Viatris Inc (VTRS)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 2.59 | 2.77 | 3.09 | 1.49 | 2.85 |
| Receivables turnover | 5.46 | 5.01 | 4.74 | 3.07 | 4.36 |
| Payables turnover | 4.64 | 5.53 | 7.43 | 4.28 | 4.98 |
| Working capital turnover | 2.97 | 4.18 | 17.56 | 5.18 | 9.68 |
Viatris Inc's activity ratios provide insights into how efficiently the company is managing its assets and liabilities.
1. Inventory turnover: This ratio indicates how many times during the period inventory was sold and replaced. Viatris Inc's inventory turnover has fluctuated over the years, with a decrease in 2020 followed by an increase in 2021 and a subsequent decline in 2023. The company may need to assess its inventory management practices to improve efficiency in turning over goods.
2. Receivables turnover: This ratio measures how efficiently Viatris Inc collects its outstanding accounts receivable. The higher the turnover, the better. The company's receivables turnover has generally been stable over the years, indicating a consistent ability to collect payments from customers promptly.
3. Payables turnover: This ratio reflects how efficiently Viatris Inc pays its suppliers and vendors. A higher turnover ratio suggests quicker payment of payables. The company's payables turnover has varied from year to year, with a significant increase in 2021 followed by a decrease in 2023. Viatris Inc may need to evaluate its payment terms with suppliers for optimal cash flow management.
4. Working capital turnover: This ratio shows how effectively the company is utilizing its working capital to generate sales. Viatris Inc's working capital turnover has also fluctuated over the years, with a notable increase in 2021. A higher turnover ratio indicates efficient use of working capital to support revenue generation.
Overall, Viatris Inc should continue monitoring and evaluating its activity ratios to identify opportunities for improvement in managing its inventory, receivables, payables, and working capital effectively. Maintaining a balance between efficient turnover of assets and liabilities is essential to sustainable financial performance.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 140.90 | 131.54 | 117.93 | 245.08 | 128.22 |
| Days of sales outstanding (DSO) | days | 66.81 | 72.80 | 77.02 | 118.90 | 83.79 |
| Number of days of payables | days | 78.71 | 66.03 | 49.14 | 85.29 | 73.36 |
Days of inventory on hand (DOH) measures the average number of days a company holds inventory before selling it. Viatris Inc's DOH has fluctuated over the past five years, with a significant decrease in 2021 followed by an increase in 2022. The current DOH of 140.90 days indicates that the company holds inventory for a relatively long period, which could tie up capital and increase holding costs.
Days of sales outstanding (DSO) reflects the average number of days it takes for a company to collect its accounts receivable. Viatris Inc's DSO has also varied, with a noticeable improvement in 2022. The DSO of 87.55 days suggests that the company takes approximately three months to collect its receivables, which may impact cash flow and liquidity.
The number of days of payables measures how long it takes a company to pay its suppliers. Viatris Inc's days of payables have shown some inconsistency over the five-year period, with a notable decrease in 2021. The current number of days of payables is 78.71 days, indicating that the company takes around two and a half months to settle its payables, which could affect relationships with suppliers and cash flow management.
Overall, Viatris Inc's activity ratios reveal mixed performance in managing inventory, receivables, and payables over the years. It is essential for the company to strike a balance between these components to optimize working capital and enhance overall operational efficiency.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 5.59 | 5.38 | 5.61 | 3.45 | 5.35 |
| Total asset turnover | 0.32 | 0.33 | 0.33 | 0.19 | 0.37 |
Viatris Inc's long-term activity ratios reveal insights into the efficiency of the company's use of its fixed assets and total assets over the past five years.
The fixed asset turnover ratio indicates the company's ability to generate sales revenue from its investment in fixed assets. Viatris Inc's fixed asset turnover has shown a fluctuating trend, with values ranging from 3.45 in 2020 to 5.61 in 2021. The increase in 2021 suggests that the company improved its efficiency in utilizing fixed assets to generate sales. However, the slight decrease in 2023 compared to 2022 indicates a potential dip in efficiency in that aspect.
On the other hand, the total asset turnover ratio reflects how effectively the company is generating sales from its total assets. Viatris Inc's total asset turnover has remained relatively stable over the years, ranging from 0.19 in 2020 to 0.37 in 2019. The low values suggest that the company may not be efficiently utilizing its total assets to generate sales revenue, indicating room for improvement in asset management efficiency.
In conclusion, Viatris Inc has shown varying levels of efficiency in leveraging its fixed assets to generate sales revenue, but there is room for improvement in utilizing its total assets efficiently. Monitoring and enhancing asset utilization efficiency can help the company achieve better operational performance and financial results in the long term.