STAAR Surgical Company (STAA)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 0.99 | 1.26 | 1.50 | 1.25 | 1.12 |
| Receivables turnover | 3.32 | 4.37 | 5.03 | 4.38 | 4.74 |
| Payables turnover | 5.15 | 5.27 | 5.96 | 6.03 | 4.75 |
| Working capital turnover | 1.07 | 1.09 | 1.04 | 0.93 | 1.07 |
The activity ratios of STAAR Surgical Company reflect its operational efficiency and management of key working capital components over the past five years.
1. Inventory turnover: The inventory turnover ratio has shown a decrease from 1.12 in 2019 to 0.99 in 2023. This indicates that the company took longer to sell its inventory in 2023 compared to previous years, which may suggest potential issues with inventory management or demand for its products.
2. Receivables turnover: The receivables turnover ratio has fluctuated but generally remained within a reasonable range, with the ratio peaking at 5.03 in 2021. A higher turnover ratio indicates that the company is efficiently collecting on its accounts receivables, which is positive for cash flow management.
3. Payables turnover: STAAR Surgical Company has consistently maintained a healthy payables turnover ratio, with a slight increase from 4.75 in 2019 to 5.15 in 2023. This suggests that the company is effectively managing its accounts payables by paying its suppliers in a timely manner, which can help maintain positive supplier relationships.
4. Working capital turnover: The working capital turnover ratio has shown slight fluctuations over the years, with an increase from 0.93 in 2020 to 1.07 in 2023. This ratio measures how efficiently the company is using its working capital to generate sales revenue. The slight improvement over the years indicates that the company is effectively utilizing its working capital to support its sales activities.
Overall, while there are minor fluctuations in the activity ratios of STAAR Surgical Company, the company appears to be managing its operational activities effectively, with room for potential improvements in inventory turnover to enhance efficiency in the future.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 367.60 | 289.10 | 243.27 | 293.16 | 327.32 |
| Days of sales outstanding (DSO) | days | 109.99 | 83.57 | 72.50 | 83.26 | 77.06 |
| Number of days of payables | days | 70.93 | 69.26 | 61.25 | 60.49 | 76.86 |
To analyze STAAR Surgical Company's activity ratios, we can use three key metrics: Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables.
1. Days of Inventory on Hand (DOH): This ratio measures the average number of days it takes for a company to sell its entire inventory. A higher DOH indicates that the company is holding onto inventory for a longer period, which may tie up cash and increase storage costs. STAAR Surgical's DOH has fluctuated over the past five years, with a significant increase from 2019 to 2020, followed by a decrease in 2021 and another significant increase in 2023. The company should monitor and manage its inventory levels effectively to optimize cash flow and minimize carrying costs.
2. Days of Sales Outstanding (DSO): DSO measures the average number of days it takes for a company to collect its accounts receivable. A higher DSO indicates slower collection of receivables, potentially impacting cash flow and liquidity. STAAR Surgical's DSO has also experienced fluctuations, peaking in 2023 after a downward trend from 2019 to 2021. The company should focus on efficient invoicing and collection processes to reduce DSO and improve cash flow.
3. Number of Days of Payables: This ratio represents the average number of days it takes for a company to pay its suppliers. A higher number of days of payables indicates that the company is taking longer to settle its payables, which could have implications for supplier relationships and cash flow management. STAAR Surgical's number of days of payables has generally been relatively stable over the past five years, with some minor fluctuations. The company should balance its payables strategy to optimize cash flow while maintaining good relationships with suppliers.
In summary, STAAR Surgical Company's activity ratios suggest areas for improvement in managing inventory, accounts receivable, and payables to enhance operational efficiency and cash flow management. The company should focus on optimizing inventory turnover, reducing DSO, and maintaining an appropriate balance between payables and receivables to support its financial health and sustainability.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 4.82 | 5.58 | 6.42 | 6.80 | 8.80 |
| Total asset turnover | 0.66 | 0.68 | 0.67 | 0.64 | 0.72 |
The fixed asset turnover ratio for STAAR Surgical Company has shown a decreasing trend over the past five years, declining from 8.80 in 2019 to 4.82 in 2023. This indicates that the company is generating less revenue from its fixed assets compared to previous years. On the other hand, the total asset turnover ratio has been relatively stable, with slight fluctuations between 0.64 and 0.72 during the same period.
A high fixed asset turnover ratio is generally desirable as it indicates efficient utilization of fixed assets to generate sales. The decreasing trend in this ratio may suggest potential inefficiencies in the company's fixed asset management or a shift in its business model that requires less reliance on fixed assets.
The total asset turnover ratio reflects the company's overall efficiency in generating sales from all its assets. While the ratio has been relatively stable over the years, it is important for STAAR Surgical Company to monitor and potentially improve this ratio to optimize the utilization of its total assets and enhance its overall operational efficiency.