Fabrinet (FN)

Short-term

Turnover ratios

Fabrinet's inventory turnover has shown an increasing trend over the past five years, indicating that the company is managing its inventory more efficiently. This ratio measures how many times a company's inventory is sold and replaced within a given period. The rising inventory turnover suggests that Fabrinet is effectively managing its inventory levels, which can lead to lower carrying costs and better cash flow management.

The receivables turnover ratio has been relatively stable over the years, indicating that Fabrinet is efficiently collecting on its accounts receivable. This ratio reflects how many times a company's accounts receivable are collected within a specific period, and a consistent level suggests effective credit and collection policies.

In terms of payables turnover, Fabrinet's ratio has fluctuated but generally remained within a reasonable range. This ratio shows how many times the company pays its suppliers within a given period. A higher payables turnover can indicate that the company is managing its payables effectively and possibly benefiting from favorable credit terms.

The working capital turnover ratio measures how effectively Fabrinet is utilizing its working capital to generate sales. The decreasing trend in this ratio over the years may indicate that the company is becoming less efficient in using its working capital to drive revenue growth. It's important for the company to closely monitor and improve this ratio to ensure optimal utilization of its working capital resources.

Overall, an analysis of Fabrinet's activity ratios suggests that the company is effectively managing its inventory and receivables, but may need to focus on improving its working capital turnover to enhance operational efficiency and generate higher sales from its capital investment.

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Average number of days

Fabrinet's activity ratios provide insight into the efficiency of the company's operations.

1. Days of Inventory on Hand (DOH):
- The company's DOH has shown a decreasing trend over the past five years, from 77.67 days in 2020 to 66.91 days in 2024. This indicates that Fabrinet has been managing its inventory more efficiently, holding less inventory for a shorter period. Lower DOH values suggest better inventory turnover and liquidity.

2. Days of Sales Outstanding (DSO):
- DSO measures the average number of days it takes for the company to collect its accounts receivable. Fabrinet's DSO has varied over the years but has generally increased from 66.02 days in 2020 to 75.01 days in 2024. A higher DSO may indicate slower collections and potential liquidity issues.

3. Number of Days of Payables:
- Fabrinet's days of payables have fluctuated over the years, but the trend is relatively stable. The company takes around 63 to 80 days to pay its suppliers. A longer period of payables may indicate favorable credit terms with suppliers, helping to improve cash flow and liquidity.

Overall, the trend in Fabrinet's activity ratios suggests improvements in inventory management and stable payment practices. However, the increasing DSO warrants attention to ensure timely collection of receivables and maintain healthy liquidity levels.

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Long-term

Fabrinet's long-term activity ratios provide insights into how effectively the company is utilizing its assets to generate sales. The fixed asset turnover ratio has been consistently increasing over the past five years, indicating that the company is generating more revenue from its fixed assets. This improvement suggests that Fabrinet is becoming more efficient in utilizing its long-term assets to generate sales.

On the other hand, the total asset turnover ratio has fluctuated over the same period, but generally shows a decreasing trend. This indicates that Fabrinet's overall asset efficiency in generating sales has been somewhat variable. However, despite the fluctuations, the total asset turnover ratio is still at a level that suggests the company is effectively utilizing its total assets to generate revenue.

Overall, Fabrinet's long-term activity ratios reflect a positive trend in asset efficiency, with the fixed asset turnover ratio showing consistent improvement and the total asset turnover ratio indicating a reasonable level of asset utilization to drive sales.