Ichor Holdings Ltd (ICHR)

Short-term

Turnover ratios

For Ichor Holdings Ltd, let's analyze the activity ratios provided:

1. Inventory Turnover: The inventory turnover ratio measures how efficiently a company manages its inventory by indicating how many times a company sells its average inventory balance during a period. A higher turnover ratio generally indicates that the company is selling goods more quickly. In the case of Ichor Holdings Ltd, the inventory turnover has decreased from 5.86 in 2020 to 2.98 in 2024. This decline could potentially indicate slower sales of inventory or an increase in average inventory levels.

2. Receivables Turnover: The receivables turnover ratio measures how effectively a company extends credit and collects debts from its customers. A higher turnover ratio suggests that the company is efficient in collecting payments from customers. However, in this case, the data shows that receivables turnover is not provided for the years 2020 to 2024.

3. Payables Turnover: The payables turnover ratio evaluates how efficiently a company pays its suppliers. A higher payables turnover ratio indicates that the company is paying its suppliers more quickly. Similar to receivables turnover, payables turnover data is not provided for Ichor Holdings Ltd from 2020 to 2024.

4. Working Capital Turnover: The working capital turnover ratio assesses how effectively a company utilizes its working capital to generate sales. A higher working capital turnover ratio indicates that the company efficiently utilizes its working capital to drive revenue. For Ichor Holdings Ltd, the working capital turnover has fluctuated over the years, peaking in 2021 with a ratio of 4.31 but declining to 2.68 by 2024. This indicates potential changes in how efficiently the company is using its working capital to generate sales.

In conclusion, based on the provided activity ratios data for Ichor Holdings Ltd, it is observed that there are fluctuations in the efficiency of managing inventory and working capital over the years, while information on receivables and payables turnover is not available for analysis. The company may need to further investigate the reasons behind these fluctuations and take appropriate actions to improve efficiency in managing its assets and generating sales.

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Average number of days

Based on the provided data for Ichor Holdings Ltd, let's analyze their activity ratios:

1. Days of Inventory on Hand (DOH):
- The trend for the Days of Inventory on Hand has been increasing over the years, from 62.31 days in December 2020 to 122.42 days in December 2024.
- This indicates that the company is holding inventory for a longer period, which may tie up cash and increase carrying costs.
- A high DOH could suggest inefficiencies in inventory management or challenges in sales forecasting.

2. Days of Sales Outstanding (DSO):
- The data does not provide information on Days of Sales Outstanding for any of the years, which limits our ability to assess the efficiency of the company in collecting accounts receivable.
- DSO is a critical metric to evaluate how quickly a company collects payments from its customers, and a lower DSO is generally favorable.

3. Number of Days of Payables:
- Similar to DSO, the provided data does not include information on the Number of Days of Payables for any of the years.
- The Days of Payables metric is essential for understanding how long a company takes to pay its suppliers, which can impact cash flow management and relationships with vendors.

In conclusion, based on the available data, the increasing trend in Days of Inventory on Hand for Ichor Holdings Ltd raises concerns about inventory management efficiency and potential cash flow implications. However, without information on Days of Sales Outstanding and the Number of Days of Payables, a comprehensive analysis of the company's overall working capital management is limited.

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Long-term

Ichor Holdings Ltd's fixed asset turnover ratio, which measures how efficiently the company generates revenue from its fixed assets, decreased from 21.87 in 2020 to 9.54 in 2021, then increased to 13.05 in 2022. However, the data is missing for 2023 and 2024. The significant drop in 2021 suggests a decrease in the revenue generated relative to fixed assets, but the subsequent increase in 2022 indicates some improvement.

Meanwhile, the total asset turnover ratio, reflecting the company's ability to generate sales from its total assets, declined from 1.18 in 2020 to 0.85 in 2024, with decreases also seen in 2021 and 2023. This trend suggests a decrease in sales relative to total assets over the years, which could be due to various factors such as inefficient asset utilization or declining sales volumes.

Overall, a fluctuating fixed asset turnover and a declining total asset turnover may indicate potential issues with asset efficiency and utilization at Ichor Holdings Ltd. Further analysis into the company's operations and asset management strategies would be required to understand the reasons behind these trends and to identify potential areas for improvement.