STERIS plc (STE)
Activity ratios
Short-term
Turnover ratios
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.33 | 4.63 | 4.47 | 5.60 | 6.49 |
| Receivables turnover | 5.10 | 4.89 | 5.74 | 5.10 | 5.17 |
| Payables turnover | 11.60 | 10.59 | 11.38 | 11.24 | 11.46 |
| Working capital turnover | 2.65 | 3.95 | 4.79 | 4.90 | 4.21 |
STERIS plc's inventory turnover has decreased over the past five years, indicating a slower rate of selling and replenishing inventory. The company's receivables turnover has fluctuated but generally remained stable, suggesting a consistent ability to collect receivables from customers. On the other hand, STERIS plc's payables turnover has shown an increasing trend, indicating a longer period taken to settle payables to suppliers.
In terms of working capital turnover, there has been a decline over the past two years, implying a decrease in the efficiency of utilizing working capital to generate sales. This may warrant further investigation to understand the underlying reasons for this trend and potential implications for the company's liquidity and operations.
Overall, while the company's receivables turnover appears stable, the declining efficiency in inventory turnover and working capital turnover, along with the increasing payables turnover, suggest some challenges in managing the company's operating cycle and cash flow efficiency.
Average number of days
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 84.30 | 78.84 | 81.70 | 65.18 | 56.22 |
| Days of sales outstanding (DSO) | days | 71.62 | 74.69 | 63.61 | 71.58 | 70.63 |
| Number of days of payables | days | 31.46 | 34.46 | 32.08 | 32.47 | 31.86 |
To analyze STERIS plc's activity ratios based on the data provided, we will look at 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):
- The trend for DOH shows an increase over the past five years, from 56.22 days in 2020 to 84.30 days in 2024.
- This indicates that inventory is being held for a longer period before it is sold. A higher DOH can tie up cash and increase storage costs, potentially impacting liquidity and profitability.
2. Days of Sales Outstanding (DSO):
- The DSO fluctuated over the years, with a peak in 2023 at 74.69 days and a decrease to 71.62 days in 2024.
- DSO represents the average number of days it takes to collect revenue from sales. A decreasing DSO indicates an improvement in collecting accounts receivable, which can improve cash flow and working capital management.
3. Number of Days of Payables:
- The days of payables have varied slightly over the years, ranging from 31.46 days in 2024 to 34.46 days in 2023.
- A lower number of days of payables suggests that the company is paying its suppliers more quickly, which may indicate efficient cash management or good relationships with suppliers.
In summary, STERIS plc's inventory management seems to have deteriorated over the years as evidenced by the increasing DOH. However, the company has shown some improvement in collecting accounts receivable as indicated by the decreasing DSO. The management of payables has remained relatively stable. Further analysis and comparison with industry benchmarks would provide more insights into STERIS plc's efficiency in managing its working capital and operating cycle.
Long-term
| Mar 31, 2024 | Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 2.91 | 2.78 | 2.95 | 2.52 | 2.73 |
| Total asset turnover | 0.46 | 0.42 | 0.40 | 0.47 | 0.56 |
The fixed asset turnover ratio for STERIS plc has shown a relatively stable performance over the past five years, ranging between 2.52 and 2.95. This ratio indicates that the company generates $2.52 to $2.95 in revenue for every dollar invested in fixed assets during the respective years. The increasing trend in fixed asset turnover from 2021 to 2022 and then a subsequent decline suggests fluctuations in the efficiency of utilizing fixed assets to generate sales.
On the other hand, the total asset turnover ratio has fluctuated significantly over the same period, ranging from 0.40 to 0.56. This ratio indicates that for every dollar of total assets, STERIS plc has generated between $0.40 and $0.56 in revenue during the years analyzed. The declining trend from 2021 to 2022 suggests a decrease in the efficiency of utilizing total assets to generate sales, which could potentially indicate inefficiencies or changes in the company's operations or asset base.
Overall, the analysis of both fixed asset turnover and total asset turnover ratios for STERIS plc indicates varying levels of efficiency in utilizing assets to generate revenue over the past five years. These ratios can provide valuable insights into the company's operational efficiency and asset management strategies.