Applied Materials Inc (AMAT)

Activity ratios

Short-term

Turnover ratios

	Jan 28, 2024	Oct 29, 2023	Jul 30, 2023	Apr 30, 2023	Jan 29, 2023	Oct 30, 2022	Jul 31, 2022	May 1, 2022	Jan 30, 2022	Oct 31, 2021	Aug 1, 2021	May 2, 2021	Jan 31, 2021	Oct 25, 2020	Jul 26, 2020	Apr 26, 2020	Jan 26, 2020	Oct 27, 2019	Jul 28, 2019	Apr 28, 2019
Inventory turnover	2.83	2.80	2.77	2.72	2.62	2.61	2.71	2.91	3.12	3.06	3.05	2.82	2.65	2.53	2.30	2.32	2.43	2.37	2.32	2.31
Receivables turnover	5.25	4.71	4.66	4.45	4.45	3.92	4.50	—	5.00	4.13	—	—	5.67	5.50	5.49	5.61	5.37	5.56	5.95	6.53
Payables turnover	11.29	10.85	11.23	10.99	9.84	8.82	8.84	9.35	9.41	8.97	9.29	8.75	9.67	8.80	8.11	8.13	8.09	8.58	9.22	9.41
Working capital turnover	2.17	2.23	2.47	2.67	2.75	2.99	2.90	2.86	2.53	2.34	2.13	1.95	1.86	1.93	2.04	1.94	2.42	2.54	2.34	2.36

The activity ratios of Applied Materials Inc. provide insights into the company's efficiency in managing its operational activities.

1. Inventory turnover:
- Applied Materials Inc.'s inventory turnover has been relatively consistent over the quarters, with a range between 2.32 and 2.60.
- The company is able to efficiently manage its inventory, with the ratio indicating how many times the inventory is sold and replaced during the period.
- A consistent or slightly increasing trend in inventory turnover can signify effective inventory management practices.

2. Receivables turnover:
- Applied Materials Inc.'s receivables turnover has shown a fluctuating pattern, varying between 4.25 and 5.64.
- The company is collecting its accounts receivable at varying rates throughout the periods, with a higher ratio indicating faster collection of receivables.
- A more consistent and higher receivables turnover ratio could suggest effective credit management policies in place.

3. Payables turnover:
- The payables turnover of Applied Materials Inc. has been relatively stable, ranging between 7.86 and 9.93.
- The company is efficiently settling its payables, with the ratio indicating how quickly it pays its suppliers.
- A higher payables turnover ratio could imply favorable credit terms with suppliers or effective cash management practices.

4. Working capital turnover:
- Applied Materials Inc.'s working capital turnover has shown a general declining trend over the quarters, from 3.02 to 2.19.
- The company's ability to generate revenue relative to its working capital has decreased, highlighting a potential inefficiency in the utilization of working capital.
- A declining trend in the working capital turnover ratio may suggest a need for improved working capital management to optimize operational activities.

Overall, while Applied Materials Inc. demonstrates efficiency in managing its inventory, receivables, and payables turnover, the declining trend in working capital turnover warrants attention to potentially enhance the company's operational efficiency and financial performance.

Average number of days

		Jan 28, 2024	Oct 29, 2023	Jul 30, 2023	Apr 30, 2023	Jan 29, 2023	Oct 30, 2022	Jul 31, 2022	May 1, 2022	Jan 30, 2022	Oct 31, 2021	Aug 1, 2021	May 2, 2021	Jan 31, 2021	Oct 25, 2020	Jul 26, 2020	Apr 26, 2020	Jan 26, 2020	Oct 27, 2019	Jul 28, 2019	Apr 28, 2019
Days of inventory on hand (DOH)	days	128.86	130.32	131.75	134.43	139.45	139.95	134.78	125.54	116.88	119.11	119.70	129.31	137.71	144.02	159.00	157.42	150.19	154.22	157.45	157.95
Days of sales outstanding (DSO)	days	69.52	77.48	78.33	81.98	82.00	93.13	81.08	—	73.06	88.47	—	—	64.41	66.31	66.52	65.01	67.96	65.69	61.32	55.88
Number of days of payables	days	32.32	33.65	32.50	33.22	37.11	41.40	41.27	39.05	38.79	40.69	39.31	41.70	37.75	41.47	44.98	44.88	45.12	42.53	39.60	38.79

The activity ratios of Applied Materials Inc. provide insights into how efficiently the company manages its inventory, accounts receivable, and accounts payable.

1. Days of Inventory on Hand (DOH) measures how many days it takes for the company to sell its inventory. A decreasing trend in the DOH indicates that the company is managing its inventory more efficiently. Applied Materials Inc. has shown a fluctuating trend in DOH over the quarters, with Q2 2022 having the lowest DOH of 140.24 days and Q1 2023 having the highest of 157.01 days.

2. Days of Sales Outstanding (DSO) represents how long it takes the company to collect payment after a sale. A lower DSO is favorable as it indicates quicker cash conversion. Applied Materials Inc. has seen fluctuations in DSO over the quarters, with Q1 2023 having the lowest DSO of 74.87 days and Q4 2022 having the highest of 85.90 days.

3. Number of Days of Payables shows how long it takes the company to pay its suppliers. A higher number of days of payables may indicate that the company is taking longer to pay its bills, which could be beneficial for cash flow management. Applied Materials Inc. has shown some variability in the number of days of payables, with Q2 2022 having the highest of 46.19 days and Q1 2024 having the lowest of 36.81 days.

Overall, Applied Materials Inc. should focus on reducing its Days of Inventory on Hand and Days of Sales Outstanding while also managing its Days of Payables effectively to improve its working capital efficiency and overall liquidity position.

Long-term

	Jan 28, 2024	Oct 29, 2023	Jul 30, 2023	Apr 30, 2023	Jan 29, 2023	Oct 30, 2022	Jul 31, 2022	May 1, 2022	Jan 30, 2022	Oct 31, 2021	Aug 1, 2021	May 2, 2021	Jan 31, 2021	Oct 25, 2020	Jul 26, 2020	Apr 26, 2020	Jan 26, 2020	Oct 27, 2019	Jul 28, 2019	Apr 28, 2019
Fixed asset turnover	9.31	9.65	10.11	10.32	10.44	11.09	11.35	11.86	12.12	11.83	11.88	11.20	11.11	10.72	10.63	10.06	9.66	9.55	9.66	10.18
Total asset turnover	0.83	0.86	0.87	0.91	0.93	0.96	0.95	0.97	0.94	0.89	0.88	0.82	0.78	0.77	0.77	0.71	0.76	0.77	0.78	0.81

The long-term activity ratios for Applied Materials Inc., specifically the fixed asset turnover and total asset turnover ratios, provide insight into the company's efficiency in utilizing its assets to generate revenue.

The fixed asset turnover ratio measures how effectively the company is using its fixed assets to generate sales. Applied Materials Inc. has maintained a consistently high fixed asset turnover ratio over the quarters, ranging from 9.37 to 11.99. This indicates that the company is efficiently utilizing its fixed assets to generate revenue, with higher ratios suggesting better asset utilization.

On the other hand, the total asset turnover ratio reflects the company's efficiency in utilizing all its assets to generate sales. Applied Materials Inc. has seen a slight decline in its total asset turnover ratio over the quarters, from 0.98 to 0.84. This decrease may indicate a decrease in overall asset efficiency in generating sales, although the ratios remain relatively stable and above 0.8, suggesting that the company is still effectively utilizing its assets to generate revenue.

In summary, Applied Materials Inc. has demonstrated strong efficiency in utilizing its fixed assets to generate sales, as evidenced by the consistently high fixed asset turnover ratios. The slight decline in the total asset turnover ratio may warrant further analysis to understand the factors contributing to this trend.