Broadcom Inc (AVGO)
Working capital turnover
| Feb 4, 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 | Nov 1, 2020 | Aug 2, 2020 | May 3, 2020 | Feb 2, 2020 | Nov 3, 2019 | Aug 4, 2019 | May 5, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue (ttm) | US$ in thousands | 38,865,000 | 35,819,000 | 35,454,000 | 35,042,000 | 34,412,000 | 33,203,000 | 31,680,000 | 29,994,000 | 28,501,000 | 27,450,000 | 26,510,000 | 25,553,000 | 24,685,000 | 23,888,000 | 23,197,000 | 22,891,000 | 22,666,000 | 22,597,000 | 22,265,000 | 21,813,000 |
| Total current assets | US$ in thousands | 27,192,000 | 20,847,000 | 18,333,000 | 17,871,000 | 18,836,000 | 18,504,000 | 15,561,000 | 14,810,000 | 15,341,000 | 16,586,000 | 15,636,000 | 14,245,000 | 14,300,000 | 11,895,000 | 13,681,000 | 14,222,000 | 12,109,000 | 9,917,000 | 10,898,000 | 10,677,000 |
| Total current liabilities | US$ in thousands | 20,369,000 | 7,405,000 | 7,345,000 | 7,511,000 | 7,483,000 | 7,052,000 | 6,702,000 | 6,910,000 | 6,287,000 | 6,281,000 | 6,501,000 | 6,436,000 | 6,694,000 | 6,371,000 | 6,702,000 | 6,601,000 | 7,739,000 | 6,899,000 | 8,282,000 | 8,503,000 |
| Working capital turnover | 5.70 | 2.66 | 3.23 | 3.38 | 3.03 | 2.90 | 3.58 | 3.80 | 3.15 | 2.66 | 2.90 | 3.27 | 3.25 | 4.32 | 3.32 | 3.00 | 5.19 | 7.49 | 8.51 | 10.03 |
February 4, 2024 calculation
Working capital turnover = Revenue (ttm) ÷ (Total current assets – Total current liabilities)
= $38,865,000K ÷ ($27,192,000K – $20,369,000K)
= 5.70
Working capital turnover is a financial ratio that measures how efficiently Broadcom Inc is utilizing its working capital to generate sales revenue. The formula for working capital turnover is:
Working Capital Turnover = Net Sales / Average Working Capital
A higher working capital turnover indicates that Broadcom is effectively managing its working capital to generate sales. Looking at the data provided, we observe fluctuations in Broadcom's working capital turnover over the various reporting periods.
Broadcom's working capital turnover ranged from a low of 2.66 to a high of 10.03 over the period under review. This indicates a significant variance in the efficiency of working capital management during different quarters. A ratio above 1 suggests that Broadcom is effectively utilizing its working capital to generate sales revenue.
The highest working capital turnover ratio of 10.03 occurred in May 2019, indicating exceptional efficiency in converting working capital into sales during that period. This could be attributed to effective inventory management, accounts receivable, and accounts payable practices.
On the other hand, the lowest working capital turnover ratio of 2.66 was recorded in October 2023, suggesting a lower efficiency in utilizing working capital to generate sales revenue during that period. This may point towards potential inefficiencies in working capital management or a mismatch in the timing of cash flows.
In general, an increasing trend in the working capital turnover ratio over time would indicate improvements in working capital management efficiency at Broadcom. Conversely, a decreasing trend may signal potential issues that need to be addressed to enhance operational performance and financial health.
It is essential for Broadcom to closely monitor its working capital turnover ratio and identify the root causes of any fluctuations to optimize working capital utilization and overall business performance in the long run.
Peer comparison
Feb 4, 2024