Solventum Corp. (SOLV)

Short-term

Turnover ratios

The analysis of Solventum Corp.'s activity ratios reveals the following trends:

1. Inventory Turnover:
- There has been a consistent improvement in the inventory turnover ratio over the five quarters, starting at 3.95 in March 2023 and reaching 4.00 in March 2024.
- This indicates that Solventum is selling and replacing its inventory more frequently, which can be a sign of efficient inventory management.

2. Receivables Turnover:
- The data does not include information on receivables turnover for any of the quarters, suggesting that the company may not have provided data on this ratio.
- Without information on receivables turnover, it is challenging to assess how quickly Solventum is collecting its receivables from customers.

3. Payables Turnover:
- Similar to receivables turnover, the table does not provide data on payables turnover for any of the quarters, indicating that information on how quickly Solventum is paying its suppliers is not available.
- Payables turnover is crucial for understanding the company's relationships with its suppliers and its liquidity management.

4. Working Capital Turnover:
- The working capital turnover ratio has fluctuated over the quarters, with values ranging from 5.45 to 7.19.
- A higher working capital turnover ratio typically indicates that the company is generating more revenue per dollar of working capital invested, which can be a positive sign of operational efficiency.

Overall, while the inventory turnover ratio shows positive trends in efficiency, the lack of data on receivables and payables turnover limits a comprehensive analysis of Solventum's working capital management and relationships with customers and suppliers. It would be beneficial for Solventum to provide more complete data on activity ratios for a more thorough assessment of its operational performance.

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Average number of days

Based on the provided data for Solventum Corp.'s activity ratios:

1. Days of inventory on hand (DOH):
- The days of inventory on hand have shown a slight increase from 92.41 days in March 2023 to 91.24 days in March 2024. This indicates that, on average, the company holds inventory for approximately 91.24 days before it is sold.
- The gradual decrease in DOH from March 2023 to March 2024 suggests potential improvements in inventory management efficiency as the company is holding inventory for a slightly shorter period.

2. Days of sales outstanding (DSO):
- Unfortunately, the data for days of sales outstanding (DSO) is not provided for any of the periods. Therefore, we are unable to assess how long it takes for the company to collect its accounts receivable.

3. Number of days of payables:
- Similar to DSO, the information regarding the number of days of payables is not available. This prevents us from analyzing how long it takes for Solventum Corp. to pay its suppliers and creditors.

Overall, based on the available data, Solventum Corp. seems to have seen a slight improvement in its inventory management efficiency over the observed period. However, a complete analysis of the company's activity ratios would require information on days of sales outstanding and the number of days of payables to provide more comprehensive insights into its overall working capital management.

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Long-term

The long-term activity ratios for Solventum Corp. provide insight into how efficiently the company is utilizing its assets to generate sales.

Fixed asset turnover, which measures how effectively fixed assets are being used to generate revenue, was not available in the provided data for the periods indicated.

Total asset turnover, on the other hand, indicates how efficiently the company is utilizing all its assets to generate sales. The ratio ranged from 0.56 to 0.59 over the five periods examined. A decreasing trend in total asset turnover may suggest that the company is becoming less efficient in generating sales relative to its total assets. It is crucial to compare this ratio with industry averages or competitors to assess Solventum Corp.'s performance in asset utilization.

In summary, while the fixed asset turnover was not available, the total asset turnover for Solventum Corp. ranged between 0.56 and 0.59. Further analysis and benchmarking against industry standards would provide a more comprehensive assessment of the company's efficiency in utilizing its assets to generate sales.