Xerox Corp (XRX)

Short-term

Turnover ratios

Xerox Holdings Corp's activity ratios provide insights into the efficiency of its operations and management of working capital.

Inventory turnover has shown a generally increasing trend over the past five years, indicating that the company is selling its inventory more frequently. This suggests effective inventory management and the ability to convert inventory into sales efficiently.

Receivables turnover has also improved over the years, with a notable increase from 2021 to 2022. This indicates that Xerox is collecting its receivables more quickly, which is positive for cash flow management and reducing the risk of bad debts.

On the other hand, payables turnover has fluctuated but remained relatively stable over the years. A higher payables turnover ratio suggests that the company is paying its suppliers more quickly, which could potentially strain liquidity but could also indicate good relationships with suppliers.

Working capital turnover has significantly improved, showing a substantial increase in 2023 compared to the previous years. This indicates that Xerox is generating sales more efficiently in relation to its working capital, which reflects positively on the company's overall operational efficiency and utilization of resources.

Overall, the activity ratios show that Xerox Holdings Corp has made improvements in managing its inventory, receivables, payables, and working capital over the years, leading to increased operational efficiency and better utilization of resources.

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Average number of days

To analyze Xerox Holdings Corp's activity ratios, we will focus on the Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables ratios for the years from 2019 to 2023.

1. Days of Inventory on Hand (DOH):
- The DOH measures how many days, on average, inventory is held before being sold.
- Xerox's DOH has fluctuated over the past five years, ranging from a low of 47.93 days in 2019 to a high of 71.98 days in 2020.
- In 2023, Xerox's DOH decreased to 54.31 days, indicating a more efficient management of inventory compared to the prior year.

2. Days of Sales Outstanding (DSO):
- The DSO ratio indicates the average number of days it takes for Xerox to collect its accounts receivable.
- Xerox's DSO has shown variability over the years, with significant spikes in 2021 and 2019.
- In 2023, the DSO improved to 94.14 days from 104.67 days in 2022, suggesting a better collection process and faster cash conversion cycle.

3. Number of Days of Payables:
- This ratio assesses the average number of days Xerox takes to pay its creditors.
- Xerox's days of payables have been relatively stable over the period, staying within the range of 72.72 days in 2019 to 103.78 days in 2022.
- In 2023, the number of days of payables decreased to 85.79 days, implying that the company is managing its payables more effectively.

In conclusion, Xerox Holdings Corp has shown improvements in its activity ratios in 2023 compared to the previous year. The company has been able to better manage its inventory, reduce the time it takes to collect receivables, and optimize its payables. These trends indicate enhanced efficiency in the company's operations and management of working capital.

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Long-term

The fixed asset turnover ratio of Xerox Holdings Corp has shown a general increasing trend over the past five years, indicating that the company has been more efficient in generating sales relative to its investment in fixed assets. This suggests that Xerox has been able to utilize its fixed assets effectively to drive revenue growth.

On the other hand, the total asset turnover ratio has also been improving steadily, albeit at a slower rate compared to the fixed asset turnover. This indicates that Xerox has been able to generate more sales relative to its total assets over the years, reflecting a higher level of efficiency in utilizing all assets to generate revenue.

Overall, the improving trend in both the fixed asset turnover and total asset turnover ratios suggests that Xerox Holdings Corp has been able to enhance its operational efficiency and effectively manage its asset base to drive revenue growth and profitability.