Waters Corporation (WAT)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Inventory turnover	2.26	2.17	2.08	1.63	2.33	2.41	2.57	2.82	2.89	2.54	2.78	3.55	3.04	2.71	2.54	2.58	2.73	2.34	2.46	2.60
Receivables turnover	4.07	4.62	4.22	—	4.04	—	—	—	4.47	—	—	—	4.04	4.54	4.48	4.42	4.01	4.67	4.55	4.64
Payables turnover	13.76	14.77	13.60	8.70	11.40	11.03	10.73	11.54	10.64	11.11	11.64	14.29	12.82	14.67	17.37	14.56	17.86	13.34	12.83	11.98
Working capital turnover	2.97	3.28	3.36	3.00	2.99	3.44	3.49	3.15	2.89	2.73	2.74	2.51	3.89	3.94	3.89	2.97	3.27	3.16	2.34	1.60

Activity ratios provide insights into how efficiently a company is managing its operations and utilizing its assets. Let's analyze the activity ratios of Waters Corp based on the provided data:

1. Inventory Turnover:
- The inventory turnover ratio has been showing a decreasing trend over the past eight quarters, falling from 3.11 in Q1 2022 to 2.32 in Q4 2023.
- This indicates that Waters Corp is selling its inventory at a slower pace compared to previous periods, which may suggest potential issues with sales and inventory management efficiency.

2. Receivables Turnover:
- The receivables turnover ratio fluctuates but generally shows a stable performance, ranging from 4.11 in Q4 2022 to 4.75 in Q3 2023.
- This suggests that Waters Corp is efficient in collecting receivables from customers, with the ability to convert credit sales into cash relatively quickly.

3. Payables Turnover:
- The payables turnover ratio has also been varying but exhibits a consistent performance, with values between 12.40 and 15.35 over the observed quarters.
- The stable payables turnover indicates that Waters Corp is managing its trade payables effectively, reflecting a steady pace of paying off its suppliers.

4. Working Capital Turnover:
- The working capital turnover ratio has been relatively stable, ranging from 3.04 to 3.55 over the analyzed quarters.
- This ratio shows how efficiently Waters Corp is using its working capital to generate sales, and the consistent performance indicates a steady utilization of working capital in its operations.

Overall, while the receivables and payables turnover ratios suggest good management of customer credit and supplier payments, the decreasing trend in inventory turnover raises a concern regarding the company's ability to efficiently manage its inventory levels. It is essential for Waters Corp to address any issues impacting inventory turnover to improve operational efficiency and enhance overall performance.

Average number of days

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	161.61	168.54	175.87	223.89	156.39	151.51	142.27	129.58	126.17	143.66	131.40	102.81	119.94	134.78	143.66	141.28	133.66	155.68	148.41	140.31
Days of sales outstanding (DSO)	days	89.69	79.09	86.43	—	90.26	—	—	—	81.58	—	—	—	90.34	80.47	81.39	82.64	90.98	78.11	80.20	78.72
Number of days of payables	days	26.52	24.72	26.84	41.94	32.02	33.08	34.01	31.63	34.30	32.85	31.36	25.55	28.47	24.88	21.02	25.08	20.43	27.36	28.45	30.46

Waters Corp.'s activity ratios provide insights into how efficiently the company manages its inventory, receivables, and payables.

1. Days of Inventory on Hand (DOH):
- Waters Corp. experienced an increasing trend in its DOH from Q1 2022 to Q4 2023, indicating that inventory is taking longer to sell.
- The average DOH for Q4 2023 was 152.7 days, suggesting that the company holds inventory for approximately 152 days before selling it.

2. Days of Sales Outstanding (DSO):
- The DSO for Waters Corp. fluctuated throughout the quarters, with a peak in Q4 2022 and a subsequent decrease in Q3 2023.
- The average DSO for Q4 2023 was 82.82 days, indicating that it takes the company around 83 days to collect payments from customers.

3. Number of Days of Payables:
- The number of days of payables remained relatively stable over the quarters, with a slight decline from Q1 2022 to Q4 2023.
- The average number of days of payables for Q4 2023 was 25.29 days, suggesting that the company takes approximately 25 days to pay its suppliers.

Overall, the trends in these activity ratios suggest that Waters Corp. may need to focus on optimizing its inventory management to reduce the days of inventory on hand and improving collection efficiency to lower the days of sales outstanding. Additionally, maintaining stable payment terms with suppliers can contribute to effective working capital management.

Long-term

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Fixed asset turnover	4.47	4.72	4.76	4.94	5.02	5.31	5.23	5.16	5.00	5.08	4.98	4.79	4.69	4.77	4.85	5.25	5.65	6.18	6.40	6.62
Total asset turnover	0.62	0.65	0.64	0.88	0.89	0.95	0.94	0.93	0.89	0.86	0.85	0.77	0.82	0.84	0.84	0.86	0.92	0.92	0.84	0.73

Long-term activity ratios provide insights into a company's efficiency in managing its assets over an extended period.

Fixed asset turnover for Waters Corp. has fluctuated over the past eight quarters. The company's fixed asset turnover ratio ranged from 4.63 to 5.39 during this period. A higher fixed asset turnover ratio indicates that the company is generating more revenue from its investments in fixed assets such as property, plant, and equipment.

On the other hand, the total asset turnover ratio, which measures how efficiently the company is utilizing all its assets to generate sales, also exhibited variability. The total asset turnover ratio ranged from 0.64 to 0.91 during the same period. A lower total asset turnover ratio may suggest that the company is not effectively using its total assets to generate sales.

Waters Corp. should focus on maintaining or improving its fixed asset turnover ratio to ensure optimal utilization of its fixed assets. Additionally, efforts can be made to enhance the total asset turnover ratio, indicating more efficient use of all assets to drive revenue.

Overall, while the fixed asset turnover ratio reflects the productivity of the company's investments in fixed assets, the total asset turnover ratio provides a broader picture of the company's efficiency in utilizing all its assets to generate revenue. Both ratios can help evaluate Waters Corp.'s long-term operational performance and asset management strategies.