Dolby Laboratories (DLB)

Short-term

Turnover ratios

Dolby Laboratories' activity ratios provide insights into the efficiency of the company's operations in managing its assets and liabilities.

1. Inventory turnover: The trend in inventory turnover indicates a fluctuating pattern over the past five years, ranging from a high of 11.86 in 2021 to a low of 4.17 in 2024. A higher inventory turnover ratio suggests that Dolby Laboratories is selling its inventory more efficiently. The decrease in the ratio over the years may indicate a slowing down in inventory sales.

2. Receivables turnover: The receivables turnover ratio reflects how efficiently Dolby Laboratories is collecting payments from its customers. The decreasing trend in the ratio from 4.79 in 2020 to 2.60 in 2024 suggests a longer collection period, which may lead to potential liquidity concerns if not managed effectively.

3. Payables turnover: The payables turnover ratio indicates how quickly Dolby Laboratories is paying its suppliers. The increasing trend in payables turnover from 7.31 in 2021 to 8.08 in 2024 suggests that the company is taking longer to settle its payables. This may indicate improved liquidity in the short term but could lead to strained supplier relationships if not managed carefully.

4. Working capital turnover: The working capital turnover ratio shows how effectively Dolby Laboratories is utilizing its working capital to generate sales. The increasing trend in the ratio from 0.91 in 2020 to 1.64 in 2024 indicates an improvement in the efficiency of working capital utilization, suggesting that the company is generating more sales with its available working capital.

Overall, Dolby Laboratories should closely monitor these activity ratios to ensure optimal management of its assets and liabilities, striving to enhance efficiency in its operations and maintain a healthy financial position.

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Average number of days

Activity ratios provide insight into how efficiently a company manages its operations and assets. Let's analyze Dolby Laboratories' activity ratios:

1. Days of Inventory on Hand (DOH):
- Dolby Laboratories' days of inventory on hand have shown variability over the past five years, ranging from a low of 30.78 days in 2021 to a high of 87.62 days in 2024.
- A higher DOH indicates that Dolby Laboratories holds inventory for a longer period, which may tie up funds and result in higher storage costs.
- The trend suggests that Dolby Laboratories may be carrying more inventory in recent years, which could impact working capital management and warehouse efficiency.

2. Days of Sales Outstanding (DSO):
- Dolby Laboratories' days of sales outstanding have generally increased over the past five years, reaching 140.20 days in 2024 from 76.17 days in 2020.
- A higher DSO indicates that Dolby Laboratories takes longer to collect revenue from its sales, potentially impacting its cash flow and liquidity.
- The rising trend in DSO may signal challenges in credit management or customer payment terms, warranting closer monitoring to ensure timely cash inflows.

3. Number of Days of Payables:
- Dolby Laboratories' number of days of payables also showed variability over the past five years, ranging from 31.44 days in 2020 to 50.06 days in 2023.
- A higher number of days of payables suggests that Dolby Laboratories takes longer to settle its accounts payables, potentially benefiting from extended payment terms.
- The fluctuating trend in days of payables may reflect changes in vendor relationships or working capital strategies, impacting cash flow and supplier goodwill.

In summary, Dolby Laboratories' activity ratios indicate trends in inventory management, accounts receivable collection, and accounts payables settlement over the past five years. Monitoring these ratios can help assess operational efficiency, working capital utilization, and cash flow dynamics in the company's financial performance.

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Long-term

The long-term activity ratios of Dolby Laboratories reflect how efficiently the company is utilizing its fixed assets and total assets to generate revenues.

Fixed asset turnover, which measures the company's ability to generate revenues from its fixed assets, has shown a stable trend over the past five years. The ratio has ranged from 2.14 to 2.70, indicating that Dolby has been able to effectively utilize its fixed assets to generate sales. A higher fixed asset turnover ratio is generally favorable as it signifies that the company is efficiently using its fixed assets to generate revenue.

On the other hand, the total asset turnover ratio, which measures how efficiently the company is generating sales from all its assets, has shown some fluctuations over the same period. The ratio has ranged from 0.40 to 0.47, with a slight decrease in 2024 compared to the previous year. A lower total asset turnover ratio could indicate that the company is not effectively utilizing all of its assets to generate sales.

Overall, Dolby Laboratories' fixed asset turnover indicates consistent efficiency in generating revenue from its fixed assets. However, the slight decrease in total asset turnover in 2024 may warrant further investigation to understand the factors contributing to this trend.