Analysis of Short-term (Operating) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Short-term Activity Ratios (Summary)
Vertex Pharmaceuticals Inc., short-term (operating) activity ratios
Based on: 10-K (filing date: 2021-02-11), 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-23).
| Short-term activity ratio | Description | The company |
|---|---|---|
| Inventory turnover | An activity ratio calculated as cost of goods sold divided by inventory. | Vertex Pharmaceuticals Inc.’s inventory turnover ratio deteriorated from 2018 to 2019 and from 2019 to 2020. |
| Receivables turnover | An activity ratio equal to revenue divided by receivables. | Vertex Pharmaceuticals Inc.’s receivables turnover ratio deteriorated from 2018 to 2019 but then improved from 2019 to 2020 not reaching 2018 level. |
| Payables turnover | An activity ratio calculated as cost of goods sold divided by payables. | Vertex Pharmaceuticals Inc.’s payables turnover ratio increased from 2018 to 2019 but then slightly decreased from 2019 to 2020 not reaching 2018 level. |
| Working capital turnover | An activity ratio calculated as revenue divided by working capital. | Vertex Pharmaceuticals Inc.’s working capital turnover ratio improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020. |
| Short-term activity ratio | Description | The company |
|---|---|---|
| Average inventory processing period | An activity ratio equal to the number of days in the period divided by inventory turnover over the period. | Vertex Pharmaceuticals Inc.’s number of days of inventory outstanding deteriorated from 2018 to 2019 and from 2019 to 2020. |
| Average receivable collection period | An activity ratio equal to the number of days in the period divided by receivables turnover. | Vertex Pharmaceuticals Inc.’s number of days of receivables outstanding deteriorated from 2018 to 2019 but then improved from 2019 to 2020 not reaching 2018 level. |
| Operating cycle | Equal to average inventory processing period plus average receivables collection period. | Vertex Pharmaceuticals Inc.’s operating cycle deteriorated from 2018 to 2019 and from 2019 to 2020. |
| Average payables payment period | An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. | Vertex Pharmaceuticals Inc.’s number of days of payables outstanding decreased from 2018 to 2019 but then slightly increased from 2019 to 2020. |
| Cash conversion cycle | A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. | Vertex Pharmaceuticals Inc.’s cash conversion cycle deteriorated from 2018 to 2019 and from 2019 to 2020. |
Inventory Turnover
Vertex Pharmaceuticals Inc., inventory turnover calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cost of sales | 736,300 | 547,758 | 409,539 | 275,119 | 210,460 | |
| Inventories | 280,777 | 167,502 | 124,360 | 111,830 | 77,604 | |
| Short-term Activity Ratio | ||||||
| Inventory turnover1 | 2.62 | 3.27 | 3.29 | 2.46 | 2.71 | |
| Benchmarks | ||||||
| Inventory Turnover, Competitors2 | ||||||
| Abbott Laboratories | 2.99 | 3.07 | 3.35 | 3.43 | 3.71 | |
| AbbVie Inc. | 4.65 | 4.10 | 4.81 | 4.39 | 4.04 | |
| Amgen Inc. | 1.58 | 1.22 | 1.39 | 1.44 | 1.52 | |
| Bristol-Myers Squibb Co. | 5.68 | 1.88 | 5.48 | 5.20 | 3.99 | |
| Eli Lilly & Co. | 1.38 | 1.48 | 1.56 | 1.36 | 1.59 | |
| Gilead Sciences Inc. | — | 5.07 | 5.96 | 5.46 | 2.68 | |
| Illumina Inc. | 2.78 | 3.00 | 2.68 | 2.78 | 2.44 | |
| Johnson & Johnson | 3.04 | 3.05 | 3.15 | 2.89 | 2.66 | |
| Merck & Co. Inc. | 2.45 | 2.36 | 2.48 | 2.51 | 2.85 | |
| Pfizer Inc. | 1.08 | 1.23 | 1.50 | 1.48 | 1.82 | |
| Regeneron Pharmaceuticals Inc. | 0.26 | 0.26 | 0.16 | 0.28 | 0.49 | |
| Zoetis Inc. | 1.26 | 1.41 | 1.37 | 1.24 | 1.11 | |
| Inventory Turnover, Sector | ||||||
| Pharmaceuticals & Biotechnology | — | 2.20 | 2.50 | 2.40 | 2.41 | |
| Inventory Turnover, Industry | ||||||
| Health Care | — | 5.37 | 5.80 | 5.50 | 5.59 | |
Based on: 10-K (filing date: 2021-02-11), 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-23).
1 2020 Calculation
Inventory turnover = Cost of sales ÷ Inventories
= 736,300 ÷ 280,777 = 2.62
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Inventory turnover | An activity ratio calculated as cost of goods sold divided by inventory. | Vertex Pharmaceuticals Inc.’s inventory turnover ratio deteriorated from 2018 to 2019 and from 2019 to 2020. |
Receivables Turnover
Vertex Pharmaceuticals Inc., receivables turnover calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Revenues | 6,205,683 | 4,162,821 | 3,047,597 | 2,488,652 | 1,702,177 | |
| Accounts receivable, net | 885,352 | 633,518 | 409,688 | 281,343 | 201,083 | |
| Short-term Activity Ratio | ||||||
| Receivables turnover1 | 7.01 | 6.57 | 7.44 | 8.85 | 8.47 | |
| Benchmarks | ||||||
| Receivables Turnover, Competitors2 | ||||||
| Abbott Laboratories | 5.40 | 5.88 | 5.90 | 5.22 | 6.42 | |
| AbbVie Inc. | 5.19 | 6.13 | 6.08 | 5.55 | 5.39 | |
| Amgen Inc. | 5.36 | 5.47 | 6.29 | 6.73 | 6.92 | |
| Bristol-Myers Squibb Co. | 5.72 | 3.89 | 4.66 | 4.43 | 4.69 | |
| Eli Lilly & Co. | 4.18 | 4.91 | 4.68 | 5.03 | 5.27 | |
| Gilead Sciences Inc. | — | 6.18 | 6.52 | 6.66 | 6.64 | |
| Illumina Inc. | 6.65 | 6.18 | 6.48 | 6.70 | 6.29 | |
| Johnson & Johnson | 6.08 | 5.67 | 5.79 | 5.67 | 6.14 | |
| Merck & Co. Inc. | 6.11 | 6.91 | 5.98 | 5.84 | 5.67 | |
| Pfizer Inc. | 5.28 | 5.93 | 6.68 | 6.39 | 6.42 | |
| Regeneron Pharmaceuticals Inc. | 1.79 | 2.30 | 2.38 | 2.42 | 2.49 | |
| Zoetis Inc. | 6.59 | 5.76 | 5.62 | 5.32 | 5.35 | |
| Receivables Turnover, Sector | ||||||
| Pharmaceuticals & Biotechnology | — | 5.58 | 5.77 | 5.65 | 5.90 | |
| Receivables Turnover, Industry | ||||||
| Health Care | — | 7.39 | 7.49 | 7.32 | 7.59 | |
Based on: 10-K (filing date: 2021-02-11), 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-23).
1 2020 Calculation
Receivables turnover = Revenues ÷ Accounts receivable, net
= 6,205,683 ÷ 885,352 = 7.01
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Receivables turnover | An activity ratio equal to revenue divided by receivables. | Vertex Pharmaceuticals Inc.’s receivables turnover ratio deteriorated from 2018 to 2019 but then improved from 2019 to 2020 not reaching 2018 level. |
Payables Turnover
Vertex Pharmaceuticals Inc., payables turnover calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cost of sales | 736,300 | 547,758 | 409,539 | 275,119 | 210,460 | |
| Accounts payable | 155,139 | 87,610 | 110,987 | 73,994 | 61,451 | |
| Short-term Activity Ratio | ||||||
| Payables turnover1 | 4.75 | 6.25 | 3.69 | 3.72 | 3.42 | |
| Benchmarks | ||||||
| Payables Turnover, Competitors2 | ||||||
| Abbott Laboratories | 3.80 | 4.07 | 4.27 | 5.14 | 7.66 | |
| AbbVie Inc. | 6.76 | 5.12 | 4.99 | 4.78 | 4.15 | |
| Amgen Inc. | 4.33 | 3.18 | 3.40 | 3.01 | 4.54 | |
| Bristol-Myers Squibb Co. | 4.34 | 3.30 | 3.46 | 2.70 | 2.97 | |
| Eli Lilly & Co. | 3.41 | 3.36 | 4.55 | 4.30 | 4.19 | |
| Gilead Sciences Inc. | — | 6.56 | 6.14 | 5.37 | 3.53 | |
| Illumina Inc. | 5.40 | 7.22 | 5.61 | 5.79 | 5.31 | |
| Johnson & Johnson | 2.99 | 3.23 | 3.59 | 3.47 | 3.13 | |
| Merck & Co. Inc. | 3.37 | 3.78 | 4.07 | 4.12 | 4.95 | |
| Pfizer Inc. | 2.02 | 2.42 | 2.41 | 2.41 | 2.72 | |
| Regeneron Pharmaceuticals Inc. | 1.03 | 0.87 | 0.82 | 1.14 | 1.44 | |
| Zoetis Inc. | 4.50 | 6.62 | 6.11 | 6.80 | 6.29 | |
| Payables Turnover, Sector | ||||||
| Pharmaceuticals & Biotechnology | — | 3.50 | 3.73 | 3.64 | 3.75 | |
| Payables Turnover, Industry | ||||||
| Health Care | — | 5.78 | 5.99 | 5.81 | 5.96 | |
Based on: 10-K (filing date: 2021-02-11), 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-23).
1 2020 Calculation
Payables turnover = Cost of sales ÷ Accounts payable
= 736,300 ÷ 155,139 = 4.75
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Payables turnover | An activity ratio calculated as cost of goods sold divided by payables. | Vertex Pharmaceuticals Inc.’s payables turnover ratio increased from 2018 to 2019 but then slightly decreased from 2019 to 2020 not reaching 2018 level. |
Working Capital Turnover
Vertex Pharmaceuticals Inc., working capital turnover calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current assets | 8,133,379 | 4,822,829 | 3,843,109 | 2,648,963 | 1,831,540 | |
| Less: Current liabilities | 1,877,533 | 1,334,827 | 1,120,292 | 807,260 | 792,537 | |
| Working capital | 6,255,846 | 3,488,002 | 2,722,817 | 1,841,703 | 1,039,003 | |
| Revenues | 6,205,683 | 4,162,821 | 3,047,597 | 2,488,652 | 1,702,177 | |
| Short-term Activity Ratio | ||||||
| Working capital turnover1 | 0.99 | 1.19 | 1.12 | 1.35 | 1.64 | |
| Benchmarks | ||||||
| Working Capital Turnover, Competitors2 | ||||||
| Abbott Laboratories | 4.06 | 6.64 | 5.44 | 2.44 | 1.04 | |
| AbbVie Inc. | — | 0.98 | — | 6.16 | 4.00 | |
| Amgen Inc. | 2.55 | 3.96 | 0.93 | 0.54 | 0.63 | |
| Bristol-Myers Squibb Co. | 3.72 | 2.28 | 3.32 | 3.64 | 3.64 | |
| Eli Lilly & Co. | 4.93 | 11.54 | 2.84 | 4.90 | 5.16 | |
| Gilead Sciences Inc. | — | 1.08 | 0.86 | 1.27 | 2.67 | |
| Illumina Inc. | 1.00 | 0.94 | 1.24 | 1.23 | 1.49 | |
| Johnson & Johnson | 9.44 | 8.81 | 5.51 | 6.09 | 1.86 | |
| Merck & Co. Inc. | 109.83 | 8.90 | 11.53 | 6.52 | 2.97 | |
| Pfizer Inc. | 4.58 | — | 2.97 | 4.90 | 6.74 | |
| Regeneron Pharmaceuticals Inc. | 0.79 | 0.86 | 0.82 | 1.16 | 1.72 | |
| Zoetis Inc. | 1.50 | 2.13 | 1.83 | 1.70 | 2.15 | |
| Working Capital Turnover, Sector | ||||||
| Pharmaceuticals & Biotechnology | — | 3.44 | 2.90 | 2.60 | 2.12 | |
| Working Capital Turnover, Industry | ||||||
| Health Care | — | 5.24 | 5.18 | 4.28 | 3.70 | |
Based on: 10-K (filing date: 2021-02-11), 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-23).
1 2020 Calculation
Working capital turnover = Revenues ÷ Working capital
= 6,205,683 ÷ 6,255,846 = 0.99
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Working capital turnover | An activity ratio calculated as revenue divided by working capital. | Vertex Pharmaceuticals Inc.’s working capital turnover ratio improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020. |
Average Inventory Processing Period
Vertex Pharmaceuticals Inc., average inventory processing period calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Inventory turnover | 2.62 | 3.27 | 3.29 | 2.46 | 2.71 | |
| Short-term Activity Ratio (no. days) | ||||||
| Average inventory processing period1 | 139 | 112 | 111 | 148 | 135 | |
| Benchmarks (no. days) | ||||||
| Average Inventory Processing Period, Competitors2 | ||||||
| Abbott Laboratories | 122 | 119 | 109 | 107 | 98 | |
| AbbVie Inc. | 79 | 89 | 76 | 83 | 90 | |
| Amgen Inc. | 231 | 300 | 262 | 254 | 241 | |
| Bristol-Myers Squibb Co. | 64 | 194 | 67 | 70 | 92 | |
| Eli Lilly & Co. | 265 | 247 | 233 | 268 | 230 | |
| Gilead Sciences Inc. | — | 72 | 61 | 67 | 136 | |
| Illumina Inc. | 131 | 122 | 136 | 131 | 150 | |
| Johnson & Johnson | 120 | 119 | 116 | 126 | 137 | |
| Merck & Co. Inc. | 149 | 155 | 147 | 146 | 128 | |
| Pfizer Inc. | 338 | 296 | 244 | 246 | 201 | |
| Regeneron Pharmaceuticals Inc. | 1,422 | 1,426 | 2,334 | 1,309 | 749 | |
| Zoetis Inc. | 289 | 258 | 266 | 293 | 329 | |
| Average Inventory Processing Period, Sector | ||||||
| Pharmaceuticals & Biotechnology | — | 166 | 146 | 152 | 151 | |
| Average Inventory Processing Period, Industry | ||||||
| Health Care | — | 68 | 63 | 66 | 65 | |
Based on: 10-K (filing date: 2021-02-11), 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-23).
1 2020 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 2.62 = 139
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Average inventory processing period | An activity ratio equal to the number of days in the period divided by inventory turnover over the period. | Vertex Pharmaceuticals Inc.’s number of days of inventory outstanding deteriorated from 2018 to 2019 and from 2019 to 2020. |
Average Receivable Collection Period
Vertex Pharmaceuticals Inc., average receivable collection period calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Receivables turnover | 7.01 | 6.57 | 7.44 | 8.85 | 8.47 | |
| Short-term Activity Ratio (no. days) | ||||||
| Average receivable collection period1 | 52 | 56 | 49 | 41 | 43 | |
| Benchmarks (no. days) | ||||||
| Average Receivable Collection Period, Competitors2 | ||||||
| Abbott Laboratories | 68 | 62 | 62 | 70 | 57 | |
| AbbVie Inc. | 70 | 60 | 60 | 66 | 68 | |
| Amgen Inc. | 68 | 67 | 58 | 54 | 53 | |
| Bristol-Myers Squibb Co. | 64 | 94 | 78 | 82 | 78 | |
| Eli Lilly & Co. | 87 | 74 | 78 | 73 | 69 | |
| Gilead Sciences Inc. | — | 59 | 56 | 55 | 55 | |
| Illumina Inc. | 55 | 59 | 56 | 55 | 58 | |
| Johnson & Johnson | 60 | 64 | 63 | 64 | 59 | |
| Merck & Co. Inc. | 60 | 53 | 61 | 63 | 64 | |
| Pfizer Inc. | 69 | 62 | 55 | 57 | 57 | |
| Regeneron Pharmaceuticals Inc. | 204 | 159 | 153 | 151 | 147 | |
| Zoetis Inc. | 55 | 63 | 65 | 69 | 68 | |
| Average Receivable Collection Period, Sector | ||||||
| Pharmaceuticals & Biotechnology | — | 65 | 63 | 65 | 62 | |
| Average Receivable Collection Period, Industry | ||||||
| Health Care | — | 49 | 49 | 50 | 48 | |
Based on: 10-K (filing date: 2021-02-11), 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-23).
1 2020 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 7.01 = 52
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Average receivable collection period | An activity ratio equal to the number of days in the period divided by receivables turnover. | Vertex Pharmaceuticals Inc.’s number of days of receivables outstanding deteriorated from 2018 to 2019 but then improved from 2019 to 2020 not reaching 2018 level. |
Operating Cycle
Vertex Pharmaceuticals Inc., operating cycle calculation, comparison to benchmarks
No. days
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Average inventory processing period | 139 | 112 | 111 | 148 | 135 | |
| Average receivable collection period | 52 | 56 | 49 | 41 | 43 | |
| Short-term Activity Ratio | ||||||
| Operating cycle1 | 191 | 168 | 160 | 189 | 178 | |
| Benchmarks | ||||||
| Operating Cycle, Competitors2 | ||||||
| Abbott Laboratories | 190 | 181 | 171 | 177 | 155 | |
| AbbVie Inc. | 149 | 149 | 136 | 149 | 158 | |
| Amgen Inc. | 299 | 367 | 320 | 308 | 294 | |
| Bristol-Myers Squibb Co. | 128 | 288 | 145 | 152 | 170 | |
| Eli Lilly & Co. | 352 | 321 | 311 | 341 | 299 | |
| Gilead Sciences Inc. | — | 131 | 117 | 122 | 191 | |
| Illumina Inc. | 186 | 181 | 192 | 186 | 208 | |
| Johnson & Johnson | 180 | 183 | 179 | 190 | 196 | |
| Merck & Co. Inc. | 209 | 208 | 208 | 209 | 192 | |
| Pfizer Inc. | 407 | 358 | 299 | 303 | 258 | |
| Regeneron Pharmaceuticals Inc. | 1,626 | 1,585 | 2,487 | 1,460 | 896 | |
| Zoetis Inc. | 344 | 321 | 331 | 362 | 397 | |
| Operating Cycle, Sector | ||||||
| Pharmaceuticals & Biotechnology | — | 231 | 209 | 217 | 213 | |
| Operating Cycle, Industry | ||||||
| Health Care | — | 117 | 112 | 116 | 113 | |
Based on: 10-K (filing date: 2021-02-11), 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-23).
1 2020 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= 139 + 52 = 191
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Operating cycle | Equal to average inventory processing period plus average receivables collection period. | Vertex Pharmaceuticals Inc.’s operating cycle deteriorated from 2018 to 2019 and from 2019 to 2020. |
Average Payables Payment Period
Vertex Pharmaceuticals Inc., average payables payment period calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Payables turnover | 4.75 | 6.25 | 3.69 | 3.72 | 3.42 | |
| Short-term Activity Ratio (no. days) | ||||||
| Average payables payment period1 | 77 | 58 | 99 | 98 | 107 | |
| Benchmarks (no. days) | ||||||
| Average Payables Payment Period, Competitors2 | ||||||
| Abbott Laboratories | 96 | 90 | 85 | 71 | 48 | |
| AbbVie Inc. | 54 | 71 | 73 | 76 | 88 | |
| Amgen Inc. | 84 | 115 | 107 | 121 | 80 | |
| Bristol-Myers Squibb Co. | 84 | 110 | 105 | 135 | 123 | |
| Eli Lilly & Co. | 107 | 109 | 80 | 85 | 87 | |
| Gilead Sciences Inc. | — | 56 | 59 | 68 | 103 | |
| Illumina Inc. | 68 | 51 | 65 | 63 | 69 | |
| Johnson & Johnson | 122 | 113 | 102 | 105 | 116 | |
| Merck & Co. Inc. | 108 | 97 | 90 | 89 | 74 | |
| Pfizer Inc. | 181 | 151 | 152 | 151 | 134 | |
| Regeneron Pharmaceuticals Inc. | 353 | 421 | 442 | 321 | 253 | |
| Zoetis Inc. | 81 | 55 | 60 | 54 | 58 | |
| Average Payables Payment Period, Sector | ||||||
| Pharmaceuticals & Biotechnology | — | 104 | 98 | 100 | 97 | |
| Average Payables Payment Period, Industry | ||||||
| Health Care | — | 63 | 61 | 63 | 61 | |
Based on: 10-K (filing date: 2021-02-11), 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-23).
1 2020 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 4.75 = 77
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Average payables payment period | An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. | Vertex Pharmaceuticals Inc.’s number of days of payables outstanding decreased from 2018 to 2019 but then slightly increased from 2019 to 2020. |
Cash Conversion Cycle
Vertex Pharmaceuticals Inc., cash conversion cycle calculation, comparison to benchmarks
No. days
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Average inventory processing period | 139 | 112 | 111 | 148 | 135 | |
| Average receivable collection period | 52 | 56 | 49 | 41 | 43 | |
| Average payables payment period | 77 | 58 | 99 | 98 | 107 | |
| Short-term Activity Ratio | ||||||
| Cash conversion cycle1 | 114 | 110 | 61 | 91 | 71 | |
| Benchmarks | ||||||
| Cash Conversion Cycle, Competitors2 | ||||||
| Abbott Laboratories | 94 | 91 | 86 | 106 | 107 | |
| AbbVie Inc. | 95 | 78 | 63 | 73 | 70 | |
| Amgen Inc. | 215 | 252 | 213 | 187 | 214 | |
| Bristol-Myers Squibb Co. | 44 | 178 | 40 | 17 | 47 | |
| Eli Lilly & Co. | 245 | 212 | 231 | 256 | 212 | |
| Gilead Sciences Inc. | — | 75 | 58 | 54 | 88 | |
| Illumina Inc. | 118 | 130 | 127 | 123 | 139 | |
| Johnson & Johnson | 58 | 70 | 77 | 85 | 80 | |
| Merck & Co. Inc. | 101 | 111 | 118 | 120 | 118 | |
| Pfizer Inc. | 226 | 207 | 147 | 152 | 124 | |
| Regeneron Pharmaceuticals Inc. | 1,273 | 1,164 | 2,045 | 1,139 | 643 | |
| Zoetis Inc. | 263 | 266 | 271 | 308 | 339 | |
| Cash Conversion Cycle, Sector | ||||||
| Pharmaceuticals & Biotechnology | — | 127 | 111 | 117 | 116 | |
| Cash Conversion Cycle, Industry | ||||||
| Health Care | — | 54 | 51 | 53 | 52 | |
Based on: 10-K (filing date: 2021-02-11), 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-13), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-23).
1 2020 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 139 + 52 – 77 = 114
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Cash conversion cycle | A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. | Vertex Pharmaceuticals Inc.’s cash conversion cycle deteriorated from 2018 to 2019 and from 2019 to 2020. |