Varex Imaging Corp (VREX)

Short-term

Turnover ratios

1. Inventory Turnover Ratio:
- The inventory turnover ratio measures how efficiently a company manages its inventory by indicating how many times a company sells and replaces its inventory during a period. Varex Imaging Corp's inventory turnover has been relatively stable over the past five years, ranging from 1.90 to 2.43. This suggests consistency in managing inventory levels.

2. Receivables Turnover Ratio:
- The receivables turnover ratio reflects how efficiently a company collects payments from its customers. Varex Imaging Corp has seen a slight fluctuation in its receivables turnover ratio over the years, with values ranging from 4.96 to 5.96. The higher turnover ratio indicates that the company is collecting its accounts receivable more frequently.

3. Payables Turnover Ratio:
- The payables turnover ratio measures how well a company manages its accounts payable by showing how quickly the company pays its suppliers. Varex Imaging Corp's payables turnover ratio has also varied but generally increased from 7.36 to 9.32 over the past five years. This suggests that the company is paying its suppliers more quickly.

4. Working Capital Turnover Ratio:
- The working capital turnover ratio assesses how effectively a company utilizes its working capital to generate sales. Varex Imaging Corp's working capital turnover has decreased from 2.96 to 1.80 over the last five years. A higher ratio indicates better utilization of working capital, so the declining trend in this ratio may warrant further investigation.

Overall, Varex Imaging Corp's activity ratios show a mixed performance in managing its inventory, receivables, payables, and working capital. Further analysis and comparison with industry benchmarks can provide more insights into the company's efficiency in managing these aspects of its operations.

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Average number of days

The activity ratios of Varex Imaging Corp provide insight into the efficiency of the company in managing its inventory, collecting receivables, and paying its payables.

- Days of Inventory on Hand (DOH): The trend in DOH indicates the number of days it takes for Varex Imaging Corp to sell its inventory. A decreasing trend in DOH from 2020 to 2021 followed by an increase in 2022 and another decrease in 2023 suggests varying efficiency in managing inventory levels. The company had the most efficient inventory turnover in 2021 with 150.11 days compared to 192.17 days in 2022 and 167.94 days in 2023, indicating improvements in inventory management.

- Days of Sales Outstanding (DSO): DSO represents the average number of days it takes for Varex Imaging Corp to collect payment after making a sale. The decreasing trend in DSO from 2019 to 2020 followed by a slight increase in 2021 and further decrease in 2022 and 2023 indicates improvement in collections efficiency. The company has been able to collect receivables at a faster rate over the years, which is a positive sign for cash flow management.

- Number of Days of Payables: This ratio reflects the average number of days Varex Imaging Corp takes to pay its suppliers. A decreasing trend in the number of days of payables from 2019 to 2020, followed by fluctuations in 2021 and further decrease in 2022 and 2023, indicates efficient management of payables. The company has been able to negotiate better payment terms with suppliers or manage its cash flow effectively to pay suppliers within a shorter period.

Overall, Varex Imaging Corp has shown improvements in efficiency in managing inventory, collecting receivables, and paying payables over the years, which is essential for optimizing working capital management and overall financial health.

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Long-term

Varex Imaging Corp's long-term activity ratios indicate the efficiency with which the company utilizes its assets to generate revenue. The fixed asset turnover ratio has shown a consistent improvement over the past five years, from 5.49 in 2019 to 6.23 in 2023, indicating that the company is generating more revenue from its fixed assets each year. This suggests that Varex Imaging Corp is effectively utilizing its long-term assets to support its operations and drive sales.

In contrast, the total asset turnover ratio has fluctuated slightly over the same period, ranging from 0.65 in 2020 to 0.73 in 2022, before decreasing slightly to 0.71 in 2023. This ratio indicates the company's overall efficiency in generating sales from all assets, including both fixed and current assets. While the total asset turnover ratio is lower than the fixed asset turnover ratio, it still reflects a decent level of asset utilization by Varex Imaging Corp.

Overall, the improvement in the fixed asset turnover ratio suggests that Varex Imaging Corp has been successful in optimizing the utilization of its long-term assets to drive revenue growth. However, the slight fluctuations in the total asset turnover ratio indicate that the company may benefit from further enhancements in its overall asset efficiency to improve profitability and operational performance.