Waters Corporation (WAT)

Short-term

Turnover ratios

The activity ratios of Waters Corporation provide insights into how effectively the company is managing its resources and operations.

1. Inventory Turnover: The inventory turnover ratio for Waters Corporation has fluctuated over the years, indicating changes in the company's efficiency in managing its inventory. It increased from 2.58 in March 2020 to a peak of 3.55 in March 2021 before declining to 2.44 by December 2024. Overall, the company shows a moderate but somewhat declining trend in inventory turnover.

2. Receivables Turnover: The receivables turnover ratio measures how quickly the company collects its accounts receivables. Waters Corporation's receivables turnover was relatively stable, ranging between 4.04 and 4.62. The company managed to maintain a consistent turnover of its receivables over the years, indicating effective management of its credit sales.

3. Payables Turnover: The payables turnover ratio reflects how quickly the company pays its suppliers. Waters Corporation's payables turnover varied significantly during the period, with the ratio ranging from 8.70 to 17.37. The ratios show a mix of longer and shorter payment cycles, possibly influenced by the company's cash flow management strategies.

4. Working Capital Turnover: The working capital turnover ratio measures how efficiently the company is using its working capital to generate revenue. Waters Corporation's working capital turnover fluctuated between 2.51 and 3.94, indicating changes in the company's ability to convert working capital into sales. The ratios suggest some variability in the efficiency of working capital utilization over the years.

In summary, while the company demonstrates stability in its receivables turnover, the fluctuations in inventory turnover, payables turnover, and working capital turnover indicate varying levels of efficiency in managing inventory, payments to suppliers, and working capital utilization over the analyzed period.

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Average number of days

Waters Corporation's activity ratios, specifically the Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables, provide insights into the company's efficiency in managing its working capital.

1. Days of Inventory on Hand (DOH):
- The trend in DOH indicates the number of days it takes for Waters Corporation to sell its inventory. From March 2020 to December 2024, the DOH fluctuated, reaching a peak of 223.89 days in March 2023 before decreasing to 149.56 days by December 2024. A high DOH value may suggest overstocking, while a low value may indicate efficient inventory management.

2. Days of Sales Outstanding (DSO):
- DSO reflects how quickly Waters Corporation collects on its sales. The DSO varied over the years, with some periods showing no data. Notably, there was an increase in DSO from December 2020 to March 2024, possibly indicating slower collection of receivables. A high DSO value may imply credit policy issues, while a low value could indicate effective debt collection practices.

3. Number of Days of Payables:
- This ratio demonstrates the average number of days Waters Corporation takes to pay its suppliers. The trend in the number of days of payables shows fluctuations, with some periods showing an increasing trend, such as from March 2020 to March 2023. A longer payment period may signify strong negotiation power with suppliers, but it could also indicate potential liquidity problems if not managed effectively.

Overall, analyzing these activity ratios provides valuable insights into Waters Corporation's working capital management and efficiency in handling inventory, receivables, and payables. It is essential for the company to strike a balance between these ratios to ensure optimal operational performance and financial health.

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Long-term

Long-term activity ratios provide insights into how efficiently a company is managing its assets over an extended period.

1. Fixed Asset Turnover: The fixed asset turnover ratio of Waters Corporation has shown a generally increasing trend from 5.25 in March 2020 to 4.47 in December 2024. This indicates that the company is generating more revenue from its fixed assets over time, showing improved efficiency in utilizing its long-term assets.

2. Total Asset Turnover: The total asset turnover ratio has fluctuated over the period, starting at 0.86 in March 2020, dipping to a low of 0.62 in June 2024, and then recovering slightly to 0.64 in December 2024. This ratio reflects the company's ability to generate sales relative to its total assets. The decreasing trend suggests that Waters Corporation may be facing challenges in efficiently utilizing its total assets to drive revenue.

Overall, while the fixed asset turnover ratio indicates an improvement in the company's efficiency in generating revenue from its fixed assets, the declining trend in total asset turnover highlights a potential concern regarding the overall asset utilization efficiency of Waters Corporation.