Stryker Corporation (SYK)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 1.54 | 1.72 | 1.85 | 1.52 | 1.74 |
| Receivables turnover | 5.44 | 5.18 | 5.66 | 5.31 | 5.14 |
| Payables turnover | 4.90 | 4.86 | 5.44 | 6.54 | 7.69 |
| Working capital turnover | 4.46 | 4.64 | 3.13 | 3.08 | 2.24 |
The activity ratios of Stryker Corp. provide insight into the company's efficiency in managing its inventory, receivables, payables, and working capital over the past five years.
1. Inventory turnover: Stryker's inventory turnover has fluctuated over the years, ranging from 1.52 to 1.85 times. A lower inventory turnover may indicate excess or slow-moving inventory, while a higher turnover suggests efficient inventory management.
2. Receivables turnover: Stryker's receivables turnover has remained relatively stable between 5.14 and 5.66 times. This ratio reflects how effectively the company collects its accounts receivable. A higher turnover indicates that the company is collecting payments more quickly.
3. Payables turnover: Stryker's payables turnover has decreased over the years, indicating that the company is taking longer to pay its suppliers. A declining payables turnover may have implications for the company's relationships with suppliers and cash flow management.
4. Working capital turnover: Stryker's working capital turnover has shown an increasing trend, indicating that the company is generating more revenue per dollar of working capital employed. A higher turnover suggests efficient utilization of working capital.
Overall, analyzing these activity ratios provides valuable insights into Stryker Corp.'s operational efficiency and effectiveness in managing its assets and liabilities to support its business activities.
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 | 237.59 | 212.22 | 197.00 | 240.90 | 209.66 |
| Days of sales outstanding (DSO) | days | 67.04 | 70.53 | 64.47 | 68.70 | 70.94 |
| Number of days of payables | days | 74.42 | 75.06 | 67.11 | 55.85 | 47.49 |
Stryker Corp.'s activity ratios provide insights into its operational efficiency and asset management.
1. Days of Inventory on Hand (DOH):
- The trend in the DOH ratio over the past five years shows fluctuations, with an increase in 2023 compared to 2022.
- The higher number of days of inventory on hand in 2023 (237.59 days) compared to previous years may indicate that Stryker is holding onto inventory for a longer period, which could tie up resources and lead to storage costs.
- Management may need to review inventory management practices to optimize levels and ensure efficient utilization of resources.
2. Days of Sales Outstanding (DSO):
- The DSO ratio reflects the average number of days it takes for Stryker to collect payment after making a sale.
- The decreasing trend in DSO from 2019 to 2021 followed by a slight increase in 2023 suggests improvements in the company's credit and collection policies and practices, leading to quicker receivables turnover.
- However, the increase in 2023 (67.04 days) compared to the previous year should be monitored to ensure timely collections and efficient cash flow management.
3. Number of Days of Payables:
- The number of days of payables indicates the average number of days Stryker takes to pay its suppliers for goods or services received.
- The increasing trend in the number of days of payables from 2019 to 2023 may suggest that Stryker has been extending its payment period to suppliers over the years.
- While effectively managing payables can provide short-term liquidity benefits, it is essential to maintain good relationships with suppliers and ensure timely payments to avoid any disruptions in the supply chain.
Overall, a balanced approach to managing inventory levels, collecting receivables efficiently, and optimizing payment terms with suppliers will help enhance Stryker Corp.'s operational efficiency and financial performance.
See also:
Stryker Corporation Short-term (Operating) Activity Ratios
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 6.38 | 6.21 | 6.04 | 5.21 | 5.80 |
| Total asset turnover | 0.51 | 0.50 | 0.49 | 0.42 | 0.49 |
The fixed asset turnover ratio measures how efficiently a company is utilizing its fixed assets to generate revenue. In the case of Stryker Corp., the fixed asset turnover has been consistently increasing over the past five years, from 5.80 in 2019 to 6.38 in 2023. This indicates that the company is becoming more efficient in generating sales from its fixed assets.
On the other hand, the total asset turnover ratio reflects the company's ability to generate sales from all its assets. Stryker Corp.'s total asset turnover has also shown an upward trend over the period, improving from 0.49 in 2019 to 0.51 in 2023. This suggests that the company is generating more revenue from its total assets, which is a positive sign of operational efficiency.
Overall, both the fixed asset turnover and total asset turnover ratios of Stryker Corp. have been trending positively over the years, indicating improved efficiency in utilizing both fixed and total assets to drive sales growth.