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)
Express Scripts Holding Co., short-term (operating) activity ratios
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
- Inventory Turnover
- Inventory turnover decreased from 51.29 in 2013 to 42.97 in 2017, showing a declining trend over the five-year period. After an initial sharp drop in 2014, the ratio slightly recovered in 2015 and 2016, before dropping again in 2017.
- Receivables Turnover
- Receivables turnover showed a significant decline from 25.88 in 2013 to 14.18 in 2017. This indicates that the company was slower in collecting receivables over time, with a steep decrease between 2013 and 2014, followed by a gradual downward trend thereafter.
- Payables Turnover
- Payables turnover also trended downward from 33.09 in 2013 to 24.31 in 2017. The decline was consistent each year, though the decrease slowed in 2017, suggesting the company was taking longer to pay its suppliers throughout the period.
- Average Inventory Processing Period
- The average inventory processing period increased from 7 days in 2013 to a stable 8 days from 2014 onwards. This indicates that inventory was held slightly longer starting in 2014 and remained consistent for the subsequent years.
- Average Receivable Collection Period
- The average receivable collection period lengthened from 14 days in 2013 to 26 days in 2017. The steady increase reflects slower collection of accounts receivable, consistent with the observed decrease in receivables turnover.
- Operating Cycle
- Operating cycle duration increased from 21 days in 2013 to 34 days in 2017. This indicates an overall lengthening of the period between inventory acquisition and cash collection from sales, reflecting slower working capital turnover.
- Average Payables Payment Period
- The average payables payment period extended from 11 days in 2013 to 15 days in 2017, indicating the company has been taking longer to pay its suppliers over time.
- Cash Conversion Cycle
- Cash conversion cycle increased from 10 days in 2013 to 19 days in 2014 and remained at 19 days through 2017. This reflects a lengthening in the time required to convert investments in inventory and receivables back into cash despite some stabilization after 2014.
- Working Capital Turnover
- Data on working capital turnover was not provided, preventing analysis of this metric.
- Summary
- Overall, the analysis shows a clear pattern of slowing asset turnover and elongation of operating and cash conversion cycles between 2013 and 2017. The company experienced increased durations in inventory holding, receivables collection, and payables payment periods, which collectively contributed to a longer cash conversion cycle. These trends suggest a less efficient working capital management over the period analyzed.
Turnover Ratios
Average No. Days
Inventory Turnover
Express Scripts Holding Co., inventory turnover calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cost of revenues | 91,302,500) | 91,667,000) | 93,349,900) | 92,962,000) | 95,966,400) | |
| Inventories | 2,124,900) | 1,959,000) | 2,023,100) | 2,113,200) | 1,871,100) | |
| Short-term Activity Ratio | ||||||
| Inventory turnover1 | 42.97 | 46.79 | 46.14 | 43.99 | 51.29 | |
| Benchmarks | ||||||
| Inventory Turnover, Competitors2 | ||||||
| Abbott Laboratories | — | — | — | — | — | |
| CVS Health Corp. | — | — | — | — | — | |
| Intuitive Surgical Inc. | — | — | — | — | — | |
| Medtronic PLC | — | — | — | — | — | |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 2017 Calculation
Inventory turnover = Cost of revenues ÷ Inventories
= 91,302,500 ÷ 2,124,900 = 42.97
2 Click competitor name to see calculations.
- Cost of Revenues
- The cost of revenues demonstrates a gradual declining trend over the five-year period. Starting at approximately 95.97 billion USD in 2013, there is a noticeable decrease each subsequent year, reaching around 91.30 billion USD by the end of 2017. This steady reduction suggests improved cost management or changes in the structure of costs associated with revenue generation.
- Inventories
- Inventory levels have experienced fluctuations over the period. The value of inventories increased from roughly 1.87 billion USD in 2013 to over 2.11 billion USD by 2014, then slightly decreased in 2015 and 2016, before rising again in 2017. This pattern indicates a moderate volatility in inventory holdings, possibly reflecting changes in purchasing strategies or demand forecasting accuracy.
- Inventory Turnover
- The inventory turnover ratio exhibits a declining trend from 51.29 times in 2013 to 42.97 times in 2017, with some minor variations in between. This reduction in turnover ratio suggests that the company is turning over its inventory less frequently over the years, which might imply slower sales relative to inventory levels or a strategic increase in inventory buffers.
Receivables Turnover
Express Scripts Holding Co., receivables turnover calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Revenues | 100,064,600) | 100,287,500) | 101,751,800) | 100,887,100) | 104,098,800) | |
| Receivables, net | 7,056,300) | 7,062,100) | 6,721,300) | 5,979,800) | 4,022,900) | |
| Short-term Activity Ratio | ||||||
| Receivables turnover1 | 14.18 | 14.20 | 15.14 | 16.87 | 25.88 | |
| Benchmarks | ||||||
| Receivables Turnover, Competitors2 | ||||||
| Abbott Laboratories | — | — | — | — | — | |
| CVS Health Corp. | — | — | — | — | — | |
| Elevance Health Inc. | — | — | — | — | — | |
| Intuitive Surgical Inc. | — | — | — | — | — | |
| Medtronic PLC | — | — | — | — | — | |
| UnitedHealth Group Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 2017 Calculation
Receivables turnover = Revenues ÷ Receivables, net
= 100,064,600 ÷ 7,056,300 = 14.18
2 Click competitor name to see calculations.
- Revenues
- The revenues showed a slight downward trend over the five-year period. Starting at approximately 104.1 billion US dollars in 2013, revenues decreased gradually to about 100.1 billion US dollars by 2017. The decline was relatively modest, with revenues fluctuating slightly but primarily remaining just above 100 billion dollars during the last four years.
- Receivables, net
- The net receivables increased significantly from 4.02 billion US dollars in 2013 to approximately 7.06 billion US dollars in 2017. This represents a rise of over 75% during the period, indicating a growing amount of credit extended to customers or possibly slower collection on outstanding amounts.
- Receivables turnover
- The receivables turnover ratio decreased steadily from 25.88 in 2013 to 14.18 in 2017. This decline suggests that the company took longer to collect its receivables over time, reflecting less efficient collection processes or more liberal credit terms extended to customers. The reduction in turnover correlates with the increase in net receivables recorded during the same period.
- Overall analysis
- While revenue remained relatively stable with a slight decline, the significant increase in net receivables combined with the decreasing receivables turnover ratio indicates a potential deterioration in the efficiency of receivables management. The company might be experiencing slower cash inflows despite stable sales, which could impact liquidity if the trend continues. These changes warrant further investigation into credit policies and collection procedures to ensure sustainable operations.
Payables Turnover
Express Scripts Holding Co., payables turnover calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cost of revenues | 91,302,500) | 91,667,000) | 93,349,900) | 92,962,000) | 95,966,400) | |
| Accounts payable | 3,755,700) | 3,875,700) | 3,451,800) | 3,137,300) | 2,900,000) | |
| Short-term Activity Ratio | ||||||
| Payables turnover1 | 24.31 | 23.65 | 27.04 | 29.63 | 33.09 | |
| Benchmarks | ||||||
| Payables Turnover, Competitors2 | ||||||
| Abbott Laboratories | — | — | — | — | — | |
| CVS Health Corp. | — | — | — | — | — | |
| Elevance Health Inc. | — | — | — | — | — | |
| Intuitive Surgical Inc. | — | — | — | — | — | |
| Medtronic PLC | — | — | — | — | — | |
| UnitedHealth Group Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 2017 Calculation
Payables turnover = Cost of revenues ÷ Accounts payable
= 91,302,500 ÷ 3,755,700 = 24.31
2 Click competitor name to see calculations.
- Cost of Revenues
- There is a consistent downward trend in the cost of revenues from 2013 to 2017. The cost decreased from approximately 95.97 billion USD in 2013 to about 91.30 billion USD in 2017. Although the reduction is gradual, it reflects efforts that may have been made to control or optimize costs over this five-year period.
- Accounts Payable
- Accounts payable showed a steady increase from 2.9 billion USD in 2013 to 3.76 billion USD in 2017. This upward trend suggests that the company has increased its outstanding obligations, potentially due to increased purchasing or changes in payment policies.
- Payables Turnover
- Payables turnover ratio declined notably from 33.09 in 2013 to 24.31 in 2017. This decrease implies that the company is taking longer to pay its suppliers over time, which could be related to changes in cash management strategies or negotiation of extended payment terms.
Working Capital Turnover
Express Scripts Holding Co., working capital turnover calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current assets | 11,957,100) | 12,363,400) | 12,059,500) | 10,568,100) | 8,491,400) | |
| Less: Current liabilities | 17,846,400) | 16,428,100) | 17,155,300) | 17,016,900) | 13,235,300) | |
| Working capital | (5,889,300) | (4,064,700) | (5,095,800) | (6,448,800) | (4,743,900) | |
| Revenues | 100,064,600) | 100,287,500) | 101,751,800) | 100,887,100) | 104,098,800) | |
| Short-term Activity Ratio | ||||||
| Working capital turnover1 | — | — | — | — | — | |
| Benchmarks | ||||||
| Working Capital Turnover, Competitors2 | ||||||
| Abbott Laboratories | — | — | — | — | — | |
| CVS Health Corp. | — | — | — | — | — | |
| Elevance Health Inc. | — | — | — | — | — | |
| Intuitive Surgical Inc. | — | — | — | — | — | |
| Medtronic PLC | — | — | — | — | — | |
| UnitedHealth Group Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 2017 Calculation
Working capital turnover = Revenues ÷ Working capital
= 100,064,600 ÷ -5,889,300 = —
2 Click competitor name to see calculations.
- Working Capital
- The working capital values indicate a consistently negative position across the analyzed periods. The negative working capital suggests that current liabilities exceed current assets throughout the five years. Specifically, the working capital decreased from -4,743,900 thousand USD in 2013 to a more negative -6,448,800 thousand USD in 2014, representing a significant deterioration. Subsequently, it improved somewhat in 2015 to -5,095,800 thousand USD and further in 2016 to -4,064,700 thousand USD. However, in 2017, the working capital again worsened to -5,889,300 thousand USD. Overall, the trend suggests fluctuations within a persistently negative range, with periodic recoveries followed by declines.
- Revenues
- Revenue figures remain relatively stable across the five-year period, with minor fluctuations within a narrow range. Beginning at 104,098,800 thousand USD in 2013, revenues decreased marginally to 100,887,100 thousand USD in 2014. After a slight increase to 101,751,800 thousand USD in 2015, revenues then declined again, recording 100,287,500 thousand USD in 2016 and 100,064,600 thousand USD in 2017. The data show that annual revenues hover around the 100 billion USD mark, indicating a relatively steady top-line performance with no significant growth or decline trends over the analyzed period.
- Working Capital Turnover
- No data is available for working capital turnover ratio for the observed periods, which limits the ability to analyze the efficiency of working capital utilization relative to revenues.
Average Inventory Processing Period
Express Scripts Holding Co., average inventory processing period calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Inventory turnover | 42.97 | 46.79 | 46.14 | 43.99 | 51.29 | |
| Short-term Activity Ratio (no. days) | ||||||
| Average inventory processing period1 | 8 | 8 | 8 | 8 | 7 | |
| Benchmarks (no. days) | ||||||
| Average Inventory Processing Period, Competitors2 | ||||||
| Abbott Laboratories | — | — | — | — | — | |
| CVS Health Corp. | — | — | — | — | — | |
| Intuitive Surgical Inc. | — | — | — | — | — | |
| Medtronic PLC | — | — | — | — | — | |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 2017 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 42.97 = 8
2 Click competitor name to see calculations.
- Inventory Turnover
- The inventory turnover ratio demonstrates a declining trend from 51.29 in 2013 to 42.97 in 2017. Between 2013 and 2014, there is a notable decrease from 51.29 to 43.99, followed by a slight increase in 2015 and 2016, reaching 46.14 and 46.79 respectively. However, the ratio declines again in 2017 to 42.97, marking the lowest point in the observed period.
- Average Inventory Processing Period
- The average inventory processing period remains relatively stable throughout the five-year period. It starts at 7 days in 2013 and then increases to 8 days from 2014 onwards, where it maintains a steady level through 2017.
- Overall Insight
- Despite the stable inventory processing period, the decline in inventory turnover ratio suggests that inventory is being turned over less frequently over time. This could indicate potential inefficiencies or changes in inventory management strategy, affecting the company's operational efficiency in utilizing inventory.
Average Receivable Collection Period
Express Scripts Holding Co., average receivable collection period calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Receivables turnover | 14.18 | 14.20 | 15.14 | 16.87 | 25.88 | |
| Short-term Activity Ratio (no. days) | ||||||
| Average receivable collection period1 | 26 | 26 | 24 | 22 | 14 | |
| Benchmarks (no. days) | ||||||
| Average Receivable Collection Period, Competitors2 | ||||||
| Abbott Laboratories | — | — | — | — | — | |
| CVS Health Corp. | — | — | — | — | — | |
| Elevance Health Inc. | — | — | — | — | — | |
| Intuitive Surgical Inc. | — | — | — | — | — | |
| Medtronic PLC | — | — | — | — | — | |
| UnitedHealth Group Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 2017 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 14.18 = 26
2 Click competitor name to see calculations.
- Receivables Turnover
- The receivables turnover ratio shows a declining trend over the five-year period, decreasing from 25.88 in 2013 to 14.18 in 2017. This reduction suggests that the company is collecting receivables less frequently each year, indicating a possible slowdown in the efficiency of credit and collections management.
- Average Receivable Collection Period
- The average receivable collection period has correspondingly increased from 14 days in 2013 to 26 days in 2017. This upward trend reflects a lengthening time frame for converting receivables into cash, which may point towards extended credit terms or slower customer payments.
- Summary
- The inverse relationship observed between the receivables turnover ratio and the average receivable collection period is consistent with standard financial principles. However, the notable deterioration in both metrics suggests that over the analyzed period, the company experienced a decline in receivables management efficiency. This trend could impact cash flow and potentially increase the risk of bad debts if not addressed.
Operating Cycle
Express Scripts Holding Co., operating cycle calculation, comparison to benchmarks
No. days
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Average inventory processing period | 8 | 8 | 8 | 8 | 7 | |
| Average receivable collection period | 26 | 26 | 24 | 22 | 14 | |
| Short-term Activity Ratio | ||||||
| Operating cycle1 | 34 | 34 | 32 | 30 | 21 | |
| Benchmarks | ||||||
| Operating Cycle, Competitors2 | ||||||
| Abbott Laboratories | — | — | — | — | — | |
| CVS Health Corp. | — | — | — | — | — | |
| Intuitive Surgical Inc. | — | — | — | — | — | |
| Medtronic PLC | — | — | — | — | — | |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 2017 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= 8 + 26 = 34
2 Click competitor name to see calculations.
The data indicates a progression of certain operational efficiency metrics over a five-year span ending in 2017.
- Average Inventory Processing Period
- The average time taken to process inventory increased slightly from 7 days in 2013 to 8 days in 2014 and remained consistent at 8 days through to 2017. This stability suggests that inventory handling processes did not significantly improve or deteriorate during the latter four years.
- Average Receivable Collection Period
- The period for collecting receivables lengthened markedly over the years, starting from 14 days in 2013 and rising steadily to 26 days by 2016, where it then plateaued through 2017. This increase points to a slower cash inflow from customers, which could indicate either relaxed credit terms or challenges in collections.
- Operating Cycle
- The operating cycle, which sums the inventory processing period and receivable collection period, extended from 21 days in 2013 to 34 days by 2016 and stabilized at this duration in 2017. This overall lengthening of the operating cycle reflects a trend of increased time for converting inventory into cash, influenced primarily by the rise in receivables collection duration.
Average Payables Payment Period
Express Scripts Holding Co., average payables payment period calculation, comparison to benchmarks
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Payables turnover | 24.31 | 23.65 | 27.04 | 29.63 | 33.09 | |
| Short-term Activity Ratio (no. days) | ||||||
| Average payables payment period1 | 15 | 15 | 13 | 12 | 11 | |
| Benchmarks (no. days) | ||||||
| Average Payables Payment Period, Competitors2 | ||||||
| Abbott Laboratories | — | — | — | — | — | |
| CVS Health Corp. | — | — | — | — | — | |
| Elevance Health Inc. | — | — | — | — | — | |
| Intuitive Surgical Inc. | — | — | — | — | — | |
| Medtronic PLC | — | — | — | — | — | |
| UnitedHealth Group Inc. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 2017 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 24.31 = 15
2 Click competitor name to see calculations.
- Payables Turnover Ratio
- The payables turnover ratio shows a consistent downward trend over the five-year period. It decreased from 33.09 in 2013 to 24.31 in 2017. This suggests that the company is taking longer to pay its suppliers or that its accounts payable are increasing relative to cost of goods sold. The decline indicates a reduction in the frequency with which the company pays off its suppliers annually.
- Average Payables Payment Period
- The average payables payment period increased steadily from 11 days in 2013 to 15 days by 2016 and remained steady in 2017. This aligns inversely with the payables turnover ratio trend and confirms that the company extended its payment terms or delayed payments over time. A higher number of days indicates the company is holding onto cash longer before settling its obligations.
- Overall Insight
- The simultaneous decrease in payables turnover and increase in payment period suggests a strategic or operational shift toward slower payment practices. This might be intended to improve liquidity or manage cash flows more effectively. However, it could also affect supplier relationships if payments are delayed beyond agreed terms.
Cash Conversion Cycle
Express Scripts Holding Co., cash conversion cycle calculation, comparison to benchmarks
No. days
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Average inventory processing period | 8 | 8 | 8 | 8 | 7 | |
| Average receivable collection period | 26 | 26 | 24 | 22 | 14 | |
| Average payables payment period | 15 | 15 | 13 | 12 | 11 | |
| Short-term Activity Ratio | ||||||
| Cash conversion cycle1 | 19 | 19 | 19 | 18 | 10 | |
| Benchmarks | ||||||
| Cash Conversion Cycle, Competitors2 | ||||||
| Abbott Laboratories | — | — | — | — | — | |
| CVS Health Corp. | — | — | — | — | — | |
| Intuitive Surgical Inc. | — | — | — | — | — | |
| Medtronic PLC | — | — | — | — | — | |
Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).
1 2017 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 8 + 26 – 15 = 19
2 Click competitor name to see calculations.
- Average Inventory Processing Period
- The average inventory processing period remained relatively stable over the analyzed years. It started at 7 days in 2013 and increased slightly to 8 days by 2014, maintaining that duration consistently through to 2017. This indicates a steady efficiency in inventory turnover without significant changes.
- Average Receivable Collection Period
- The average receivable collection period exhibited a rising trend over the period. Beginning at 14 days in 2013, it increased markedly to 22 days in 2014 and continued a gradual increase to 26 days by 2016, where it stabilized through 2017. This suggests a lengthening time to collect receivables, potentially indicating a relaxation of credit terms or difficulties in collection.
- Average Payables Payment Period
- The average payables payment period showed a consistent upward trend. Starting at 11 days in 2013, the period extended progressively each year, reaching 15 days by 2016 and remaining unchanged into 2017. This pattern implies a growing delay in settling payables, which could be a strategy to optimize cash flow or reflect supplier payment terms extensions.
- Cash Conversion Cycle
- The cash conversion cycle increased substantially from 10 days in 2013 to 18 days in 2014, rising further to 19 days by 2015 and then holding steady through to 2017. The increase corresponds with longer receivables collection and payables payment periods, suggesting a lengthening period between cash outlay and cash recovery, which may affect liquidity management.