Zimmer Biomet Holdings Inc (ZBH)

Short-term

Turnover ratios

Zimmer Biomet Holdings Inc's activity ratios provide insights into how efficiently the company manages its assets and liabilities to generate sales.

1. Inventory Turnover:
- The inventory turnover ratio indicates how many times a company's inventory is sold and replaced within a given period. Zimmer Biomet's inventory turnover varied over the years, decreasing from 3.16 in 2021 to 2.46 in 2023 before increasing slightly to 2.74 in 2024. This may suggest varying sales trends or inventory management practices within the company.

2. Receivables Turnover:
- The receivables turnover ratio measures how effectively a company collects payments from its customers. Zimmer Biomet showed a relatively consistent performance in this area, with the receivables turnover ratio fluctuating between 4.67 in 2020 to 5.02 in 2024. This indicates that the company efficiently collects payments from customers over the years.

3. Payables Turnover:
- The payables turnover ratio evaluates how efficiently a company pays its suppliers. Zimmer Biomet's payables turnover varied significantly, with a notable increase from 16.95 in 2022 to 31.44 in 2024. This could suggest changes in the company's payment terms with suppliers or improved working capital management.

4. Working Capital Turnover:
- The working capital turnover ratio measures how efficiently a company utilizes its working capital to generate sales. Zimmer Biomet's working capital turnover fluctuated over the years, with the highest value of 5.26 in 2021 and the lowest of 2.69 in 2020. This indicates changes in the company's ability to convert working capital into sales.

In summary, Zimmer Biomet's activity ratios reflect varying levels of efficiency in managing its inventory, receivables, payables, and working capital over the years. Monitoring these ratios can help stakeholders assess the company's operational performance and identify areas for improvement.

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Average number of days

Zimmer Biomet Holdings Inc's activity ratios provide insights into how efficiently the company manages its inventory, collects its receivables, and pays its suppliers.

1. Days of Inventory on Hand (DOH):
- Zimmer Biomet Holdings Inc's DOH decreased from 128.08 days in 2020 to 115.63 days in 2021, indicating an improvement in managing inventory levels.
- However, the DOH increased to 130.61 days in 2022, then spiked to 148.20 days in 2023, before dropping to 133.37 days in 2024. This increase suggests potential challenges in inventory management efficiency during those years.

2. Days of Sales Outstanding (DSO):
- The DSO decreased from 78.09 days in 2020 to 68.75 days in 2021, showing an improvement in collecting receivables more efficiently.
- Subsequently, the DSO remained relatively stable, with slight reductions to 74.37 days in 2022, 73.41 days in 2023, and 72.70 days in 2024.

3. Number of Days of Payables:
- Zimmer Biomet Holdings Inc's payables period remained relatively stable, decreasing slightly from 17.25 days in 2020 to 16.50 days in 2021, before increasing to 21.54 days in 2022 and 25.51 days in 2023.
- Notably, the number of days of payables significantly decreased to 11.61 days in 2024, indicating a potential improvement in the company's payment terms with suppliers.

Overall, while Zimmer Biomet Holdings Inc has shown mixed performance in managing its activity ratios over the years, its focus on improving inventory turnover, receivables collection, and payables management is essential for enhancing operational efficiency and financial performance. Further analysis and monitoring of these ratios will be beneficial for evaluating the company's liquidity and operational effectiveness.

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Long-term

The Fixed Asset Turnover ratio for Zimmer Biomet Holdings Inc has shown a fluctuating trend over the past five years, with values of 3.32 in 2020, 4.06 in 2021, 3.62 in 2022, 3.48 in 2023, and 3.63 in 2024. This indicates that the company generates the indicated amount of revenue for every dollar invested in fixed assets.

On the other hand, the Total Asset Turnover ratio has been relatively stable, increasing from 0.28 in 2020 to 0.35 in 2024. This suggests that Zimmer Biomet has been efficient in utilizing its total assets to generate sales over the years.

In conclusion, while the Fixed Asset Turnover ratio has varied, the Total Asset Turnover ratio has shown a positive trend, reflecting solid efficiency in asset utilization by Zimmer Biomet Holdings Inc.