First Solar Inc (FSLR)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 2.17 | 2.46 | 4.10 | 3.29 | 3.58 |
| Receivables turnover | 2.49 | 2.47 | 8.08 | 6.81 | 9.26 |
| Payables turnover | 4.87 | 9.74 | 7.47 | 11.34 | 11.08 |
| Working capital turnover | 1.40 | 1.00 | 0.95 | 1.19 | 1.25 |
First Solar Inc's inventory turnover ratio has shown some fluctuations over the years, decreasing from 3.58 in 2020 to 2.17 in 2024. This indicates a decrease in the efficiency of managing and selling inventory.
In terms of receivables turnover, there was a significant decline from 9.26 in 2020 to 2.49 in 2024. This suggests that the company is taking longer to collect payments from its customers, potentially signaling issues with credit policies or customer payment behavior.
The payables turnover ratio for First Solar Inc also experienced fluctuations, decreasing from 11.08 in 2020 to 4.87 in 2024. A lower payables turnover could indicate a longer payment period for the company's payables or potential challenges in negotiating favorable credit terms with suppliers.
Looking at the working capital turnover, it decreased from 1.25 in 2020 to 1.40 in 2024, with some ups and downs in between. This ratio reflects how effectively the company is utilizing its working capital to generate sales. The fluctuation in this ratio indicates variability in the efficiency of using working capital to support operations.
Overall, the activity ratios for First Solar Inc highlight some inconsistencies in managing inventory, receivables, payables, and working capital, which could impact the company's overall operational efficiency and financial performance.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 168.54 | 148.30 | 88.96 | 110.88 | 102.02 |
| Days of sales outstanding (DSO) | days | 146.36 | 147.64 | 45.20 | 53.62 | 39.41 |
| Number of days of payables | days | 74.94 | 37.47 | 48.88 | 32.18 | 32.96 |
First Solar 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):
- First Solar's DOH has shown fluctuations over the years, ranging from 88.96 days in 2022 to 168.54 days in 2024. A higher DOH indicates that inventory turnover is slower, which may tie up working capital and increase carrying costs. The increase in DOH from 2022 to 2024 may suggest potential challenges in managing inventory levels efficiently.
2. Days of Sales Outstanding (DSO):
- The DSO for First Solar has varied significantly, from 39.41 days in 2020 to 146.36 days in 2024. A higher DSO implies that the company is taking longer to collect payments from customers, which could impact cash flow. The substantial increase in DSO from 2022 to 2024 may point to potential issues with credit policies or customer payment delays.
3. Number of Days of Payables:
- The number of days of payables for First Solar ranged from 32.18 days in 2021 to 74.94 days in 2024. A higher number of days of payables indicates that the company is taking longer to pay its suppliers, which could be a strategy to improve cash flow or negotiate better terms. The notable increase in payables days from 2023 to 2024 suggests a shift in the company's payment practices.
In summary, First Solar's activity ratios reflect varying levels of efficiency in managing inventory, collecting receivables, and paying suppliers over the years. Monitoring and optimizing these ratios are crucial for improving working capital management and overall operational performance.
See also:
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 0.78 | 0.75 | 0.74 | 1.10 | 1.13 |
| Total asset turnover | 0.35 | 0.32 | 0.32 | 0.39 | 0.38 |
The fixed asset turnover ratio for First Solar Inc has shown a slight decline from 1.13 in December 2020 to 0.78 in December 2024. This indicates that the company is generating less revenue relative to its fixed assets over the years, which may suggest underutilization or inefficiency in managing its fixed assets.
Similarly, the total asset turnover ratio has also displayed a decreasing trend, declining from 0.38 in December 2020 to 0.35 in December 2024. This implies that the company's ability to generate sales from its total assets has marginally decreased, reflecting potential challenges in efficiently utilizing its assets to generate revenue.
Overall, the declining trend in both fixed asset turnover and total asset turnover ratios for First Solar Inc over the specified period may raise concerns about the company's asset utilization efficiency and its ability to generate revenue effectively from its asset base. Further analysis and examination of the reasons behind these trends may be warranted to identify potential areas for improvement and enhance the company's long-term operating performance.