Zoetis Inc (ZTS)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 1.95 | 2.01 | 2.39 | 2.51 | 2.80 |
| Receivables turnover | 6.27 | 6.28 | 6.59 | 6.29 | 5.57 |
| Payables turnover | 12.14 | 11.64 | 10.52 | 8.93 | 13.12 |
| Working capital turnover | 1.92 | 1.86 | 1.51 | 1.50 | 2.13 |
Inventory Turnover:
Zoetis Inc's inventory turnover has been gradually declining over the past five years, from 1.41 in 2019 to 1.00 in 2023. This indicates that the company takes longer to sell its inventory. While a lower inventory turnover may suggest potential issues with inventory management or declining sales, further analysis is needed to understand the underlying reasons for this trend.
Receivables Turnover:
The receivables turnover for Zoetis Inc has shown a relatively stable trend over the past five years, ranging from 5.76 in 2019 to 6.86 in 2021. This metric suggests that the company is efficient in collecting payments from customers. A higher receivables turnover ratio indicates that Zoetis is collecting outstanding receivables at a faster rate in recent years.
Payables Turnover:
Zoetis Inc's payables turnover has shown fluctuations over the past five years, with a low of 4.50 in 2020 and a high of 6.62 in 2019. A higher payables turnover ratio indicates that Zoetis is taking longer to pay its suppliers. The decreasing trend from 2019 to 2023 may suggest that the company is taking longer to pay off its payables, which could impact its relationship with suppliers.
Working Capital Turnover:
The working capital turnover for Zoetis Inc has been consistently above 1 in recent years, indicating that the company is effectively utilizing its working capital to generate revenue. A higher working capital turnover ratio suggests that Zoetis is efficiently generating sales revenue relative to its working capital levels. The increasing trend in this ratio from 2019 to 2023 indicates improved efficiency in generating revenue with the available working capital.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 187.55 | 181.53 | 152.98 | 145.57 | 130.29 |
| Days of sales outstanding (DSO) | days | 58.18 | 58.09 | 55.39 | 58.02 | 65.48 |
| Number of days of payables | days | 30.06 | 31.35 | 34.69 | 40.86 | 27.81 |
Activity ratios provide insight into how efficiently a company manages its assets and liabilities.
1. Days of Inventory on Hand (DOH): Zoetis Inc's DOH has been increasing over the years, indicating a longer period of time it takes to sell inventory. This could be a result of slower inventory turnover or perhaps an increase in inventory holdings. The trend suggests that Zoetis may be carrying excess inventory or experiencing challenges in moving products.
2. Days of Sales Outstanding (DSO): Zoetis Inc's DSO has been relatively stable over the years, with a slight decrease observed in recent years. This ratio represents the average number of days it takes for the company to collect its accounts receivable. A lower DSO is generally preferable as it indicates faster cash collection. Zoetis' stable DSO suggests a consistent ability to collect receivables efficiently.
3. Number of Days of Payables: Zoetis Inc's Days of Payables has fluctuated over the years, with an increasing trend observed until 2021 followed by a decrease in 2022 and another increase in 2023. This ratio reflects the average number of days it takes for the company to pay its suppliers. A longer payment period can indicate a better utilization of supplier credit terms, increasing liquidity. However, prolonged payment periods can strain relationships with suppliers. Zoetis' fluctuating Days of Payables suggests varying approaches to managing payables over the years.
Overall, Zoetis Inc's activity ratios indicate areas where the company may need to focus on improving efficiency, such as inventory management, while also highlighting strengths in accounts receivable collection and payables management. It would be beneficial for the company to closely monitor these ratios and make strategic adjustments as needed to optimize its working capital management.
See also:
Zoetis Inc Short-term (Operating) Activity Ratios
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 2.67 | 2.93 | 3.21 | 3.03 | 3.23 |
| Total asset turnover | 0.60 | 0.54 | 0.56 | 0.49 | 0.54 |
The long-term activity ratios of Zoetis Inc, as indicated by the fixed asset turnover and total asset turnover ratios, have exhibited varying trends over the past five years.
The fixed asset turnover ratio has shown a decreasing trend from 3.23 in 2019 to 2.67 in 2023, indicating that the company is generating less revenue from its fixed assets over time. This may suggest that Zoetis Inc is utilizing its fixed assets less efficiently in generating sales.
On the other hand, the total asset turnover ratio has shown some fluctuations over the same period, with a relatively low point of 0.49 in 2020 and a high point of 0.60 in 2023. This ratio measures the company's ability to generate revenue from its total assets. The fluctuating trend could indicate changes in the company's asset management efficiency or shifts in its business operations.
Overall, these long-term activity ratios suggest that Zoetis Inc may need to focus on improving the utilization of its assets, particularly fixed assets, to enhance its overall efficiency and profitability in the long term.