West Pharmaceutical Services Inc (WST)

Short-term

Turnover ratios

Based on the provided data for West Pharmaceutical Services Inc, the analysis of activity ratios reveals the following:

1. Inventory Turnover: The inventory turnover ratio measures how efficiently the company manages its inventory. It shows the number of times a company sells and replaces its inventory during a specific period. West Pharmaceutical Services Inc's inventory turnover has fluctuated over the years, ranging from a low of 3.94 to a high of 5.03. Generally, a higher inventory turnover indicates that the company is selling its inventory quickly, which is a positive sign.

2. Receivables Turnover: Unfortunately, data for the receivables turnover ratio is not available in the provided information. This ratio typically indicates how many times a company collects its accounts receivable during a period and reflects the efficiency of the company in collecting its credit sales.

3. Payables Turnover: Similar to receivables turnover, there is no data available for the payables turnover ratio. This ratio assesses how many times a company pays off its accounts payable during a period and indicates how efficiently the company manages its trade credit with suppliers.

4. Working Capital Turnover: The working capital turnover ratio evaluates how efficiently a company utilizes its working capital to generate sales. West Pharmaceutical Services Inc's working capital turnover has varied over time, with values ranging from 2.06 to 3.39. A higher working capital turnover indicates that the company is generating more revenue with its available working capital, reflecting effective management of its current assets and liabilities.

Overall, analyzing these activity ratios provides insights into West Pharmaceutical Services Inc's operational efficiency and effectiveness in managing its inventory, working capital, and potentially accounts receivable and accounts payable, although data for the latter two was not available in the provided information.

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Average number of days

Based on the provided data, let's analyze the activity ratios for West Pharmaceutical Services Inc:

1. Days of Inventory on Hand (DOH):
- The DOH ratio measures how many days, on average, a company holds inventory before selling it.
- West Pharmaceutical Services Inc's DOH has shown some fluctuations over the periods provided, ranging from a low of 72.60 days to a high of 92.67 days.
- An increasing trend in DOH could indicate potential issues with inventory management, such as overstocking or slow-moving inventory.
- A decreasing trend in DOH could suggest efficient inventory turnover and better working capital management.

2. Days of Sales Outstanding (DSO):
- Unfortunately, the data does not provide information on DSO, which measures how long it takes for a company to collect its accounts receivable.
- DSO is crucial for assessing the efficiency of a company in converting its credit sales into cash.

3. Number of Days of Payables:
- Similarly, the data does not include information on the number of days of payables, which represents the average number of days a company takes to pay its suppliers.
- Monitoring this ratio is essential for understanding a company's relationships with its vendors and its ability to manage cash flow effectively.

In conclusion, while we could analyze the DOH for West Pharmaceutical Services Inc, a more comprehensive understanding of the company's activity ratios would require data on DSO and the number of days of payables. These ratios collectively provide insights into the efficiency of the company's operations, cash conversion cycle, and working capital management.

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Long-term

The fixed asset turnover ratio measures how efficiently a company generates revenue from its fixed assets. West Pharmaceutical Services Inc's fixed asset turnover ratio has shown a slightly increasing trend over the past few years, fluctuating between 2.08 to 2.72.

This indicates that the company is effectively utilizing its fixed assets to generate sales, with a peak at 2.72 in June 30, 2022, and a slight decline in the most recent data points. However, it is worth noting that the ratio has remained relatively stable overall.

On the other hand, the total asset turnover ratio assesses the company's ability to generate sales from all its assets. West Pharmaceutical Services Inc's total asset turnover ratio has fluctuated between 0.77 to 0.88.

The company has shown variability in its efficiency in utilizing all assets to generate revenue, with some fluctuations observed in the ratio over the years. It peaked at 0.88 in September 30, 2022, showing an improvement in asset utilization efficiency, and then decreased slightly in the most recent data points.

In conclusion, West Pharmaceutical Services Inc has demonstrated relative stability in its fixed asset turnover over the years, while its total asset turnover has shown more fluctuations, indicating varying levels of efficiency in utilizing its total assets to generate revenue.