Veracyte Inc (VCYT)

Short-term

Turnover ratios

The activity ratios of Veracyte Inc. over the period from December 31, 2020, to December 31, 2024, reflect the company's operational efficiency in managing inventory, receivables, payables, and working capital.

Inventory Turnover: The inventory turnover ratio experienced a decline from 8.90 in 2020 to 6.63 in 2021, indicating a decrease in the efficiency of inventory management. Subsequently, it modestly increased to 7.11 in 2022 and stabilized around 7.00 in 2023, with a slight rise to 7.18 in 2024. This pattern suggests a relatively stable inventory management approach in recent years, with some fluctuation that may reflect operational adjustments.

Receivables Turnover: The receivables turnover ratio shows an improving trend, rising from 6.36 in 2020 to 5.29 in 2021 (a slight decrease), then substantially increasing to 6.74 in 2022, followed by significant increases to 8.94 in 2023 and 9.58 in 2024. The upward trajectory indicates enhanced collection efficiency and potentially tighter credit control, leading to faster collection of receivables over time.

Payables Turnover: The payables turnover ratio displays notable volatility. It started high at 13.30 in 2020, then declined sharply to 6.02 in 2021, before increasing again to 8.53 in 2022 and 8.72 in 2023. In 2024, it experienced a significant jump to 18.09. The fluctuations suggest adjustments in the company's payment practices or supplier terms. The substantial increase in 2024 might indicate a strategic change to delay payments further or improved negotiation with suppliers.

Working Capital Turnover: The working capital turnover ratio improved from 0.33 in 2020 to 1.23 in 2021, continuing upward to 1.59 in 2022. It remained relatively stable at 1.61 in 2023 before decreasing slightly to 1.52 in 2024. The trend reflects a generally improved capacity to utilize working capital efficiently to generate sales, with a peak in 2023 and a slight decline afterward, possibly due to changes in sales volume, inventory levels, or receivables management.

Overall, Veracyte Inc.'s activity ratios suggest a trajectory of improving receivables management and operational efficiency, with some variability in inventory and payables management. The trends in these ratios reflect strategic adjustments aimed at optimizing working capital utilization and operational throughput over the assessed period.

---

Average number of days

The activity ratios for Veracyte Inc, as measured by days of inventory on hand (DOH), days of sales outstanding (DSO), and days of payables, exhibit notable trends over the period from 2020 to 2024.

Days of inventory on hand (DOH): The inventory holding period increased from 41.00 days at the end of 2020 to a peak of 55.07 days in 2021. Subsequently, it decreased to 51.36 days in 2022, remained relatively stable at 52.14 days in 2023, and slightly declined further to 50.82 days in 2024. This pattern indicates an initial expansion in inventory turnover efficiency in 2022, followed by stabilization and minor improvement in subsequent years.

Days of sales outstanding (DSO): The company's receivables collection period rose notably from 57.36 days in 2020 to 68.94 days in 2021, suggesting a slowdown in receivables collections during that year. However, this trend reversed in 2022, where DSO decreased to 54.18 days, signaling improved receivables management. Further improvements are observed in 2023 and 2024, with DSO declining to 40.82 days and 38.10 days respectively, reflecting enhanced efficiencies in cash collection processes.

Number of days of payables: The payables deferral period experienced significant fluctuations over the years. It increased sharply from 27.44 days in 2020 to 60.64 days in 2021, possibly reflecting extended credit terms negotiated with suppliers or changes in payment policies. In 2022, the period decreased to 42.80 days but remained elevated compared to 2020. The trend persisted with slight decreases in 2023 (41.84 days), and a substantial reduction in 2024 to 20.17 days, indicating a shortening in the company's payment cycle and possibly a shift towards faster payments to suppliers or a change in credit terms.

Overall, Veracyte Inc has demonstrated improvements in receivables collection efficiency from 2021 onward, alongside ongoing management of inventory levels. The significant reduction in payables days in 2024 suggests a strategic shift towards less extended credit or more prompt payments to suppliers. These activity ratio trends reflect a dynamic operational environment with efforts toward optimizing working capital management.

---

Long-term

The analysis of Veracyte Inc.'s long-term activity ratios reveals notable trends over the relevant periods. The Fixed Asset Turnover ratio experienced a significant decline from 13.07 at the end of 2020 to 7.05 at the end of 2021, indicating a reduction in the efficiency with which the company utilized its fixed assets to generate sales. Subsequently, there was a partial recovery in this ratio, reaching 9.61 at the end of 2022, suggesting some improvement in fixed asset utilization. However, the ratio data for 2023 and 2024 are unavailable, limiting further year-over-year comparison.

In contrast, the Total Asset Turnover ratio exhibited a downward trajectory from 0.26 at the end of 2020 to 0.18 at the end of 2021, pointing to decreased overall efficiency in asset utilization. This ratio then rebounded to 0.26 by the end of 2022 and continued upward to 0.32 in 2023, with a further increase to 0.34 projected or recorded for 2024. These movements indicate a gradual improvement in the company's overall effectiveness in generating sales from its total asset base over this period.

Overall, the data suggest that while fixed asset utilization experienced volatility and a downward trend initially, the total asset utilization demonstrated resilience and improvement from 2021 onward. The decline and partial recovery in fixed asset turnover may reflect changes in fixed asset investments or operational adjustments, whereas the consistent increase in total asset turnover indicates enhanced efficiency in deploying the company's broader asset base to generate revenue.