Ichor Holdings Ltd (ICHR)

Working capital turnover

Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Revenue US$ in thousands 791,741 1,269,010 1,089,730 905,509 610,190
Total current assets US$ in thousands 401,365 513,458 462,771 495,714 276,947
Total current liabilities US$ in thousands 98,962 166,292 208,303 162,034 163,867
Working capital turnover 2.62 3.66 4.28 2.71 5.40

December 31, 2023 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $791,741K ÷ ($401,365K – $98,962K)
= 2.62

The working capital turnover ratio measures how efficiently a company is utilizing its working capital to generate sales revenue. The trend analysis of Ichor Holdings Ltd’s working capital turnover over the past five years shows fluctuations.

In 2023, the working capital turnover ratio decreased to 2.62 from 3.66 in 2022, indicating a decline in the company's efficiency in utilizing its working capital to generate sales. This could imply that the company may be facing challenges in managing its working capital effectively or experiencing a decrease in sales relative to its working capital.

Comparing this to the high of 5.40 in 2019, the sharp decline to 2.62 in 2023 is significant and may warrant further investigation. It suggests that Ichor Holdings Ltd may be facing operational challenges that are impacting its ability to efficiently convert working capital into sales.

Overall, the downward trend in the working capital turnover ratio over the past five years for Ichor Holdings Ltd indicates a potential decline in operational efficiency or sales performance, which could require management attention to improve the company's working capital management practices.