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Short-term (Operating) Activity Analysis
Difficulty: Beginner
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Ratios (Summary)
Allergan PLC, short-term (operating) activity ratios
Based on: 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-18), 10-K (filing date: 2014-02-25).
| Ratio | Description | The company |
|---|---|---|
| Inventory turnover | An activity ratio calculated as cost of goods sold divided by inventory. | Allergan PLC's inventory turnover deteriorated from 2015 to 2016 and from 2016 to 2017. |
| Receivables turnover | An activity ratio equal to revenue divided by receivables. | Allergan PLC's receivables turnover deteriorated from 2015 to 2016 and from 2016 to 2017. |
| Payables turnover | An activity ratio calculated as cost of goods sold divided by payables. | Allergan PLC's payables turnover declined from 2015 to 2016 and from 2016 to 2017. |
| Working capital turnover | An activity ratio calculated as revenue divided by working capital. | Allergan PLC's working capital turnover deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017. |
| 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. | Allergan PLC's average inventory processing period deteriorated from 2015 to 2016 and from 2016 to 2017. |
| Average receivable collection period | An activity ratio equal to the number of days in the period divided by receivables turnover. | Allergan PLC's average receivable collection period deteriorated from 2015 to 2016 and from 2016 to 2017. |
| Operating cycle | Equal to average inventory processing period plus average receivables collection period. | Allergan PLC's operating cycle deteriorated from 2015 to 2016 and from 2016 to 2017. |
| 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. | Allergan PLC's average payables payment period increased from 2015 to 2016 and from 2016 to 2017. |
| 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. | Allergan PLC's cash conversion cycle deteriorated from 2015 to 2016 and from 2016 to 2017. |
Inventory Turnover
Allergan PLC, inventory turnover calculation, comparison to benchmarks
Based on: 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-18), 10-K (filing date: 2014-02-25).
2017 Calculations
1 Inventory turnover = Cost of sales, excludes amortization and impairment of acquired intangibles including product rights ÷ Inventories
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Inventory turnover | An activity ratio calculated as cost of goods sold divided by inventory. | Allergan PLC's inventory turnover deteriorated from 2015 to 2016 and from 2016 to 2017. |
Receivables Turnover
Allergan PLC, receivables turnover calculation, comparison to benchmarks
Based on: 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-18), 10-K (filing date: 2014-02-25).
2017 Calculations
1 Receivables turnover = Net revenues ÷ Accounts receivable, net
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Receivables turnover | An activity ratio equal to revenue divided by receivables. | Allergan PLC's receivables turnover deteriorated from 2015 to 2016 and from 2016 to 2017. |
Payables Turnover
Allergan PLC, payables turnover calculation, comparison to benchmarks
Based on: 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-18), 10-K (filing date: 2014-02-25).
2017 Calculations
1 Payables turnover = Cost of sales, excludes amortization and impairment of acquired intangibles including product rights ÷ Accounts payable
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Payables turnover | An activity ratio calculated as cost of goods sold divided by payables. | Allergan PLC's payables turnover declined from 2015 to 2016 and from 2016 to 2017. |
Working Capital Turnover
Allergan PLC, working capital turnover calculation, comparison to benchmarks
Based on: 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-18), 10-K (filing date: 2014-02-25).
2017 Calculations
1 Working capital turnover = Net revenues ÷ Working capital
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Working capital turnover | An activity ratio calculated as revenue divided by working capital. | Allergan PLC's working capital turnover deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017. |
Average Inventory Processing Period
Allergan PLC, average inventory processing period calculation, comparison to benchmarks
Based on: 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-18), 10-K (filing date: 2014-02-25).
2017 Calculations
1 Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ =
| 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. | Allergan PLC's average inventory processing period deteriorated from 2015 to 2016 and from 2016 to 2017. |
Average Receivable Collection Period
Allergan PLC, average receivable collection period calculation, comparison to benchmarks
Based on: 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-18), 10-K (filing date: 2014-02-25).
2017 Calculations
1 Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ =
| Ratio | Description | The company |
|---|---|---|
| Average receivable collection period | An activity ratio equal to the number of days in the period divided by receivables turnover. | Allergan PLC's average receivable collection period deteriorated from 2015 to 2016 and from 2016 to 2017. |
Operating Cycle
Allergan PLC, operating cycle calculation, comparison to benchmarks
No. of days
Based on: 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-18), 10-K (filing date: 2014-02-25).
2017 Calculations
1 Operating cycle = Average inventory processing period + Average receivable collection period
= + =
| Ratio | Description | The company |
|---|---|---|
| Operating cycle | Equal to average inventory processing period plus average receivables collection period. | Allergan PLC's operating cycle deteriorated from 2015 to 2016 and from 2016 to 2017. |
Average Payables Payment Period
Allergan PLC, average payables payment period calculation, comparison to benchmarks
Based on: 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-18), 10-K (filing date: 2014-02-25).
2017 Calculations
1 Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ =
| 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. | Allergan PLC's average payables payment period increased from 2015 to 2016 and from 2016 to 2017. |
Cash Conversion Cycle
Allergan PLC, cash conversion cycle calculation, comparison to benchmarks
No. of days
Based on: 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-18), 10-K (filing date: 2014-02-25).
2017 Calculations
1 Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= + – =
| 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. | Allergan PLC's cash conversion cycle deteriorated from 2015 to 2016 and from 2016 to 2017. |
