Zebra Technologies Corporation (ZBRA)

Short-term

Turnover ratios

Zebra Technologies Corp.'s activity ratios indicate the efficiency of its operations in managing inventory, receivables, payables, and working capital.

1. Inventory turnover: The company's inventory turnover has been relatively stable, fluctuating between 3.06 and 3.71 over the past eight quarters. This indicates that Zebra is able to efficiently sell and replace its inventory multiple times during the period. A higher turnover ratio suggests effective inventory management.

2. Receivables turnover: Zebra's receivables turnover has shown consistent improvement, ranging from 7.28 to 8.74 over the same period. This indicates that the company is collecting its accounts receivable more quickly, which is a positive sign of efficient credit management.

3. Payables turnover: Zebra's payables turnover has also been on an upward trend, increasing from 3.76 to 6.28 over the past eight quarters. A higher payables turnover ratio suggests that the company is paying its suppliers more quickly, potentially benefiting from discounts or improving relationships with suppliers.

4. Working capital turnover: The working capital turnover figure is provided for three quarters only and shows a decreasing trend from 61.95 to 56.42, indicating a decline in the efficiency of utilizing working capital to generate sales.

Overall, Zebra Technologies Corp. demonstrates strong efficiency in managing inventory, receivables, and payables, as reflected in its activity ratios. However, a more detailed analysis of working capital turnover and its impact on overall efficiency would provide a more comprehensive view of the company's operational performance.

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Average number of days

The activity ratios of Zebra Technologies Corp., as indicated by its days of inventory on hand (DOH), days of sales outstanding (DSO), and number of days of payables, reveal important insights into the company's efficiency in managing its working capital.

Looking at the trend in DOH, we observe an upward trajectory, indicating an increase in the number of days Zebra holds its inventory before selling it. This could imply higher levels of inventory relative to sales, which may tie up more capital and potentially lead to increased carrying costs or obsolescence risk.

In contrast, the DSO figures display a fluctuating pattern, with some periods showing a decreasing trend followed by slight increases. Lower DSO numbers suggest the company is efficient in collecting its accounts receivable, turning sales into cash quickly. However, the recent increase in DSO compared to previous quarters may signal a potential delay in collecting payments from customers.

Lastly, the number of days of payables highlights how long Zebra takes to pay its suppliers. The trend shows a decreasing pattern, which could indicate that the company is paying its bills more promptly. While this may improve relationships with suppliers, it could also suggest a potential reduction in available cash for other purposes.

In conclusion, Zebra Technologies Corp. should focus on optimizing its inventory management to reduce DOH, maintaining efficient accounts receivable collection practices to lower DSO, and carefully managing payable days to strike a balance between timely payments and cash conservation. These efforts can enhance working capital efficiency and ultimately contribute to the company's overall financial health.

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Long-term

Zebra Technologies Corp.'s long-term activity ratios provide insight into the efficiency of the company in utilizing its assets. The fixed asset turnover ratio has been consistently decreasing over the last eight quarters, indicating a declining trend in the company's ability to generate sales from its fixed assets. This could be a cause for concern as it suggests that Zebra Technologies Corp. may not be optimizing the utilization of its long-term assets to drive revenue.

On the other hand, the total asset turnover ratio has also been declining gradually over the quarters. While the total asset turnover ratio is typically lower than the fixed asset turnover ratio due to the inclusion of non-fixed assets, the decreasing trend suggests that Zebra Technologies Corp. is becoming less effective in generating sales from its total assets overall. This decline could be a sign of inefficiency in utilizing both fixed and current assets in generating revenue.

Overall, a declining trend in both fixed asset turnover and total asset turnover ratios may indicate that Zebra Technologies Corp. is facing challenges in efficiently utilizing its long-term assets to drive sales. It would be important for the company to explore the underlying reasons for this trend and consider strategies to improve asset efficiency in order to enhance its long-term sustainability and profitability.