Advanced Micro Devices Inc (AMD)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover	4.14	5.17	5.30	4.81	4.70
Receivables turnover	3.53	4.53	5.40	4.42	3.18
Payables turnover	8.77	7.83	7.84	14.37	4.67
Working capital turnover	2.27	2.73	3.78	2.60	2.92

Activity ratios measure how efficiently a company is managing its assets in generating sales and revenue. Let's analyze Advanced Micro Devices Inc's activity ratios based on the data provided:

1. Inventory Turnover:
- The inventory turnover ratio measures how many times a company sells and replaces its inventory during a specific period.
- AMD's inventory turnover has fluctuated over the past five years, ranging from 4.14 to 5.30. A higher ratio indicates more efficient management of inventory.

2. Receivables Turnover:
- The receivables turnover ratio measures how many times a company collects its accounts receivable during a period.
- AMD's receivables turnover has shown an increasing trend from 3.18 to 5.40 over the past five years, indicating that the company is collecting its receivables more frequently.

3. Payables Turnover:
- The payables turnover ratio measures how many times a company pays off its accounts payable during a period.
- AMD's payables turnover has varied significantly, with a notable decrease in 2020 and a subsequent increase in 2023. A higher ratio suggests that the company is managing its payables more effectively.

4. Working Capital Turnover:
- The working capital turnover ratio measures how efficiently a company utilizes its working capital to generate revenue.
- AMD's working capital turnover has fluctuated over the years but remains above 2, indicating efficient utilization of working capital to generate sales.

Overall, based on the activity ratios, Advanced Micro Devices Inc has shown significant improvements in managing its inventory, collecting receivables, and handling payables efficiently over the years. The company's working capital turnover also indicates effective utilization of resources to drive revenue generation.

Average number of days

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	88.11	70.56	68.88	75.95	77.70
Days of sales outstanding (DSO)	days	103.33	80.65	67.54	82.51	114.96
Number of days of payables	days	41.61	46.64	46.54	25.41	78.17

To analyze Advanced Micro Devices Inc's activity ratios based on the provided data, we will look at the Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables.

1. Days of Inventory on Hand (DOH):
- The company's Days of Inventory on Hand has been gradually increasing over the past five years, indicating that inventory turnover has been slowing down. In 2023, the DOH stands at 88.11 days, which means the company takes approximately 88 days to sell its inventory. This may suggest inefficiencies in managing inventory or potential overstocking.

2. Days of Sales Outstanding (DSO):
- The Days of Sales Outstanding metric shows how long it takes for the company to collect payments from its customers. AMD's DSO has been fluctuating over the years, with a notable increase in 2019. In 2023, the DSO is 103.33 days, indicating that it takes the company around 103 days to collect its accounts receivable. A higher DSO could imply potential issues with credit policies or difficulties in collecting payments efficiently.

3. Number of Days of Payables:
- The Number of Days of Payables represents how long it takes the company to pay its suppliers. AMD's payables days have shown variability, with a significant decrease in 2020 followed by an increase in 2022. In 2023, the company takes approximately 42 days to pay its bills. A lower number of days of payables may signal a strong bargaining position with suppliers, potential liquidity issues, or stricter payment terms.

Overall, based on the activity ratios analysis, Advanced Micro Devices Inc may need to focus on improving inventory management efficiency, optimizing accounts receivable collection processes, and maintaining favorable relationships with suppliers to enhance its working capital management and operational effectiveness.

Long-term

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Fixed asset turnover	14.40	15.63	23.36	15.11	13.06
Total asset turnover	0.34	0.35	1.32	1.08	1.08

Advanced Micro Devices Inc's long-term activity ratios indicate how efficiently the company is utilizing its assets to generate sales. The fixed asset turnover has shown fluctuations over the past five years, with a peak in 2021 at 23.36 which indicates that the company generated $23.36 in sales for every $1 of fixed assets. The decrease in 2023 to 14.40 suggests a potential slowdown in utilizing fixed assets efficiently to generate revenue.

On the other hand, the total asset turnover ratio has remained relatively stable over the years, hovering around 1. This indicates that for every $1 of total assets, the company generates approximately $1 in sales. While the ratio is healthy, it is important to note that a higher total asset turnover ratio could indicate more efficient utilization of assets.

Overall, Advanced Micro Devices Inc's long-term activity ratios suggest that the company has been effectively turning its assets into revenue, though the fluctuations in the fixed asset turnover ratio could warrant further investigation into the company's asset management strategies.