Cognex Corporation (CGNX)

Short-term

Turnover ratios

### Cognex Corporation Activity Ratios Analysis:

#### 1. Inventory Turnover:
- Inventory turnover measures how efficiently Cognex Corporation is managing its inventory.
- The trend shows a generally decreasing turnover rate from 8.43 in March 2020 to 4.30 in December 2024.
- The decrease indicates that the company is taking longer to sell its inventory, which could potentially lead to storage costs or obsolete inventory issues.

#### 2. Receivables Turnover:
- Receivables turnover ratio demonstrates how quickly Cognex Corporation is collecting on its credit sales.
- The company did not provide turnover data for the first four quarters but has shown improvement from 7.70 in December 2021 to 6.26 in December 2024.
- The increasing trend suggests the company is collecting its accounts receivables more efficiently over time.

#### 3. Payables Turnover:
- Payables turnover ratio illustrates how quickly Cognex Corporation is paying its suppliers.
- The trend indicates fluctuating payables turnover rates, but overall, there is a decrease from 28.62 in March 2020 to 17.81 in December 2024.
- This decreasing trend could imply potential liquidity issues or changes in the company's payment terms with suppliers.

#### 4. Working Capital Turnover:
- Working capital turnover measures how effectively Cognex Corporation is utilizing its working capital to generate sales.
- The trend fluctuates over the years, with a peak at 2.29 in December 2021 and a dip to 1.29 in September 2023, before recovering to 2.06 in December 2024.
- The fluctuations indicate changes in the company's working capital management efficiency.

In conclusion, while the receivables turnover has shown improvement over time, there are concerns regarding the decreasing inventory turnover and payables turnover rates. Cognex Corporation may need to focus on optimizing its inventory management and supplier payment processes to enhance its overall financial efficiency.

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Average number of days

Cognex Corporation's activity ratios reflect its efficiency in managing its inventory, receivables, and payables.

1. Days of Inventory on Hand (DOH):
- The DOH shows the number of days the company holds its inventory before selling it. Cognex's DOH has fluctuated over the years, ranging from a low of 39.03 days to a high of 104.03 days. A higher DOH indicates that inventory is being held for a longer period, which may tie up capital and increase holding costs. The company should aim to optimize inventory management to reduce excess holding.

2. Days of Sales Outstanding (DSO):
- DSO measures how long it takes for the company to collect cash from credit sales. Cognex started reporting DSO from December 31, 2021, and it ranged between 47.38 days and 70.63 days. Lower DSO values indicate a faster collection of receivables, which improves cash flow. The company should continue to monitor and reduce DSO to enhance liquidity.

3. Number of Days of Payables:
- This ratio indicates how long the company takes to pay its suppliers. Cognex's payables days varied between 8.22 days and 29.64 days. A lower number of days suggests that the company is managing its payables efficiently. Cognex has shown a decreasing trend in payables days over recent periods, which may help in maintaining good relationships with suppliers.

Overall, Cognex Corporation should focus on optimizing inventory levels, reducing DSO, and managing payables effectively to enhance operational efficiency and financial performance.

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Long-term

The Fixed Asset Turnover ratio for Cognex Corporation has shown an increasing trend from March 31, 2020, to December 31, 2024, with a peak at 13.85 on March 31, 2022. This indicates that the company has been able to generate more revenue relative to its investment in fixed assets over the period analyzed. However, there was a slight decline in the ratio in the last two quarters of 2024, although it remained relatively high compared to the earlier periods.

On the other hand, the Total Asset Turnover ratio, which measures the efficiency of Cognex in generating sales from its total assets, also exhibited a positive trend, albeit with some fluctuations. The ratio increased steadily from 0.38 on March 31, 2020, to 0.46 on March 31, 2021, but then experienced some variability, reaching 0.46 on December 31, 2024. This suggests that the company has been effective in utilizing its total assets to generate sales revenue, with some minor fluctuations in efficiency observed in the latter periods of the data.

Overall, the analysis of the long-term activity ratios for Cognex Corporation indicates a generally positive trend in asset utilization and revenue generation efficiency, with some fluctuations in performance observable in the more recent periods.