West Pharmaceutical Services Inc (WST)
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 | 4.82 | 4.65 | 4.43 | 4.40 | 4.72 | 4.93 | 4.89 | 4.76 | 5.14 | 5.25 | 5.16 | 5.46 | 5.04 | 5.05 | 4.96 | 5.03 | 5.24 | 5.23 | 5.14 | 5.25 |
| Receivables turnover | 5.73 | 5.62 | 5.36 | 5.62 | 5.69 | 6.00 | 5.54 | 5.78 | 5.79 | 5.63 | 5.25 | 4.98 | 5.56 | 5.44 | 5.70 | 5.67 | 5.76 | 5.67 | 5.34 | 5.48 |
| Payables turnover | 8.65 | 9.13 | 9.12 | 8.42 | 9.09 | 10.78 | 9.15 | 7.99 | 8.38 | 8.94 | 8.69 | 8.29 | 7.60 | 8.27 | 8.40 | 7.99 | 7.87 | 8.30 | 7.85 | 8.62 |
| Working capital turnover | 2.32 | 2.03 | 2.10 | 2.06 | 2.06 | 2.28 | 2.43 | 2.61 | 2.47 | 2.58 | 2.51 | 2.75 | 2.46 | 2.57 | 2.64 | 2.98 | 2.57 | 2.68 | 2.80 | 3.08 |
Activity ratios provide insight into how efficiently a company is managing its assets and liabilities to generate sales. Let's analyze the activity ratios of West Pharmaceutical Services, Inc. based on the provided data.
1. Inventory Turnover:
- The inventory turnover ratio measures how many times a company sells and replaces its inventory during a period.
- West Pharmaceutical Services, Inc. has maintained a relatively stable inventory turnover ratio around 4 times per year over the past eight quarters.
- A consistent inventory turnover ratio indicates that the company is effectively managing its inventory levels to meet demand without excessive buildup or stockouts.
2. Receivables Turnover:
- The receivables turnover ratio assesses how efficiently a company collects payments from its customers.
- West Pharmaceutical Services, Inc. shows a consistent trend of collecting payments from customers approximately 5-6 times a year.
- A stable and relatively high receivables turnover ratio suggests that the company has effective credit and collection policies in place, resulting in timely receipt of cash from credit sales.
3. Payables Turnover:
- The payables turnover ratio reflects how quickly a company pays its suppliers for credit purchases.
- West Pharmaceutical Services, Inc. has shown some fluctuations in its payables turnover ratio, ranging from around 6.82 to 9.18 times per year in the last eight quarters.
- A higher payables turnover ratio indicates that the company is efficiently managing its accounts payable by paying suppliers promptly, which may help maintain good relationships and potentially negotiate favorable terms.
4. Working Capital Turnover:
- The working capital turnover ratio evaluates how effectively a company generates sales relative to its working capital.
- West Pharmaceutical Services, Inc. has exhibited a declining trend in its working capital turnover ratio over the past eight quarters.
- A decreasing working capital turnover ratio may suggest that the company is becoming less efficient in utilizing its working capital to generate sales, potentially indicating operational inefficiencies or changes in business dynamics.
Overall, based on the activity ratios analysis, West Pharmaceutical Services, Inc. appears to be effectively managing its inventory, receivables, and payables, but may need to address the decreasing trend in working capital turnover to ensure optimal utilization of resources for revenue generation.
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 | 75.68 | 78.57 | 82.46 | 82.87 | 77.29 | 74.01 | 74.65 | 76.70 | 71.00 | 69.55 | 70.71 | 66.85 | 72.42 | 72.23 | 73.57 | 72.60 | 69.71 | 69.73 | 71.02 | 69.50 |
| Days of sales outstanding (DSO) | days | 63.75 | 64.93 | 68.15 | 64.96 | 64.13 | 60.84 | 65.85 | 63.15 | 63.00 | 64.86 | 69.55 | 73.25 | 65.67 | 67.06 | 64.04 | 64.38 | 63.34 | 64.39 | 68.32 | 66.55 |
| Number of days of payables | days | 42.20 | 39.99 | 40.00 | 43.34 | 40.14 | 33.84 | 39.90 | 45.71 | 43.57 | 40.83 | 42.01 | 44.03 | 48.03 | 44.16 | 43.45 | 45.67 | 46.37 | 43.97 | 46.50 | 42.33 |
Based on the activity ratios provided for West Pharmaceutical Services, Inc., we can analyze the efficiency of the company's operations over multiple quarters.
1. Days of Inventory on Hand (DOH):
- The trend in DOH appears to be relatively stable, ranging from 86.48 to 92.67 days over the past eight quarters.
- The company holds inventory for an average of around 88 days, indicating that it takes approximately 88 days for the company to sell its entire inventory.
2. Days of Sales Outstanding (DSO):
- DSO has shown some variability over the quarters, fluctuating between 60.89 and 68.06 days.
- The average DSO stands at around 64 days, suggesting that it takes the company approximately 64 days to collect payments from customers after making a sale.
3. Number of Days of Payables:
- The days of payables range from 39.76 to 53.53 days, demonstrating some fluctuations in the payment period to suppliers.
- On average, the company takes around 47 days to pay its suppliers.
Overall, the analysis of these activity ratios indicates that West Pharmaceutical Services, Inc. may be efficiently managing its inventory levels, collecting payments from customers within a reasonable timeframe, and maintaining a balanced payment period to suppliers. It's essential for the company to continue monitoring and optimizing these ratios to ensure operational efficiency and effective management of working capital.
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 | 2.07 | 2.22 | 2.27 | 2.37 | 2.49 | 2.72 | 2.72 | 2.70 | 2.68 | 2.66 | 2.59 | 2.49 | 2.27 | 2.30 | 2.31 | 2.28 | 2.19 | 2.21 | 2.15 | 2.14 |
| Total asset turnover | 0.77 | 0.78 | 0.78 | 0.77 | 0.80 | 0.88 | 0.87 | 0.87 | 0.85 | 0.85 | 0.86 | 0.85 | 0.77 | 0.79 | 0.81 | 0.84 | 0.79 | 0.82 | 0.83 | 0.86 |
The fixed asset turnover for West Pharmaceutical Services, Inc. has been relatively stable over the past eight quarters, ranging from 2.09 to 2.49. This ratio indicates that for every dollar invested in fixed assets, the company generates between $2.09 to $2.49 in revenue. A higher fixed asset turnover ratio suggests that the company is effectively utilizing its fixed assets to generate sales.
On the other hand, the total asset turnover ratio has shown a slight decrease from 0.80 in Q4 2022 to 0.77 in Q4 2023. This ratio signifies how efficiently the company is using its total assets to generate revenue. A total asset turnover ratio of 0.77 means that for every dollar in total assets, the company is generating $0.77 in revenue.
Overall, while the fixed asset turnover remained relatively stable, the total asset turnover has decreased slightly over the past year. Investors and analysts may want to further investigate the factors contributing to the decrease in total asset turnover to assess the company's overall operational efficiency and asset utilization.