Teleflex Incorporated (TFX)

Short-term

Turnover ratios

The activity ratios of Teleflex Incorporated provide insights into how efficiently the company manages its resources and operations.

1. Inventory Turnover:
The company's inventory turnover has fluctuated over the years, ranging from 2.12 to 2.64. A lower inventory turnover may indicate slower sales or excess inventory levels, while a higher turnover implies efficient management of inventory levels.

2. Receivables Turnover:
Teleflex's receivables turnover has remained relatively stable, ranging from 6.20 to 7.32. A higher receivables turnover suggests that the company efficiently collects payments from its customers, minimizing the risk of bad debts.

3. Payables Turnover:
The payables turnover ratio has fluctuated between 9.94 and 11.82, indicating how quickly the company pays its suppliers. A higher turnover ratio suggests that Teleflex is effectively managing its payables, potentially taking advantage of favorable credit terms.

4. Working Capital Turnover:
The working capital turnover has varied from 2.88 to 3.75, reflecting how efficiently the company utilizes its working capital to generate sales. A higher turnover ratio indicates effective management of working capital, maximizing operational efficiency.

Overall, Teleflex's activity ratios demonstrate a mix of efficiency in inventory management, accounts receivable collection, payables management, and working capital utilization over the years. Monitoring these ratios can help assess the company's operational performance and financial health.

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Average number of days

Activity ratios provide insights into how efficiently a company manages its resources and operations. Let's analyze Teleflex Incorporated's activity ratios:

1. Days of Inventory on Hand (DOH)
- The trend in DOH shows an increase from 2019 to 2023, peaking in 2023 at 172.17 days. This indicates that Teleflex is taking longer to sell its inventory, potentially tying up more funds in inventory.
- The increase in DOH could be a signal of inefficiency in inventory management or challenges in forecasting demand accurately.
- Teleflex should consider strategies to optimize inventory levels, such as improving demand forecasting or implementing lean inventory practices.

2. Days of Sales Outstanding (DSO)
- The DSO has been relatively stable over the past five years, ranging from 49.83 to 58.88 days.
- A lower DSO indicates that Teleflex is collecting its receivables more quickly, which is a positive sign of efficient accounts receivable management.
- Consistent DSO levels suggest that Teleflex has been effective in managing credit terms with customers and timely collecting payments.

3. Number of Days of Payables
- The days of payables have shown a slight increasing trend from 2019 to 2023, reaching 36.36 days in 2023.
- A longer payment period may indicate that Teleflex is taking longer to pay its suppliers, potentially improving cash flow by extending payment terms.
- However, excessively long payment periods could strain relationships with suppliers and impact future access to credit and discounts.

In conclusion, Teleflex Incorporated should focus on optimizing its inventory levels to reduce the DOH and consider maintaining a balance between efficiently managing accounts receivable (DSO) and payables to enhance its overall working capital efficiency.

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Long-term

Teleflex Incorporated's long-term activity ratios indicate how effectively the company is utilizing its assets to generate sales over the years. The fixed asset turnover has been consistently high, with values ranging from 5.35 to 6.33, demonstrating that the company efficiently generates sales from its investments in fixed assets such as property, plant, and equipment.

In contrast, the total asset turnover ratios have been lower, fluctuating between 0.35 and 0.41. This suggests that while Teleflex is efficient in generating sales from its fixed assets, it may not be as effective in utilizing its total assets, which include both fixed and current assets, to drive sales.

Overall, the high fixed asset turnover ratios indicate that Teleflex is effectively managing its investments in fixed assets to generate revenue, although there may be room for improvement in optimizing the utilization of its total assets to drive overall sales growth.