Applied Materials Inc (AMAT)

Short-term

Turnover ratios

Inventory Turnover Ratio:

- Applied Materials Inc's inventory turnover ratio has shown a fluctuating trend over the period provided, ranging from a low of 2.47 to a high of 2.87.
- The company's ability to sell and replace its inventory has improved slightly towards the end of the period, with the ratio increasing from 2.61 to 2.76.
- Overall, the inventory turnover ratio indicates that Applied Materials is managing its inventory efficiently, although there is room for improvement.

Receivables Turnover Ratio:

- The data provided shows that Applied Materials has incomplete information regarding its receivables turnover ratio, with certain periods marked as not available.
- When data is present, the company's receivables turnover ratio has been relatively consistent, ranging from 3.93 to 5.33.
- Based on the available data points, it appears that Applied Materials is collecting its receivables effectively, with a generally stable turnover ratio.

Payables Turnover Ratio:

- Applied Materials Inc's payables turnover ratio exhibits an inconsistent pattern, with some periods marked as not available.
- When data is provided, the company's payables turnover ratio ranges from 8.35 to 10.72, indicating variations in how quickly the company is paying its suppliers.
- The trend in the payables turnover ratio suggests that Applied Materials may be managing its payables effectively, although the inconsistency in data availability warrants further investigation.

Working Capital Turnover Ratio:

- The working capital turnover ratio for Applied Materials Inc displays a decreasing trend over the period provided, dropping from 2.93 to 2.16.
- This trend suggests that the company's efficiency in generating revenue from its working capital has declined over time.
- Applied Materials may need to reassess its working capital management strategies to improve efficiency and maximize revenue generation from its current assets and liabilities.

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Average number of days

Based on the provided data, let's analyze the activity ratios of Applied Materials Inc:

1. Days of Inventory on Hand (DOH):
- The company's inventory turnover has witnessed fluctuations over the periods, ranging from 127.30 days to 147.71 days.
- In general, a lower number of days of inventory on hand indicates better efficiency in managing inventory levels. Applied Materials Inc has shown improvement in this aspect, with a decreasing trend in days of inventory on hand from October 2024 to January 2025.

2. Days of Sales Outstanding (DSO):
- Data inconsistencies exist, as some periods indicate "— days" for DSO.
- DSO is a measure of how quickly a company collects its accounts receivable. Applied Materials Inc's DSO varied from 68.32 days to 92.85 days when reported.
- Lower DSO values are preferable as they signify quicker collection of receivables. The company showed improvement in DSO from October 2022 to October 2024, indicating a more efficient collection process. However, missing data points limit a comprehensive analysis.

3. Number of Days of Payables:
- The number of days of payables indicates the average number of days a company takes to pay its suppliers.
- Applied Materials Inc's payables days ranged between 34.06 days and 43.70 days, reflecting minor fluctuations in payment terms with suppliers.
- A lower number of days of payables is generally more favorable for a company as it represents a longer credit period enjoyed from suppliers. The company has maintained relatively stable playables days over the periods provided.

In conclusion, Applied Materials Inc has shown improvements in inventory management efficiency and receivables collection processes. However, the company may benefit from consistent reporting of data in DSO to enable a more robust analysis of its activity ratios.

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See also:

Applied Materials Inc Short-term (Operating) Activity Ratios (Quarterly Data)

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Long-term

Applied Materials Inc's fixed asset turnover has shown a gradual decline over the past few years, indicating that the company is generating less revenue relative to its fixed assets. The ratio decreased from 12.03 in May 1, 2022, to 8.14 in October 27, 2024.

Similarly, the total asset turnover ratio has also experienced a downward trend, falling from 0.98 in May 1, 2022, to 0.84 in January 31, 2024, before slightly recovering to 0.84 in January 31, 2025. This suggests that the company's total assets are not being efficiently utilized to generate sales.

Overall, the decreasing trend in both fixed asset turnover and total asset turnover ratios may indicate potential inefficiencies in asset utilization and a need for Applied Materials Inc to optimize its asset management strategies to improve profitability.

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See also:

Applied Materials Inc Long-term (Investment) Activity Ratios (Quarterly Data)