH):
- The DOH for Solventum Corp. has shown a decreasing trend over the last three years, from 92.76 days in 2022 to 86.17 days in 2023. This indicates that the company is able to turn over its inventory more quickly, which can be a positive sign of efficient inventory management.

2. Days of Sales Outstanding (DSO):
- Unfortunately, data for Days of Sales Outstanding (DSO) is not available for any of the years provided. DSO is a metric used to measure how long it takes for a company to collect its accounts receivable. Without this data, we are unable to assess the efficiency of Solventum Corp.'s accounts receivable management.

3. Number of Days of Payables:
- Similarly, information on the Number of Days of Payables is not provided for any of the years. This metric measures how long a company takes to pay its suppliers. The absence of this data makes it challenging to evaluate Solventum Corp.'s payment practices and relationships with suppliers.

In conclusion, the analysis of Solventum Corp.'s activity ratios based on the available data indicates an improvement in inventory turnover efficiency. However, without information on DSO and number of days of payables, a comprehensive assessment of the company's overall working capital management is limited.

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Long-term

The fixed asset turnover ratio for Solventum Corp. is not provided in the data table. However, we can analyze the Total Asset Turnover ratio over the past four years. The Total Asset Turnover ratio measures how efficiently the company is utilizing its total assets to generate revenue.

From 2020 to 2023, Solventum Corp.'s Total Asset Turnover ratio has slightly declined from 0.58 to 0.57. This indicates that the company is generating less revenue for each dollar of total assets over the years, which may be a cause for concern in terms of asset utilization efficiency.

A lower Total Asset Turnover ratio could suggest that the company is either experiencing a decrease in sales relative to its asset base or that it has been inefficient in managing its total assets to generate revenue. It could be beneficial for Solventum Corp. to investigate further into the reasons behind this decline in asset turnover and explore strategies to improve asset utilization efficiency in order to enhance overall operational performance and profitability.