Coherent Inc (COHR)

Short-term

Turnover ratios

Coherent Inc's activity ratios provide insights into how efficiently the company manages its inventory, receivables, payables, and working capital. The inventory turnover ratio has shown fluctuations over the past five years, ranging from 3.12 to 4.26. A higher ratio indicates that Coherent Inc is selling its inventory more quickly, which could imply effective inventory management strategies in certain periods.

The receivables turnover ratio has remained relatively stable, varying between 4.56 and 5.40. This suggests that the company is collecting its accounts receivable efficiently, with a higher ratio indicating faster collection of receivables.

In terms of payables turnover, Coherent Inc's ratio has also fluctuated, with values ranging from 6.47 to 13.37. A higher payables turnover ratio indicates that the company is paying its suppliers more quickly, which may signify strong cash management practices in certain periods.

The working capital turnover ratio has shown variability over the years, with values ranging from 1.05 to 2.24. A higher working capital turnover ratio indicates that Coherent Inc is generating more revenue relative to its working capital, reflecting the effectiveness of the company in utilizing its working capital to generate sales.

Overall, these activity ratios provide a comprehensive view of Coherent Inc's operational efficiency in managing its inventory, receivables, payables, and working capital over the analyzed period.

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Average number of days

Activity ratios provide insights into how efficiently a company is managing its resources to generate sales and collect cash. Let's analyze the activity ratios of Coherent Inc based on the provided data:

1. Days of Inventory on Hand (DOH):
- The DOH measures how many days, on average, a company holds its inventory before selling it.
- Coherent Inc's DOH has fluctuated over the years, ranging from 85.70 days to 117.15 days.
- A higher DOH could indicate slow-moving inventory or overstocking, tying up capital and potentially leading to obsolescence.

2. Days of Sales Outstanding (DSO):
- DSO reflects the average number of days it takes for a company to collect payment from its customers.
- Coherent Inc's DSO has shown variability, with figures ranging from 67.60 days to 96.00 days.
- A higher DSO may suggest inefficiencies in the company's credit and collection policies, leading to potential cash flow challenges.

3. Number of Days of Payables:
- This ratio measures how long a company takes to pay its suppliers.
- Coherent Inc's number of days of payables ranged from 27.30 days to 56.45 days.
- A longer payment period may indicate that the company is effectively using trade credit to manage its cash flow.

Overall, analyzing these activity ratios can help stakeholders assess Coherent Inc's inventory management, sales collection efficiency, and payment practices. Monitoring these ratios over time can provide insights into the company's operational performance and financial health.

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Long-term

The long-term activity ratios for Coherent Inc indicate how efficiently the company is utilizing its fixed assets and total assets to generate sales.

1. Fixed Asset Turnover:
- The fixed asset turnover ratio has been fluctuating over the past five years, ranging from 1.87 to 2.73.
- The ratio indicates that, on average, Coherent Inc generated $2.43 in sales for every dollar invested in fixed assets in 2024.
- The decreasing trend from 2023 to 2022 could suggest a decrease in the efficiency of utilizing fixed assets to generate revenue, but the ratio rebounded in 2024 to its level in 2021.
- This ratio shows that Coherent Inc has been relatively effective in generating sales from its fixed assets.

2. Total Asset Turnover:
- The total asset turnover ratio has also shown a declining trend over the past five years.
- The ratio declined from 0.43 in 2020 to 0.30 in 2024, indicating a decrease in sales generated for every dollar of total assets employed by the company.
- This declining trend suggests that Coherent Inc may be becoming less efficient at generating sales from its total assets over time.
- A lower total asset turnover ratio could indicate inefficiencies in asset utilization or potential underperformance in sales generation relative to asset investment.

Overall, while Coherent Inc has shown relatively consistent performance in generating sales from fixed assets, the decreasing trend in total asset turnover raises concerns about the company's overall efficiency in utilizing all assets to drive revenue growth. Monitoring and potentially improving the total asset turnover ratio could be crucial for enhancing the company's long-term operational efficiency and profitability.