Waters Corporation (WAT)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.02 | 4.32 | 5.18 | 5.34 | 4.98 |
| Receivables turnover | 4.05 | 4.00 | 4.47 | 4.03 | 4.00 |
| Payables turnover | 24.49 | 21.12 | 19.04 | 22.49 | 32.58 |
| Working capital turnover | 2.95 | 2.96 | 2.88 | 3.87 | 3.26 |
The activity ratios of Waters Corp. provide insights into the efficiency of the company's operations in managing its inventory, receivables, payables, and working capital over the past five years.
1. Inventory turnover: Waters Corp.'s inventory turnover has shown a gradual decline from 3.31 in 2020 to 2.32 in 2023. This indicates that the company is selling its inventory at a slower pace, which may suggest potential issues with inventory management or declining sales volume.
2. Receivables turnover: The receivables turnover ratio has fluctuated slightly over the years, with a peak of 4.55 in 2021 and a low of 4.09 in 2019. This implies that Waters Corp. is collecting its receivables in a relatively efficient manner, but there may be room for improvement in managing its accounts receivable turnover.
3. Payables turnover: The payables turnover ratio has been relatively stable, with a noticeable decrease from 20.63 in 2019 to 14.11 in 2023. A lower payables turnover ratio indicates that the company is taking longer to pay its suppliers, which could impact relationships with vendors and potentially signal cash flow issues.
4. Working capital turnover: Waters Corp.'s working capital turnover has been consistent over the years, ranging from 2.94 in 2021 to 3.97 in 2020. This ratio indicates how effectively the company is utilizing its working capital to generate sales. A higher ratio suggests more efficient use of working capital.
Overall, the analysis of Waters Corp.'s activity ratios provides valuable insights into the company's operational efficiency and highlights areas that may require attention to improve performance and profitability.
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 | 90.82 | 84.41 | 70.50 | 68.37 | 73.29 |
| Days of sales outstanding (DSO) | days | 90.17 | 91.23 | 81.73 | 90.62 | 91.33 |
| Number of days of payables | days | 14.90 | 17.28 | 19.17 | 16.23 | 11.20 |
Waters Corp.'s activity ratios provide insight into how efficiently the company manages its inventory, receivables, and payables. The days of inventory on hand (DOH) have increased over the past five years, indicating a longer period of time it takes for the company to sell its inventory. This could suggest potential issues such as overstocking or slowing sales.
In contrast, the days of sales outstanding (DSO) have fluctuated slightly but generally remained within a stable range. A decreasing trend in DSO would indicate that Waters Corp. is collecting its receivables more quickly, which is a positive sign of effective credit management.
The number of days of payables has shown a slight increase over the period, indicating that the company is taking longer to pay its suppliers. This strategy can sometimes be used to manage cash flow effectively, but prolonged delays may strain supplier relationships.
Overall, Waters Corp. should focus on optimizing its inventory levels to reduce the days of inventory on hand, while also keeping a close eye on maintaining a balance between collecting receivables promptly and managing payables efficiently.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 4.45 | 4.97 | 4.99 | 4.67 | 5.63 |
| Total asset turnover | 0.61 | 0.88 | 0.88 | 0.81 | 0.92 |
The fixed asset turnover ratio for Waters Corp. has shown a decreasing trend over the past five years, indicating that the company is generating less revenue relative to its fixed assets. This could be a sign of inefficiency in utilizing its fixed assets to generate sales.
On the other hand, the total asset turnover ratio has also declined consistently, suggesting that Waters Corp. is becoming less effective in generating sales revenue compared to its total assets. This may indicate a potential issue with the overall efficiency of the company in utilizing its total assets to generate revenue.
Overall, the decreasing trend in both fixed asset turnover and total asset turnover ratios for Waters Corp. raises concerns about the company's ability to efficiently utilize its assets to generate sales, potentially impacting its profitability and long-term sustainability. Further analysis is recommended to identify the underlying reasons for this decline and to implement corrective measures if necessary.