Varex Imaging Corp (VREX)

Short-term

Turnover ratios

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

1. Inventory turnover:
Varex Imaging Corp's inventory turnover has been relatively stable over the periods, ranging from 1.30 to 2.48 times. A lower turnover may indicate overstocking or slow-moving inventory, while a higher turnover implies efficient inventory management. The company's inventory turnover has shown some variability, which may warrant further investigation into inventory management practices.

2. Receivables turnover:
Varex Imaging Corp's receivables turnover has also demonstrated variability, with values ranging from 4.99 to 6.65 times. A higher turnover indicates that the company is collecting its receivables more quickly, which is generally favorable. However, incomplete data in some periods makes it challenging to discern a consistent trend. It would be beneficial to have more complete data for a more robust analysis.

3. Payables turnover:
The payables turnover for Varex Imaging Corp has fluctuated between 4.78 to 10.64 times. A higher turnover suggests that the company is paying its suppliers more frequently, which could indicate strong supplier relationships or favorable credit terms. However, a very high turnover could also signal potential cash flow challenges. Varex Imaging Corp should monitor this ratio closely to ensure optimal cash flow management.

4. Working capital turnover:
The working capital turnover for Varex Imaging Corp has ranged from 1.77 to 3.19 times. A higher turnover ratio indicates that the company is efficiently using its working capital to generate sales revenue. Varex Imaging Corp's working capital turnover has shown some fluctuations, and the company should strive to maintain a balance between working capital efficiency and liquidity.

In conclusion, Varex Imaging Corp's activity ratios provide valuable insights into the efficiency of its operations and management of assets. Monitoring these ratios over time and comparing them to industry benchmarks can help the company identify areas for improvement and make informed strategic decisions.

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Average number of days

The Days of Inventory on Hand (DOH) for Varex Imaging Corp have shown some fluctuations over the past few quarters. The company held inventory for an average of 185.61 days at the end of December 2023, which is higher compared to the previous quarter but lower than the same period in the previous year. This indicates that the company may be experiencing challenges in managing its inventory levels efficiently.

The Days of Sales Outstanding (DSO) metric also indicates some variability in Varex Imaging Corp's collection efficiency. The DSO was 57.95 days at the end of December 2023, showing an improvement from the previous quarter. However, the DSO was higher compared to the same period in the previous year, suggesting that the company might be facing difficulties in collecting its accounts receivable promptly.

In terms of the Number of Days of Payables, Varex Imaging Corp has been extending its payment period to suppliers over the past few quarters. The company took an average of 47.22 days to pay its suppliers at the end of December 2023, which was higher compared to the previous quarter but lower than the same period in the previous year. This indicates that the company may be trying to manage its cash flow by delaying payments to suppliers.

Overall, the activity ratios for Varex Imaging Corp suggest that the company may be facing challenges in managing its inventory levels efficiently and collecting accounts receivable promptly. The extension of the payment period to suppliers might be a tactic to improve cash flow management.

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Long-term

Varex Imaging Corp's fixed asset turnover ratio has shown relatively stable performance over the past five quarters, with values ranging from 5.97 to 6.44. This indicates that the company generates between $5.97 and $6.44 in sales revenue for every dollar invested in fixed assets. The consistent high values of the fixed asset turnover ratio suggest that Varex Imaging efficiently utilizes its fixed assets to generate revenue.

On the other hand, the total asset turnover ratio has also demonstrated stability, albeit at lower levels compared to the fixed asset turnover. The total asset turnover ratio has ranged from 0.71 to 0.75 over the same period, signifying that the company generates between $0.71 and $0.75 in sales revenue for every dollar invested in total assets. While the total asset turnover ratio is lower than the fixed asset turnover ratio, it still indicates that Varex Imaging effectively utilizes its total assets to generate sales.

Overall, Varex Imaging Corp's activity ratios suggest that the company efficiently utilizes both its fixed and total assets to generate sales revenue. The stability in these ratios over the past quarters indicates a consistent operational efficiency in asset utilization.