Fabrinet (FN)

Short-term

Turnover ratios

The analysis of Fabrinet's activity ratios over the period from June 2021 to June 2025 reveals several notable trends and patterns:

Inventory Turnover:
Fabrinet's inventory turnover has demonstrated an overall upward trend, moving from 3.93 times in 2021 to 5.46 times in 2024 before experiencing a slight decline to 5.17 times in 2025. The increase from 2021 to 2024 indicates an improvement in inventory management efficiency, suggesting that the company has become more effective at converting inventory into sales. The slight decrease in 2025 could imply a modest slowdown or a strategic holding of higher inventory levels, or potential supply chain adjustments.

Receivables Turnover:
The receivables turnover ratio has steadily declined from 5.39 times in 2021 to 4.51 times in 2025. This indicates a gradual elongation in the collection period, possibly pointing to more lenient credit terms extended to customers or increased difficulty in collecting accounts receivable. The trend suggests a need for monitoring credit policies to prevent potential cash flow pressures.

Payables Turnover:
Fabrinet’s payables turnover exhibits variability, with an increase from 4.78 times in 2021 to a peak of 6.06 times in 2023, followed by a decrease to 4.72 times in 2025. The upward movement until 2023 signifies a shorter period for paying suppliers, potentially reflecting improved liquidity or strategic payment management. The subsequent decline indicates a lengthening of payment periods, possibly as a response to cash management strategies or supplier negotiations.

Working Capital Turnover:
The working capital turnover ratio remained relatively stable within a narrow range, fluctuating from 2.07 in 2021 to 2.26 in 2023, then decreasing slightly to 1.98 in 2024 before rising marginally to 2.11 in 2025. This stability suggests consistent use of working capital to generate sales, though the slight fluctuations may reflect operational adjustments or strategic shifts in working capital management.

In summary, Fabrinet has exhibited improvements in inventory management efficiency, while receivables collection periods have lengthened. The company’s payables management shows a pattern of tightening and loosening over the period, and its working capital utilization remains broadly stable. These ratios collectively suggest ongoing operational adjustments aimed at balancing liquidity, efficiency, and supplier relations.

---

Average number of days

The analysis of Fabrinet’s activity ratios over the period from June 2021 to June 2025 reveals significant trends and shifts in operational efficiency.

Days of Inventory on Hand (DOH):
The company's inventory holding period experienced fluctuations during this timeframe. It increased from 92.93 days in June 2021 to a peak of 102.52 days in June 2022, indicating that inventory was held longer during that period, potentially implying slower inventory turnover or supply chain buildup. Subsequently, the DOH decreased substantially to 82.13 days in June 2023 and further declined to 66.91 days by June 2024. This reduction suggests improvements in inventory management, potentially reflecting increased operational efficiency or a strategic shift toward leaner inventories. The figure slightly increased to 70.55 days in June 2025 but remained lower than the levels observed in 2022 and early 2023, indicating a generally favorable trend towards faster inventory turnover.

Days of Sales Outstanding (DSO):
Fabrinet’s receivables collection period demonstrated a gradual lengthening trend over the period examined. Starting at approximately 67.67 days in June 2021, DSO increased to 73.04 days in June 2022 and remained relatively stable at 73.38 days in June 2023. The period extended further to 75.01 days in June 2024 and reached 81.01 days in June 2025. This consistent increase suggests a slowing in receivables collection efficiency, which may be due to longer credit terms, customer payment behavior, or differences in credit policies.

Number of Days of Payables:
The payables period exhibited notable variation. It was 76.29 days as of June 2021, increasing to 80.90 days in June 2022, indicating extended payment terms to suppliers. In June 2023, the payables period decreased significantly to 60.25 days, possibly reflecting a strategic tightening of payment schedules or changes in supplier payment terms. The period increased again to 63.82 days in June 2024 before rising sharply to 77.40 days in June 2025, surpassing previous levels and suggesting a renewed extension in payment obligations, potentially to optimize cash flows.

Overall Implications:
The trends indicate that Fabrinet has been progressively improving its inventory turnover, reducing the number of days inventory on hand, which can benefit operational efficiency and liquidity. Conversely, the lengthening DSO underscores a potential challenge in receivables management, possibly impacting working capital. The fluctuations in payables suggest active management of supplier payments, with periods of extension possibly leveraged to conserve cash.

In summary, the activity ratios reflect a company actively managing its working capital components but facing mixed developments: enhanced inventory efficiency alongside increasing receivables and variable payables management.

---

Long-term

The analysis of Fabrinet’s long-term activity ratios reveals notable trends over the fiscal periods from June 30, 2021, to June 30, 2024. The fixed asset turnover ratio demonstrates a consistent upward trajectory, increasing from 7.58 in 2021 to 8.52 in 2023, and further improving to 9.22 in 2024. This escalation indicates that the company has been increasingly efficient in utilizing its fixed assets to generate sales, reflecting optimized asset management and possibly better asset deployment or technological advancements that enhance productivity.

In contrast, the total asset turnover ratio shows a more moderate and somewhat volatile trend. It rose from 1.16 in 2021 to 1.34 in 2023, suggesting improved overall efficiency in asset utilization. However, it experienced a slight decline to 1.23 in 2024 and is projected to be slightly lower at 1.21 in 2025. This pattern may indicate that while fixed asset utilization has become more effective, the overall efficiency in using all assets, including current assets and intangible assets, has stabilized or slightly diminished in recent periods.

Overall, the data suggests that Fabrinet has made significant progress in efficiently employing its fixed assets, leading to an increasing fixed asset turnover ratio. Meanwhile, the total asset turnover remains relatively stable but with a trend toward slight moderation in the most recent period. These ratios reflect a positive trajectory in long-term asset efficiency, particularly in fixed asset management, which can be viewed as a strength in the company's operational leverage and fixed asset optimization.