Diodes Incorporated (DIOD)

Short-term

Turnover ratios

Inventory Turnover:
Diodes, Inc.'s inventory turnover has fluctuated over the past five years, ranging from 2.57 to 3.31. This ratio indicates how efficiently the company manages its inventory by selling and replacing stock. A higher turnover ratio generally suggests effective inventory management, as seen in 2022 and 2019, although the ratio declined in 2023.

Receivables Turnover:
The trend in Diodes, Inc.'s receivables turnover demonstrates a consistent ability to collect revenues from customers over the years. The ratio has generally increased from 3.84 in 2020 to 5.42 in 2022 before settling at 4.47 in 2023. A higher turnover ratio is favorable as it indicates effective credit management and timely collection of receivables.

Payables Turnover:
The payables turnover ratio of Diodes, Inc. has been relatively volatile, varying between 4.75 and 7.31 over the past five years. This ratio reflects the speed at which the company pays its suppliers. A higher payables turnover ratio, as seen in 2022, may suggest efficient utilization of supplier credit terms, while a lower ratio, as in 2023, could indicate a shift in payment practices.

Working Capital Turnover:
Diodes, Inc.'s working capital turnover has remained relatively stable around 2.38 to 2.74, indicating how efficiently the company utilizes its working capital to generate sales revenue. A higher turnover ratio signifies effective management of working capital resources to support business operations and drive sales. In general, a consistent working capital turnover ratio reflects the company's ability to optimize its working capital efficiently.

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Average number of days

Diodes, Inc.'s activity ratios provide insight into the efficiency of the company's operations.

1. Days of Inventory on Hand (DOH):
- The trend in DOH shows fluctuations over the years, with a high of 141.76 days in 2023 and a low of 110.19 days in 2019.
- A higher DOH indicates that Diodes, Inc. is holding inventory for a longer period, tying up capital and potentially facing risks of obsolescence.
- The increase in 2023 compared to the previous years may suggest issues with inventory management and supply chain disruptions.

2. Days of Sales Outstanding (DSO):
- The DSO trend fluctuates, with a high of 95.04 days in 2020 and a low of 67.37 days in 2022.
- A higher DSO implies that Diodes, Inc. takes more time to collect receivables, which could impact cash flow and liquidity.
- The decrease in DSO from 2020 to 2022 is a positive indication of potentially improved collections efficiency.

3. Number of Days of Payables:
- The trend in the number of days of payables also varies, with a high of 76.85 days in 2020 and a low of 49.91 days in 2022.
- A higher number of days of payables suggests that the company takes longer to pay its suppliers, which could indicate liquidity issues or strained relationships.
- The decrease in days of payables from 2020 to 2022 could indicate a change in the company's payment terms or better management of payables.

Overall, Diodes, Inc. should focus on optimizing its inventory management to reduce the days of inventory on hand and strive to improve collections efficiency to lower the days of sales outstanding, while also maintaining healthy relationships with suppliers to manage the number of days of payables effectively.

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Long-term

The long-term activity ratios of Diodes, Inc. provide insights into the company's ability to efficiently utilize its fixed assets and total assets to generate sales revenue.

1. Fixed Asset Turnover:
The fixed asset turnover ratio measures how well the company generates sales using its fixed assets. A higher ratio indicates that the company is more efficient in using its fixed assets to generate revenue. Over the past five years, Diodes, Inc. has experienced fluctuations in its fixed asset turnover ratio. The ratio declined from 3.10 in 2021 to 2.23 in 2023. This suggests that the company's efficiency in utilizing its fixed assets to generate sales revenue has decreased. However, it is worth noting that the ratio remains above 2, indicating that the company is still effectively utilizing its fixed assets to generate revenue.

2. Total Asset Turnover:
The total asset turnover ratio reflects how efficiently the company generates sales revenue using all its assets, both fixed and current. A higher ratio suggests better asset utilization. Diodes, Inc. has also shown fluctuations in its total asset turnover ratio over the past five years. The ratio increased from 0.62 in 2020 to 0.87 in 2022, but then decreased to 0.70 in 2023. This indicates that while the company may have improved its asset utilization in 2022, there was a slight decline in efficiency in 2023.

Overall, the trend in both fixed asset turnover and total asset turnover ratios for Diodes, Inc. suggests some variability in the company's ability to effectively generate sales revenue from its assets over the years. Further analysis of the underlying factors driving these fluctuations would be necessary to fully understand the company's operational performance.