Analysis of Long-term (Investment) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Long-term Activity Ratios (Summary)
Stryker Corp., long-term (investment) activity ratios
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The investment activity ratios exhibit a consistent pattern of decline from 2017 through 2020, followed by a synchronized recovery in 2021. This trajectory suggests a period of diminishing asset efficiency that reached its lowest point in 2020 before rebounding.
- Net Fixed Asset Turnover
- A gradual decrease is observed from a peak of 6.30 in 2017 to a low of 5.21 in 2020. This indicates a period where revenue growth did not keep pace with the growth of net fixed assets. However, the ratio recovered significantly to 6.04 in 2021, nearly returning to 2018 levels.
- Net Fixed Asset Turnover Including Right-of-Use Assets
- This metric followed a similar downward trend but experienced a more pronounced decline, falling from 6.30 in 2017 to 4.52 in 2020. The widening gap between this and the standard net fixed asset turnover suggests an increase in operating lease obligations and right-of-use assets over the period. A recovery to 5.26 occurred in 2021.
- Total Asset Turnover
- Efficiency in utilizing the total asset base declined steadily from 0.56 in 2017 to 0.42 in 2020. This downward trend reflects a reduction in the volume of sales generated per dollar of total assets. By 2021, the ratio improved to 0.49, indicating a partial restoration of asset productivity.
- Equity Turnover
- Equity turnover remained the most stable of the measured ratios, though it still mirrored the general trend. It moved from 1.25 in 2017 to a low of 1.10 in 2020, before rising to 1.15 in 2021. The relative stability suggests that changes in the equity base were more closely aligned with revenue fluctuations than the fixed asset base was.
Overall, the data indicates that asset utilization efficiency was negatively impacted during the 2017-2020 window, with 2020 representing a critical trough. The universal increase across all ratios in 2021 signifies an improvement in the company's ability to generate revenue from its long-term investments and capital structure.
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Net Fixed Asset Turnover
Stryker Corp., net fixed asset turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | 17,108) | 14,351) | 14,884) | 13,601) | 12,444) | |
| Property, plant and equipment, net | 2,833) | 2,752) | 2,567) | 2,291) | 1,975) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | 6.04 | 5.21 | 5.80 | 5.94 | 6.30 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover, Competitors2 | ||||||
| Abbott Laboratories | 4.81 | — | — | — | — | |
| Elevance Health Inc. | 34.94 | — | — | — | — | |
| Intuitive Surgical Inc. | 3.04 | — | — | — | — | |
| Medtronic PLC | 5.77 | — | — | — | — | |
| UnitedHealth Group Inc. | 31.81 | — | — | — | — | |
| Net Fixed Asset Turnover, Sector | ||||||
| Health Care Equipment & Services | 17.31 | — | — | — | — | |
| Net Fixed Asset Turnover, Industry | ||||||
| Health Care | 7.74 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Net fixed asset turnover = Net sales ÷ Property, plant and equipment, net
= 17,108 ÷ 2,833 = 6.04
2 Click competitor name to see calculations.
The analysis of long-term investment activity reveals a fluctuating relationship between capital investment in fixed assets and revenue generation over the five-year period ending December 31, 2021.
- Asset Accumulation and Revenue Growth
- Net sales grew from 12,444 million US dollars in 2017 to 17,108 million US dollars in 2021. Simultaneously, net property, plant, and equipment increased steadily every year, rising from 1,975 million US dollars to 2,833 million US dollars. This indicates a consistent strategy of expanding the fixed asset base to support long-term operational capacity.
- Net Fixed Asset Turnover Trend
- The net fixed asset turnover ratio experienced a gradual decline from 2017 through 2020, moving from 6.30 down to 5.21. This downward trend indicates that the growth in the net fixed asset base outpaced the growth in net sales during this interval, leading to a temporary reduction in the efficiency of asset utilization.
- Operational Recovery and Efficiency Gains
- A notable recovery is observed in 2021, with the net fixed asset turnover ratio increasing to 6.04. This improvement was driven by a significant surge in net sales, which rose from 14,351 million US dollars in 2020 to 17,108 million US dollars in 2021. The data suggests that the investments made in property, plant, and equipment in previous years began to yield higher revenue returns, enhancing the overall efficiency of the company's fixed asset investments.
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Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
Stryker Corp., net fixed asset turnover (including operating lease, right-of-use asset) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | 17,108) | 14,351) | 14,884) | 13,601) | 12,444) | |
| Property, plant and equipment, net | 2,833) | 2,752) | 2,567) | 2,291) | 1,975) | |
| Operating lease right-of-use assets (recorded in Other noncurrent assets) | 419) | 423) | 384) | —) | —) | |
| Property, plant and equipment, net (including operating lease, right-of-use asset) | 3,252) | 3,175) | 2,951) | 2,291) | 1,975) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset)1 | 5.26 | 4.52 | 5.04 | 5.94 | 6.30 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Competitors2 | ||||||
| Abbott Laboratories | 4.26 | — | — | — | — | |
| Elevance Health Inc. | 30.12 | — | — | — | — | |
| Intuitive Surgical Inc. | 2.93 | — | — | — | — | |
| Medtronic PLC | 4.84 | — | — | — | — | |
| UnitedHealth Group Inc. | 21.54 | — | — | — | — | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Sector | ||||||
| Health Care Equipment & Services | 13.89 | — | — | — | — | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Industry | ||||||
| Health Care | 6.75 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Net fixed asset turnover (including operating lease, right-of-use asset) = Net sales ÷ Property, plant and equipment, net (including operating lease, right-of-use asset)
= 17,108 ÷ 3,252 = 5.26
2 Click competitor name to see calculations.
An analysis of the long-term activity ratios between 2017 and 2021 reveals a period of significant asset expansion coupled with fluctuating revenue growth, resulting in a non-linear trend in asset utilization efficiency.
- Net Sales Performance
- Net sales exhibited a general upward trajectory, increasing from 12,444 million USD in 2017 to 17,108 million USD by 2021. A temporary contraction occurred in 2020, where sales declined to 14,351 million USD, before experiencing a sharp recovery in 2021.
- Fixed Asset Investment
- Property, plant, and equipment, net (including operating lease right-of-use assets), showed consistent year-over-year growth throughout the analyzed period. The asset base expanded from 1,975 million USD in 2017 to 3,252 million USD in 2021, representing a substantial increase in the company's long-term investment in infrastructure and leased assets.
- Net Fixed Asset Turnover Trend
- The net fixed asset turnover ratio experienced a steady decline from 6.30 in 2017 to a low of 4.52 in 2020. This downward trend indicates that the growth in the fixed asset base outpaced the growth in net sales during this four-year window, suggesting a temporary decrease in the efficiency of asset utilization. However, the ratio rebounded to 5.26 in 2021, driven by a significant surge in sales that exceeded the modest increase in fixed assets for that year.
Overall, the data indicates a strategic expansion of the asset base from 2017 to 2020 which initially pressured the turnover ratio. The recovery observed in 2021 suggests that the company began to realize higher revenue yields from its increased investment in fixed assets.
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Total Asset Turnover
Stryker Corp., total asset turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | 17,108) | 14,351) | 14,884) | 13,601) | 12,444) | |
| Total assets | 34,631) | 34,330) | 30,167) | 27,229) | 22,197) | |
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | 0.49 | 0.42 | 0.49 | 0.50 | 0.56 | |
| Benchmarks | ||||||
| Total Asset Turnover, Competitors2 | ||||||
| Abbott Laboratories | 0.57 | — | — | — | — | |
| Elevance Health Inc. | 1.41 | — | — | — | — | |
| Intuitive Surgical Inc. | 0.42 | — | — | — | — | |
| Medtronic PLC | 0.32 | — | — | — | — | |
| UnitedHealth Group Inc. | 1.34 | — | — | — | — | |
| Total Asset Turnover, Sector | ||||||
| Health Care Equipment & Services | 1.02 | — | — | — | — | |
| Total Asset Turnover, Industry | ||||||
| Health Care | 0.62 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Total asset turnover = Net sales ÷ Total assets
= 17,108 ÷ 34,631 = 0.49
2 Click competitor name to see calculations.
An evaluation of investment activity indicates a general decline in asset utilization efficiency between 2017 and 2021, despite an overall increase in revenue. The expansion of the asset base has outpaced the growth of net sales, resulting in a compression of the total asset turnover ratio over the analyzed period.
- Net Sales Trends
- Revenue exhibited a positive growth trajectory, increasing from 12,444 million USD in 2017 to 17,108 million USD by 2021. A temporary contraction occurred in 2020, where sales decreased to 14,351 million USD, followed by a significant recovery in 2021.
- Total Asset Growth
- Total assets showed a consistent and substantial upward trend, rising from 22,197 million USD in 2017 to 34,631 million USD in 2021. This steady accumulation of assets indicates significant capital investment or strategic acquisitions throughout the five-year period.
- Total Asset Turnover Analysis
- The total asset turnover ratio declined from 0.56 in 2017 to a period low of 0.42 in 2020, reflecting a reduction in the efficiency of generating sales relative to the asset base. This decline was most acute in 2020, as falling net sales converged with continued asset growth. A partial recovery to 0.49 was observed in 2021, driven by a strong resurgence in sales while total asset growth reached a plateau.
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Equity Turnover
Stryker Corp., equity turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | 17,108) | 14,351) | 14,884) | 13,601) | 12,444) | |
| Total Stryker shareholders’ equity | 14,877) | 13,084) | 12,807) | 11,730) | 9,966) | |
| Long-term Activity Ratio | ||||||
| Equity turnover1 | 1.15 | 1.10 | 1.16 | 1.16 | 1.25 | |
| Benchmarks | ||||||
| Equity Turnover, Competitors2 | ||||||
| Abbott Laboratories | 1.20 | — | — | — | — | |
| Elevance Health Inc. | 3.80 | — | — | — | — | |
| Intuitive Surgical Inc. | 0.48 | — | — | — | — | |
| Medtronic PLC | 0.59 | — | — | — | — | |
| UnitedHealth Group Inc. | 3.98 | — | — | — | — | |
| Equity Turnover, Sector | ||||||
| Health Care Equipment & Services | 2.42 | — | — | — | — | |
| Equity Turnover, Industry | ||||||
| Health Care | 1.67 | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Equity turnover = Net sales ÷ Total Stryker shareholders’ equity
= 17,108 ÷ 14,877 = 1.15
2 Click competitor name to see calculations.
The financial performance between 2017 and 2021 demonstrates a steady expansion of the capital base accompanied by an overall increase in revenue generation, although the efficiency of equity utilization experienced a marginal contraction over the analyzed period.
- Net Sales Trajectory
- Revenue exhibited a general upward trend, increasing from US$ 12,444 million in 2017 to US$ 17,108 million by 2021. A temporary decline was observed in 2020, where sales dropped to US$ 14,351 million, followed by a significant recovery in 2021.
- Shareholders' Equity Growth
- Total shareholders' equity grew consistently throughout the five-year period, rising from US$ 9,966 million in 2017 to US$ 14,877 million in 2021. This consistent increase indicates a strengthening of the company's net asset position.
- Equity Turnover Analysis
- The equity turnover ratio declined from 1.25 in 2017 to 1.10 in 2020, before recovering to 1.15 in 2021. This pattern indicates that the growth in the equity base occurred at a slightly faster rate than the growth in net sales between 2017 and 2020, leading to a reduction in the sales generated per unit of equity. However, the ratio remained above 1.0 throughout the period, signifying that the company consistently generates revenue in excess of its total shareholders' equity.
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