Advanced Micro Devices Inc (AMD)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Inventory turnover	3.34	4.14	5.17	5.30	4.81
Receivables turnover	3.81	3.53	4.53	5.40	4.42
Payables turnover	9.63	8.77	7.83	7.84	14.37
Working capital turnover	2.21	2.27	2.73	3.78	2.60

Based on the provided data for Advanced Micro Devices Inc, let's analyze the activity ratios:

1. Inventory Turnover:
- The inventory turnover ratio measures how effectively a company manages its inventory by indicating the number of times a company sells and replaces its inventory within a specific period.
- The trend for Advanced Micro Devices Inc's inventory turnover ratio shows a slight increase from 4.81 in 2020 to 5.30 in 2021, signaling better inventory management. However, there was a decrease to 3.34 in 2024 indicating a possible slowdown in inventory turnover.

2. Receivables Turnover:
- The receivables turnover ratio assesses how efficiently a company collects cash from its credit sales during a period.
- Advanced Micro Devices Inc's receivables turnover ratio fluctuates over the years, peaking at 5.40 in 2021 before dropping to 3.53 in 2023, and then slightly increasing to 3.81 in 2024. This indicates some variability in the company's ability to collect receivables efficiently.

3. Payables Turnover:
- The payables turnover ratio measures how many times a company pays off its accounts payable during a specific period.
- Advanced Micro Devices Inc's payables turnover ratio declined from 14.37 in 2020 to 7.84 in 2021, indicating the company took longer to pay its suppliers. However, it slightly increased to 9.63 in 2024, suggesting an improvement in managing payables.

4. Working Capital Turnover:
- The working capital turnover ratio evaluates how efficiently a company utilizes its working capital to generate sales.
- The trend for Advanced Micro Devices Inc's working capital turnover ratio shows an increase in efficiency from 2.60 in 2020 to 3.78 in 2021, but it declined to 2.21 in 2024. This suggests that the company may have decreased its sales generated per unit of working capital over the years.

In conclusion, Advanced Micro Devices Inc's activity ratios indicate varying levels of efficiency in managing inventory, receivables, payables, and working capital over the years, which may impact the company's overall operational performance.

Average number of days

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	109.24	88.11	70.56	68.88	75.95
Days of sales outstanding (DSO)	days	95.86	103.33	80.65	67.54	82.51
Number of days of payables	days	37.91	41.61	46.64	46.54	25.41

The activity ratios of Advanced Micro Devices Inc, as indicated by the data provided, show trends in the efficiency of the company's management of inventory, accounts receivable, and accounts payable.

1. Days of Inventory on Hand (DOH):
- In 2020, the company held inventory for an average of 75.95 days before selling it, which decreased to 68.88 days in 2021, indicating an improvement in inventory turnover.
- By 2024, the days of inventory on hand increased to 109.24 days, signaling a potential slowdown in inventory turnover, which may lead to increased carrying costs or potential issues with product obsolescence.

2. Days of Sales Outstanding (DSO):
- The number of days it took for Advanced Micro Devices to collect on its accounts receivable decreased from 82.51 days in 2020 to 67.54 days in 2021, reflecting a more efficient collection process.
- However, the DSO increased to 95.86 days in 2024, suggesting a possible delay in collecting payments from customers which could impact cash flow and liquidity.

3. Number of Days of Payables:
- The number of days the company took to pay its suppliers increased from 25.41 days in 2020 to 46.54 days in 2021, indicating a slower payment cycle.
- There was a gradual improvement in payables management as the number of days decreased to 37.91 days by the end of 2024, potentially indicating better cash flow management and relationships with suppliers.

Overall, these activity ratios provide insights into Advanced Micro Devices Inc's operational efficiency, inventory management, collections practices, and payment terms with suppliers. Monitoring these ratios over time can help assess the effectiveness of the company's working capital management strategies.

Long-term

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Fixed asset turnover	14.41	14.40	15.63	23.36	15.11
Total asset turnover	0.38	0.34	0.35	1.32	1.08

Long-term activity ratios provide insights into how efficiently a company is utilizing its assets to generate sales revenue and are crucial in assessing the operational performance and asset utilization of a company over an extended period.

1. Fixed Asset Turnover: This ratio measures how well a company is generating revenue from its investments in fixed assets. A higher fixed asset turnover indicates that the company is efficiently utilizing its fixed assets to generate sales. AMD's fixed asset turnover has shown fluctuations over the years, from 15.11 in 2020 to 23.36 in 2021, indicating a significant increase in efficiency. However, there was a slight decrease in 2022 to 15.63, followed by further declines in 2023 and 2024 to 14.40 and 14.41, respectively. This downward trend suggests a potential decrease in the efficiency of AMD's fixed asset utilization in recent years.

2. Total Asset Turnover: This ratio measures how effectively a company is using its total assets to generate sales. A higher total asset turnover indicates that the company is generating more sales for each dollar invested in total assets. In AMD's case, the total asset turnover has fluctuated significantly, from 1.08 in 2020 to 1.32 in 2021, demonstrating an improvement in asset utilization efficiency. However, there was a notable decline in 2022 to 0.35, followed by further decreases in 2023 and 2024 to 0.34 and 0.38, respectively. This declining trend indicates that AMD may be experiencing challenges in effectively utilizing its total assets to generate revenue in the later years.

In conclusion, while AMD initially displayed improvements in asset utilization efficiency based on the fixed asset turnover and total asset turnover ratios, the subsequent decreases suggest a potential decline in operational performance and asset productivity in the later years. Further analysis and investigation into the factors driving these changes would be necessary to fully understand AMD's long-term activity performance.