FormFactor Inc (FORM)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.89 | 4.94 | 5.33 | 5.53 | 5.84 |
| Receivables turnover | 7.12 | 8.45 | 6.64 | 6.44 | 5.99 |
| Payables turnover | 8.55 | 8.78 | 10.28 | 8.84 | 11.88 |
| Working capital turnover | 1.66 | 2.29 | 2.04 | 2.09 | 2.08 |
FormFactor Inc's activity ratios provide insight into how efficiently the company is managing its assets and liabilities to generate sales.
1. Inventory turnover: The inventory turnover ratio has been gradually decreasing from 5.84 in 2019 to 4.89 in 2023. This indicates that the company is taking longer to sell its inventory, which could result in higher carrying costs or potential obsolescence.
2. Receivables turnover: The receivables turnover ratio has been fluctuating but generally improving over the years, from 5.99 in 2019 to 7.12 in 2023. This suggests that FormFactor Inc is collecting its receivables more quickly, which is a positive sign of efficient credit management.
3. Payables turnover: The payables turnover ratio has been variable but relatively stable, ranging from 8.55 in 2023 to 11.88 in 2019. A higher ratio indicates that the company is paying its suppliers more quickly, which can improve relationships but may also impact cash flow if not managed effectively.
4. Working capital turnover: The working capital turnover ratio has been decreasing over the years, from 2.08 in 2019 to 1.66 in 2023. This indicates that the company is generating less revenue for each dollar of working capital employed, which could suggest inefficiencies in asset management or liquidity issues.
Overall, FormFactor Inc's activity ratios show a mixed performance in terms of asset and liability management efficiency. The company may need to focus on optimizing its inventory turnover and working capital turnover to improve overall operational effectiveness and financial performance.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 74.63 | 73.84 | 68.42 | 66.00 | 62.53 |
| Days of sales outstanding (DSO) | days | 51.24 | 43.20 | 54.98 | 56.65 | 60.89 |
| Number of days of payables | days | 42.67 | 41.55 | 35.49 | 41.27 | 30.73 |
FormFactor Inc's activity ratios provide insights into how efficiently the company manages its inventory, collects receivables, and pays its suppliers.
1. Days of Inventory on Hand (DOH):
- FormFactor's days of inventory on hand have been increasing over the past five years, indicating a longer time taken to sell its inventory.
- An increase in DOH could suggest potential issues such as overstocking, slowing sales, or inefficiencies in inventory management.
2. Days of Sales Outstanding (DSO):
- The company's days of sales outstanding decreased from 2019 to 2020, signaling an improvement in its ability to collect receivables efficiently.
- However, there was a slight increase in DSO in 2021 and a more significant increase in 2023, which may indicate difficulties in collecting payments from customers.
3. Number of Days of Payables:
- FormFactor Inc has been extending the number of days it takes to pay its suppliers over the past five years.
- A longer period of payables may suggest that the company is effectively managing its cash flow by delaying payments, but it could also strain relationships with suppliers if not managed carefully.
Overall, FormFactor Inc should closely monitor its activity ratios to ensure efficient inventory management, prompt collection of receivables, and strategic management of payables to maintain a healthy financial position.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 3.59 | 3.92 | 5.23 | 6.66 | 9.99 |
| Total asset turnover | 0.66 | 0.74 | 0.75 | 0.72 | 0.70 |
FormFactor Inc's long-term activity ratios provide insights into how efficiently the company utilizes its assets to generate sales.
1. Fixed Asset Turnover:
- The fixed asset turnover ratio indicates the company's ability to generate revenue from its investment in fixed assets such as property, plant, and equipment.
- The trend shows a decreasing fixed asset turnover over the past five years, declining from 9.99 in 2019 to 3.59 in 2023.
- The decreasing trend may indicate that the company is less efficient in generating sales from its fixed assets, potentially signaling underutilization or inefficiencies in asset management.
2. Total Asset Turnover:
- The total asset turnover ratio measures how effectively the company utilizes all its assets to generate revenue.
- The total asset turnover has fluctuated over the years, with a slight increase from 0.70 in 2019 to 0.66 in 2023.
- A lower total asset turnover ratio could suggest that the company is not generating sufficient sales compared to its total asset base.
Overall, the decreasing fixed asset turnover and relatively low total asset turnover for FormFactor Inc may indicate potential inefficiencies in asset utilization. This analysis suggests that the company may need to improve its operational efficiency and asset management strategies to enhance its long-term profitability.