Viatris Inc (VTRS)

Short-term

Turnover ratios

Inventory turnover for Viatris Inc has been relatively stable around 2.5 to 2.8 times per year over the past eight quarters, indicating that the company is efficiently managing its inventory levels. Receivables turnover has also been consistent, averaging around 4.3 to 4.5 times per year, suggesting that Viatris is collecting its accounts receivables in a timely manner.

On the other hand, the payables turnover ratio has been declining from 7.6 to 4.6 times per year over the same period. This trend suggests that the company is taking longer to pay its suppliers, which may impact supplier relationships and potentially strain liquidity if not managed effectively.

The working capital turnover ratio shows a declining trend from 8.4 to 2.97 times per year over the past two years. A decreasing working capital turnover ratio may indicate that Viatris is becoming less efficient in managing its working capital to generate sales revenue. It is essential for the company to closely monitor this ratio and take appropriate actions to improve working capital management efficiency.

In conclusion, while Viatris Inc demonstrates efficient inventory and receivables turnover, the company needs to address the declining payables turnover and working capital turnover ratios to maintain overall financial health and operational efficiency.

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Average number of days

To analyze Viatris Inc's activity ratios, we will focus on Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables.

1. Days of Inventory on Hand (DOH):
- The trend in DOH over the past eight quarters has been relatively stable, ranging from 121.28 days in Q1 2022 to 143.35 days in Q3 2023.
- Viatris Inc appears to be carrying inventory for approximately 4 to 5 months on average, which may indicate slower inventory turnover relative to its industry peers.
- Maintaining high levels of inventory could tie up working capital and potentially increase holding costs.

2. Days of Sales Outstanding (DSO):
- DSO has shown fluctuations over the quarters, with a peak of 88.23 days in Q3 2023 and a low of 72.74 days in Q3 2022.
- The company takes an average of around 80 to 85 days to collect its accounts receivable, indicating a moderate collection period.
- A decreasing trend in DSO suggests more efficient management of accounts receivable.

3. Number of Days of Payables:
- The number of days of payables has increased over the quarters, from 47.89 days in Q1 2022 to 78.71 days in Q4 2023.
- Viatris Inc seems to be taking longer to pay its suppliers, potentially benefiting from extended credit terms.
- A longer payment period can improve cash flow and liquidity but may strain supplier relationships if not managed effectively.

Overall, Viatris Inc's activity ratios suggest that the company may need to focus on optimizing its inventory management to improve turnover rates and consider balancing its payables strategy to maintain positive supplier relationships while managing cash flow effectively. Additionally, efforts to streamline accounts receivable collection processes could enhance overall working capital efficiency.

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Long-term

The fixed asset turnover ratio for Viatris Inc has been relatively stable over the past eight quarters, ranging from 5.23 to 5.59. This indicates that the company generates $5.23 to $5.59 in revenue for every dollar invested in fixed assets. A higher fixed asset turnover ratio suggests that the company is effectively utilizing its fixed assets to generate sales.

In contrast, the total asset turnover ratio has been consistent at around 0.32 to 0.34 over the same period. This implies that Viatris Inc generates approximately $0.32 to $0.34 in revenue for every dollar of total assets it possesses. A stable total asset turnover ratio may indicate that the company is efficiently utilizing all its assets, not just fixed assets, to generate sales.

Overall, Viatris Inc's long-term activity ratios suggest that the company is effectively utilizing its assets to generate revenue. The consistency in both fixed asset turnover and total asset turnover ratios indicates a sustained efficiency in asset management and revenue generation.