Cognex Corporation (CGNX)

Short-term

Turnover ratios

Activity ratios provide insights into the efficiency with which a company manages its resources and operations. Let's analyze the activity ratios of Cognex Corp. over the past five years:

1. Inventory Turnover:
Inventory turnover measures how many times a company sells and replaces its inventory within a given period. Cognex Corp.'s inventory turnover has decreased from 3.15 in 2019 to 1.46 in 2023. This indicates that the company is holding onto its inventory for a longer period before selling it, which could tie up capital and potentially result in obsolescence or lower selling prices.

2. Receivables Turnover:
Receivables turnover measures how efficiently a company collects on its credit sales. Cognex Corp.'s receivables turnover has remained relatively stable over the years, ranging from 6.18 in 2020 to 7.88 in 2022. This suggests that the company has been effective in collecting payments from its customers, with a slightly higher turnover in 2022 indicating quicker collection.

3. Payables Turnover:
Payables turnover measures how quickly a company pays its suppliers. Cognex Corp.'s payables turnover fluctuated over the years, with a notable increase in 2021 and a subsequent decrease in 2022 and 2023. A higher payables turnover ratio indicates that the company is paying its suppliers more frequently, potentially improving relationships but also possibly affecting cash flow management.

4. Working Capital Turnover:
Working capital turnover assesses the efficiency with which a company utilizes its working capital to generate sales revenue. Cognex Corp.'s working capital turnover has fluctuated over the years, reaching its peak in 2022. A higher turnover ratio suggests efficient utilization of working capital in generating sales, reflecting positively on the company's operational efficiency.

In summary, Cognex Corp. has shown mixed performance in its activity ratios over the past five years. The company needs to focus on optimizing its inventory management to improve turnover, maintaining steady receivables turnover, and carefully managing payables to ensure a balanced approach to supplier payments. The positive trend in working capital turnover indicates effective utilization of resources to drive revenue generation.

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Average number of days

Activity ratios provide insight into how efficiently a company is managing its inventory, accounts receivable, and accounts payable. Let's analyze the activity ratios of Cognex Corp. based on the given data:

1. Days of Inventory on Hand (DOH):
- DOH measures the average number of days it takes for a company to sell its inventory. A lower DOH indicates efficient inventory management.
- Cognex Corp.'s DOH has been increasing over the years, from 115.91 days in 2019 to 250.67 days in 2023. This suggests a longer time to sell inventory, which may tie up working capital and could indicate potential issues with inventory turnover.

2. Days of Sales Outstanding (DSO):
- DSO reflects the average number of days it takes for a company to collect revenue after making a sale. A lower DSO is preferable as it indicates faster cash conversion.
- Cognex Corp.'s DSO has fluctuated over the years, with a slight increase from 54.44 days in 2019 to 50.80 days in 2023. This implies that the company is taking a relatively consistent amount of time to collect its accounts receivable.

3. Number of Days of Payables:
- This ratio calculates the average number of days it takes for a company to pay its suppliers. A higher number of days suggests the company is taking longer to pay its bills.
- Cognex Corp.'s number of days of payables has varied, with a notable decrease from 57.99 days in 2021 to 33.14 days in 2023. A lower number of days of payables may indicate improved liquidity but could also strain relationships with suppliers.

Overall, the analysis of Cognex Corp.'s activity ratios reveals areas for potential improvement, particularly in managing inventory levels to enhance efficiency and optimizing the balance between collecting receivables and paying payables. Monitoring these ratios can help the company enhance its working capital management and overall operational effectiveness.

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Long-term

The fixed asset turnover ratio for Cognex Corp. has shown a decreasing trend over the past five years. The ratio was highest in 2021 at 13.37, indicating that the company generated $13.37 in net sales for each dollar invested in fixed assets during that year. However, the ratio has since declined to 7.91 in 2023, suggesting that the efficiency of utilizing fixed assets to generate sales has decreased.

On the other hand, the total asset turnover ratio has also exhibited a fluctuating pattern over the same period. The ratio hit its peak in 2021 at 0.52, signifying that Cognex Corp. generated $0.52 in sales for each dollar of total assets on its balance sheet that year. The ratio has varied between 0.38 and 0.51 in the subsequent years, indicating some volatility in the company's ability to utilize its total assets efficiently to generate revenue.

Overall, the declining trend in fixed asset turnover and the fluctuating pattern in total asset turnover ratios suggest that Cognex Corp. may need to review its asset utilization strategies to improve efficiency in generating sales in the long term.