Varex Imaging Corp (VREX)

Short-term

Turnover ratios

The activity ratios of Varex Imaging Corp provide insights into how efficiently the company manages its inventory, receivables, payables, and working capital to generate sales and maintain liquidity.

1. Inventory turnover: Varex Imaging Corp's inventory turnover ratio has been fluctuating over the analyzed periods, ranging from a low of 1.30 to a high of 2.65. The average inventory turnover appears to be moderate, indicating that the company is able to manage its inventory levels efficiently. However, there may be room for improvement in optimizing inventory turnover to potentially reduce storage costs and enhance cash flow.

2. Receivables turnover: The receivables turnover ratio shows how quickly Varex Imaging Corp collects payments from its customers. The company's receivables turnover ratio has also varied over time, with a high of 6.65 and a low of 4.99. Overall, the company appears to have a relatively efficient collections process, with a decent turnover rate.

3. Payables turnover: Varex Imaging Corp's payables turnover ratio reflects how quickly the company pays its suppliers. The company's payables turnover ratio has fluctuated, suggesting varying payment practices. The higher ratios indicate more efficient management of payables, while the lower ratios may indicate extended payment periods or difficulties in managing supplier relationships.

4. Working capital turnover: The working capital turnover ratio measures how effectively Varex Imaging Corp utilizes its working capital to generate sales. The company's working capital turnover has shown some variability but generally appears stable and efficient, with an average ratio above 2. A higher working capital turnover ratio typically indicates better utilization of resources and efficient operations.

Overall, while Varex Imaging Corp demonstrates reasonable efficiency in managing its activity ratios, there may be opportunities for the company to further optimize its operations and enhance overall financial performance by focusing on improving inventory management, collections processes, payables management, and working capital utilization.

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Average number of days

The Days of Inventory on Hand (DOH) for Varex Imaging Corp have fluctuated over the periods analyzed, with a range from 137.72 days to 281.68 days. Generally, a high DOH indicates that the company may be holding excess inventory, potentially leading to higher carrying costs and a risk of obsolescence. The company's DOH has shown an increasing trend from the year-end 2019 to the current period, peaking in March 2021 and then fluctuating at elevated levels.

The Days of Sales Outstanding (DSO) measures how long it takes for the company to collect its accounts receivable. Varex Imaging Corp's DSO has varied between 54.90 days and 73.14 days. A higher DSO may suggest inefficiencies in the company's credit policy or difficulties in collecting receivables promptly. It is noteworthy that the DSO has increased from March 2021 to the recent period, indicating potential challenges in collecting receivables efficiently.

The Number of Days of Payables measures how long it takes for the company to pay its suppliers. Varex Imaging Corp's payables days have displayed fluctuations between 30.74 days and 76.31 days. A longer payable period may indicate that the company is taking advantage of trade credit terms or facing financial constraints. The company's payables days decreased initially, then increased, peaking in December 2020, followed by fluctuations in the recent periods.

Overall, Varex Imaging Corp's activity ratios suggest some inefficiencies in managing inventory levels and collections, but they have also indicated an ability to manage payables effectively. Monitoring these ratios over time can help assess the company's operational and financial efficiency.

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Long-term

Varex Imaging Corp's long-term activity ratios, specifically the fixed asset turnover and total asset turnover, provide insights into the efficiency of the company in generating revenue from its assets over time.

1. Fixed Asset Turnover:
- Varex Imaging Corp's fixed asset turnover ratio has shown a fluctuating trend over the periods analyzed, ranging from a low of 4.91 to a high of 6.44.
- The ratio indicates how effectively the company utilizes its fixed assets to generate sales. A higher ratio suggests better efficiency in utilizing fixed assets to generate revenue.
- The declining trend from recent periods to earlier ones may indicate potential operational challenges in maximizing revenue generation from fixed assets.

2. Total Asset Turnover:
- The total asset turnover ratio for Varex Imaging Corp has also depicted some variability over time, with values ranging from 0.62 to 0.75.
- This ratio measures the company's ability to generate sales in relation to its total assets. A higher ratio signifies efficient utilization of total assets in generating revenue.
- The fluctuations in the total asset turnover ratio suggest changes in the company's operational efficiency and effectiveness in utilizing its total asset base to drive sales.

In conclusion, while Varex Imaging Corp's fixed asset turnover and total asset turnover ratios indicate some degree of fluctuation, it is crucial for the company to maintain a focus on optimizing the utilization of its assets to enhance efficiency and profitability in the long term. Monitoring these ratios can provide valuable insights into the company's operational performance and potential areas for improvement.