Tandem Diabetes Care Inc (TNDM)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.73 | 6.63 | 8.75 | 7.10 | 6.92 |
| Receivables turnover | 6.97 | 6.93 | 6.29 | 5.91 | 7.78 |
| Payables turnover | 15.05 | 13.21 | 21.40 | 25.41 | 19.13 |
| Working capital turnover | 1.33 | 1.16 | 1.03 | 0.91 | 2.05 |
Inventory Turnover: Tandem Diabetes Care Inc's inventory turnover has fluctuated over the past five years, with a decreasing trend overall. The company's ability to sell its inventory has decreased from 4.76 times in 2021 to 2.41 times in 2023. This indicates that the company is holding onto its inventory for a longer period before selling it, which may result in higher carrying costs or potential obsolescence.
Receivables Turnover: Tandem Diabetes Care Inc's receivables turnover indicates how efficiently the company collects on its credit sales. The ratio has remained relatively stable over the past five years, ranging from 6.07 to 7.78. A higher turnover ratio suggests that the company is collecting its receivables more quickly, which is a positive sign of good credit management.
Payables Turnover: The payables turnover ratio measures how quickly a company pays its suppliers. Tandem Diabetes Care Inc's payables turnover has shown variability, with a significant decrease in 2023 compared to the previous years. A lower payables turnover could indicate that the company is taking longer to pay its suppliers, which may impact relationships or result in potential cash flow issues.
Working Capital Turnover: Tandem Diabetes Care Inc's working capital turnover has decreased over the five-year period, indicating a decline in the efficiency of utilizing working capital to generate sales. The ratio has dropped from 2.05 in 2019 to 1.35 in 2023. A decreasing trend in working capital turnover may suggest that the company is becoming less effective in converting working capital into sales revenue.
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 | 77.24 | 55.09 | 41.72 | 51.41 | 52.75 |
| Days of sales outstanding (DSO) | days | 52.37 | 52.67 | 58.00 | 61.73 | 46.94 |
| Number of days of payables | days | 24.25 | 27.63 | 17.06 | 14.36 | 19.08 |
The activity ratios of Tandem Diabetes Care Inc provide insights into the efficiency of its operations and management of working capital.
1. Days of Inventory on Hand (DOH): This ratio shows the average number of days it takes for the company to sell its inventory. An increasing trend from 2019 to 2023 indicates that the company is holding inventory for a longer period. This could suggest inefficiencies in inventory management, such as overstocking or slow-moving inventory.
2. Days of Sales Outstanding (DSO): DSO reflects the average number of days it takes for the company to collect its accounts receivable. A decreasing trend in DSO from 2019 to 2023 suggests that the company has been improving its collection process, resulting in quicker conversion of sales into cash.
3. Number of Days of Payables: This ratio signifies how long the company takes to pay its suppliers. The decreasing trend in the number of days of payables from 2019 to 2023 suggests that the company is paying its suppliers more quickly. This could indicate better relationships with suppliers or changes in the company's payment terms.
Overall, Tandem Diabetes Care Inc should focus on managing its inventory levels efficiently to reduce the Days of Inventory on Hand, while continuing to improve its collection process as indicated by the decreasing trend in Days of Sales Outstanding. Keeping a balance between payment terms and maintaining good relationships with suppliers is also crucial, as reflected in the trend of the Number of Days of Payables.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 9.61 | 11.60 | 13.83 | 9.72 | 11.00 |
| Total asset turnover | 0.77 | 0.76 | 0.77 | 0.68 | 1.11 |
The fixed asset turnover ratio measures how efficiently a company is generating sales from its investment in fixed assets. Tandem Diabetes Care Inc's fixed asset turnover has fluctuated over the past five years, ranging from a high of 13.95 in 2021 to a low of 9.77 in 2023. Generally, a higher fixed asset turnover ratio indicates better efficiency in utilizing fixed assets to generate revenue.
On the other hand, the total asset turnover ratio assesses the company's ability to generate sales from its total assets. Tandem Diabetes Care Inc's total asset turnover has been relatively stable, with values ranging from 0.70 in 2020 to 0.78 in both 2021 and 2023. A total asset turnover ratio below 1.0 indicates that the company is generating less in sales compared to its total assets.
In comparison, Tandem Diabetes Care Inc's fixed asset turnover is consistently higher than its total asset turnover, suggesting that the company is very efficient in utilizing its fixed assets to generate revenue. However, the total asset turnover ratios below 1.0 across the years may indicate that the company could potentially improve its overall efficiency in generating sales from its total asset base.