Varex Imaging Corp (VREX)

Short-term

Turnover ratios

Activity ratios provide insight into how efficiently a company is managing its assets and liabilities. Let's analyze the activity ratios of Varex Imaging Corp based on the provided data:

1. Inventory Turnover:
The inventory turnover ratio measures how many times a company's inventory is sold and replaced over a period. Varex Imaging Corp's inventory turnover has fluctuated over the past five years, ranging from 1.90 to 2.43. A higher inventory turnover generally indicates more efficient inventory management. Varex Imaging Corp's inventory turnover has been moderate and relatively stable over the years, suggesting consistent management of inventory levels.

2. Receivables Turnover:
The receivables turnover ratio indicates how many times a company collects its accounts receivable during a period. Varex Imaging Corp's receivables turnover has also varied but remained within a relatively narrow range of 4.96 to 5.96 over the last five years. A higher receivables turnover indicates faster collection of payments from customers, which is generally favorable for cash flow and liquidity. Varex Imaging Corp has maintained a stable receivables turnover ratio, indicating efficient management of accounts receivable.

3. Payables Turnover:
The payables turnover ratio measures how quickly a company pays its suppliers. Varex Imaging Corp's payables turnover has shown some fluctuations but has generally been within a reasonable range from 7.36 to 9.38 over the past five years. A higher payables turnover suggests that the company is paying its suppliers more quickly. Varex Imaging Corp's payables turnover indicates that the company has been managing its payables effectively and consistently.

4. Working Capital Turnover:
The working capital turnover ratio reflects how effectively a company is utilizing its working capital to generate sales. Varex Imaging Corp's working capital turnover has been relatively stable, ranging from 1.79 to 2.11 over the last five years. A higher working capital turnover indicates more efficient utilization of working capital. Varex Imaging Corp's stable working capital turnover ratio suggests that the company has been effectively using its working capital to support its operations and generate revenue.

In summary, Varex Imaging Corp has demonstrated stable and efficient management of its inventories, receivables, payables, and working capital over the past five years, as indicated by the consistent performance of its activity ratios.

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Average number of days

Varex Imaging Corp's activity ratios provide insights into the efficiency of its operations in managing inventory, collecting receivables, and paying its payables.

1. Days of Inventory on Hand (DOH):
- The trend for DOH shows a fluctuating pattern over the past five years. In 2024, the company held inventory for 174.43 days on average, a slight increase from the previous year.
- The increasing trend in DOH signifies that Varex Imaging Corp may be holding onto inventory for a longer period, which could tie up capital and potentially lead to increased holding costs.

2. Days of Sales Outstanding (DSO):
- Varex Imaging Corp's DSO has shown a relatively consistent trend over the past five years, with a slight increase in 2024 to 70.97 days.
- The stability in DSO suggests that the company has been efficient in collecting its receivables within a reasonable timeframe, indicating effective credit and collection policies.

3. Number of Days of Payables:
- The number of days of payables has fluctuated over the years, with a decrease in 2024 to 38.93 days.
- A lower number of days of payables implies that the company is taking fewer days to pay its suppliers, which could be beneficial in terms of maintaining good vendor relationships and potentially taking advantage of early payment discounts.

Overall, while Varex Imaging Corp has shown some fluctuations in its activity ratios, the company has managed its inventory, receivables, and payables effectively to ensure operational efficiency. Monitoring these ratios can help the company make informed decisions to optimize working capital management and improve overall financial performance.

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Long-term

The fixed asset turnover ratio measures how efficiently a company is utilizing its fixed assets to generate revenue. Varex Imaging Corp's fixed asset turnover has been fluctuating over the past five years, ranging from 5.10 to 6.23. A higher fixed asset turnover ratio indicates that the company is generating more revenue per dollar of fixed assets invested.

The trend in Varex Imaging Corp's fixed asset turnover ratio shows that the company has been able to improve its efficiency in utilizing its fixed assets to generate sales over the years, with a peak in 2023 at 6.23 and a slight decrease to 5.52 in 2024. This suggests that the company has been managing its fixed assets effectively to drive revenue growth.

Total asset turnover ratio, on the other hand, measures how efficiently a company is utilizing all its assets to generate sales. Varex Imaging Corp's total asset turnover has been relatively stable, ranging from 0.65 to 0.73 over the past five years. A higher total asset turnover ratio indicates that the company is generating more revenue per dollar of total assets.

Overall, the long-term activity ratios of Varex Imaging Corp indicate that the company has been efficiently utilizing both its fixed assets and total assets to generate sales. The fluctuation in fixed asset turnover and the stability in total asset turnover suggest that the company has been effectively managing its assets to drive revenue growth over the years.