Vertex Pharmaceuticals Inc (VRTX)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Inventory turnover	2.53	3.31	4.51	5.09	5.55
Receivables turnover	6.83	6.27	6.15	6.60	6.93
Payables turnover	7.38	6.70	6.83	9.21	10.05
Working capital turnover	1.82	0.93	0.84	1.01	0.98

Based on the provided data for Vertex Pharmaceuticals Inc, let's analyze the activity ratios:

1. Inventory Turnover:
- The inventory turnover ratio measures how many times a company's inventory is sold and replaced over a specific period. Vertex Pharmaceuticals Inc's inventory turnover has decreased from 5.55 in 2020 to 2.53 in 2024. This downward trend indicates that the company is taking longer to sell its inventory, which may lead to higher carrying costs and liquidity challenges.

2. Receivables Turnover:
- The receivables turnover ratio reflects how efficiently a company collects cash from its credit sales. Vertex Pharmaceuticals Inc's receivables turnover has fluctuated slightly, ranging from 6.15 in 2022 to 6.83 in 2024. Overall, the company maintains a consistent collection efficiency in converting credit sales into cash.

3. Payables Turnover:
- The payables turnover ratio indicates how quickly a company pays its suppliers. Vertex Pharmaceuticals Inc's payables turnover has decreased from 10.05 in 2020 to 7.38 in 2024. This suggests that the company is taking longer to pay its suppliers, potentially signaling either strained relationships or liquidity management strategies.

4. Working Capital Turnover:
- The working capital turnover ratio assesses how effectively a company utilizes its working capital to generate sales revenue. Vertex Pharmaceuticals Inc's working capital turnover has varied, with the highest value of 1.82 in 2024. A higher turnover implies efficient utilization of working capital to drive sales, which could indicate improved operational performance.

In summary, the analysis of Vertex Pharmaceuticals Inc's activity ratios demonstrates mixed efficiency in managing its inventory, receivables, payables, and working capital. The company should focus on improving inventory turnover and payables management while sustaining the efficiency in receivables collection and utilizing working capital effectively to drive sales.

Average number of days

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	144.45	110.37	80.98	71.75	65.79
Days of sales outstanding (DSO)	days	53.43	58.21	59.39	55.33	52.67
Number of days of payables	days	49.49	54.51	53.43	39.63	36.34

Based on the provided data for Vertex Pharmaceuticals Inc, we can analyze the company's activity ratios to assess its efficiency in managing its inventory, receivables, and payables.

1. Days of Inventory on Hand (DOH):
- The days of inventory on hand increased from 65.79 days in December 2020 to 144.45 days in December 2024. This indicates that Vertex Pharmaceuticals Inc is holding onto its inventory for a longer period, which may suggest issues like overstocking or slower inventory turnover.

2. Days of Sales Outstanding (DSO):
- The days of sales outstanding show a fluctuating trend, decreasing from 52.67 days in December 2020 to 53.43 days in December 2024. This suggests that Vertex Pharmaceuticals Inc is collecting its receivables more efficiently over the years.

3. Number of Days of Payables:
- The number of days of payables has been fluctuating over the years, with an increase from 36.34 days in December 2020 to 49.49 days in December 2024. A higher number of days of payables could indicate that the company is taking longer to pay its suppliers, which may impact relationships with vendors.

Overall, the analysis of Vertex Pharmaceuticals Inc's activity ratios indicates that there have been changes in the efficiency of managing inventory, receivables, and payables over the years. Monitoring and improving these ratios can help the company optimize its working capital management and enhance overall operational performance.

Long-term

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Fixed asset turnover	9.40	11.06	11.18	10.81	11.64
Total asset turnover	0.49	0.43	0.49	0.56	0.52

From the data provided, we can analyze the long-term activity ratios of Vertex Pharmaceuticals Inc, focusing on Fixed Asset Turnover and Total Asset Turnover.

1. Fixed Asset Turnover:
- The Fixed Asset Turnover ratio measures how efficiently a company generates revenue from its fixed assets. Vertex Pharmaceuticals Inc's Fixed Asset Turnover has been relatively high and stable over the years, with values ranging from 9.40 to 11.64.
- A high Fixed Asset Turnover ratio indicates that Vertex Pharmaceuticals Inc effectively utilizes its fixed assets to generate sales. However, the slight decrease from 11.64 in 2020 to 9.40 in 2024 may suggest a potential decline in asset productivity, which warrants further investigation into the company's fixed asset management strategies. Overall, Vertex Pharmaceuticals Inc appears to efficiently generate revenue from its fixed assets.

2. Total Asset Turnover:
- The Total Asset Turnover ratio reflects how effectively a company utilizes its total assets to generate sales. Vertex Pharmaceuticals Inc's Total Asset Turnover has fluctuated over the years, ranging from 0.43 to 0.56.
- A higher Total Asset Turnover ratio signifies that Vertex Pharmaceuticals Inc efficiently generates revenue relative to its total assets. The increase from 0.43 in 2023 to 0.49 in 2024 suggests an improvement in asset efficiency. However, the ratio peaked in 2021 at 0.56 before decreasing in subsequent years, indicating potential fluctuations in asset productivity.
- Further analysis is needed to understand the factors driving these fluctuations in Total Asset Turnover and to assess Vertex Pharmaceuticals Inc's overall asset utilization efficiency.

In summary, the analysis of Vertex Pharmaceuticals Inc's long-term activity ratios indicates that the company effectively utilizes its fixed assets to generate revenue, but there are fluctuations in its total asset turnover. Monitoring these ratios and investigating the underlying reasons for any changes will provide valuable insights into the company's operational performance and asset management effectiveness.