First Solar Inc (FSLR)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover	2.46	4.10	3.29	3.58	5.67
Receivables turnover	2.47	8.08	6.81	9.26	4.63
Payables turnover	9.74	7.47	11.34	11.08	11.53
Working capital turnover	1.00	0.95	1.19	1.25	1.34

First Solar Inc's activity ratios provide insight into how efficiently the company manages its assets and liabilities to generate sales.

1. Inventory Turnover:
- First Solar's inventory turnover has fluctuated over the past five years, ranging from 2.46 in 2023 to 5.06 in 2019.
- A lower inventory turnover ratio indicates that inventory is being held for a longer period before being sold. In 2023, the ratio decreased, which may suggest slower sales or excess inventory.

2. Receivables Turnover:
- The receivables turnover ratio measures how quickly the company collects payments from customers. First Solar's ratio ranged from 2.39 in 2023 to 9.21 in 2020.
- A higher receivables turnover ratio indicates efficient collection practices. A decrease in the ratio in 2023 compared to the previous year might suggest a slowdown in collections.

3. Payables Turnover:
- The payables turnover ratio reflects how quickly the company pays its suppliers. First Solar's ratio ranged from 9.74 in 2023 to 11.53 in 2019.
- A higher payables turnover ratio can indicate that the company is effectively managing its payables. In 2023, the ratio increased, suggesting more frequent payments to suppliers.

4. Working Capital Turnover:
- The working capital turnover ratio measures how effectively working capital is utilized to generate sales. First Solar's ratio ranged from 0.95 in 2022 to 1.34 in 2019.
- A higher working capital turnover ratio indicates efficient utilization of working capital. In 2023, the ratio increased slightly, which could indicate improved efficiency in utilizing working capital for sales generation.

In conclusion, analyzing these activity ratios can help stakeholders assess First Solar's efficiency in managing inventory, receivables, payables, and working capital to support its sales operations.

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	148.30	88.96	110.88	102.02	64.39
Days of sales outstanding (DSO)	days	147.64	45.20	53.62	39.41	78.76
Number of days of payables	days	37.47	48.88	32.18	32.96	31.66

First Solar Inc's Days of Inventory on Hand (DOH) has shown a consistent increase over the past five years, indicating that the company is holding onto its inventory for a longer period before turning it into sales. This trend could potentially signal inefficiencies in inventory management and a risk of inventory obsolescence.

On the other hand, the Days of Sales Outstanding (DSO) have fluctuated over the same period, with a significant increase in 2023 compared to the prior year. This suggests that the company is taking longer to collect revenue from its customers, possibly indicating issues with credit policies or customer payment delays.

The number of Days of Payables has also varied over the years, with a notable increase in 2023 compared to the previous year. This implies that the company is taking longer to pay its suppliers, potentially indicating strained relationships or cash flow constraints.

Overall, the trends in these activity ratios suggest that First Solar Inc may be facing challenges in managing its inventory levels, collecting receivables, and managing payables efficiently. It may need to implement improvements in its working capital management practices to enhance operational efficiency and cash flow performance.

Long-term

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Fixed asset turnover	0.75	0.74	1.10	1.13	1.40
Total asset turnover	0.32	0.32	0.39	0.38	0.41

First Solar Inc's long-term activity ratios provide insight into how effectively the company is utilizing its fixed and total assets to generate sales over the years. The fixed asset turnover ratio has been relatively stable, ranging from 0.74 to 1.15, with a slight decrease in 2023 to 0.75. This indicates that First Solar is generating $0.75 in sales for every dollar invested in fixed assets in 2023.

On the other hand, the total asset turnover ratio has also remained consistent, hovering around 0.32 to 0.41, with a slight decline to 0.32 in 2023. This suggests that the company is generating $0.32 in sales for every dollar invested in total assets in 2023.

Overall, both ratios show a trend of declining efficiency in utilizing assets to generate sales, potentially indicating challenges in optimizing asset utilization for revenue generation. Further analysis, along with insights into the company's strategy and industry dynamics, would be necessary to fully assess the implications of these ratios on First Solar's operational performance and long-term sustainability.