Keysight Technologies Inc (KEYS)

Short-term

Turnover ratios

The activity ratios of Keysight Technologies Inc provide insights into the efficiency of the company's management of its inventory, receivables, payables, and working capital.

- Inventory turnover has shown a relatively stable trend over the periods analyzed, ranging between 3.26 and 4.27. This indicates that, on average, inventory is turned over 3 to 4 times a year. The decrease in inventory turnover from 4.27 to 3.40 from Oct 31, 2021, to Oct 31, 2024, suggests a possible increase in inventory levels relative to sales.

- Receivables turnover has fluctuated, with values ranging from 4.82 to 8.65. A higher receivables turnover ratio indicates that the company is more efficient in collecting outstanding receivables. The decrease in receivables turnover from 8.65 to 4.82 from Oct 31, 2020, to Oct 31, 2024, suggests a potential lengthening of the collection period for receivables.

- Payables turnover has shown a relatively consistent trend, with values between 9.70 and 16.62. A higher payables turnover ratio indicates that the company is taking longer to pay its suppliers. The increase in payables turnover from 9.70 to 11.09 from Oct 31, 2022, to Oct 31, 2024, suggests the company is taking longer to pay its suppliers compared to the earlier period.

- Working capital turnover has varied, with values ranging from 1.57 to 2.73. A higher working capital turnover ratio indicates that the company is generating more revenue per dollar of working capital employed. The increase in working capital turnover from 1.57 to 1.76 from Jul 31, 2023, to Jan 31, 2024, suggests an improvement in the efficiency of working capital utilization during that period.

Overall, the analysis of these activity ratios provides valuable insights into Keysight Technologies Inc's operational efficiency and effectiveness in managing its resources and relationships with customers and suppliers.

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Average number of days

To analyze Keysight Technologies Inc's activity ratios, we will focus on three key ratios: Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables.

1. Days of Inventory on Hand (DOH): This ratio measures how efficiently the company manages its inventory. A lower DOH signifies a faster turnover of inventory, which is generally positive as it indicates efficient inventory management. Keysight's DOH has been fluctuating over the past years, ranging from 85.56 days to 111.80 days. The recent DOH of 107.50 days (as of Oct 31, 2024) is slightly higher than the previous quarter, indicating a slight decrease in inventory turnover efficiency.

2. Days of Sales Outstanding (DSO): DSO measures the average number of days it takes for the company to collect payment after a sale is made. A lower DSO is favorable as it indicates quicker collection of accounts receivable. Keysight's DSO has shown a decreasing trend over the analyzed periods, ranging from 42.18 days to 75.65 days. The most recent DSO of 75.65 days (as of Oct 31, 2024) is higher compared to the previous quarter, suggesting a potential delay in collecting payments from customers.

3. Number of Days of Payables: This ratio represents the average number of days it takes the company to pay its suppliers. A higher number of days of payables indicates that the company takes longer to settle its payables, which can be a positive for cash flow management. Keysight's number of days of payables has been relatively stable over the analyzed periods, ranging from 21.96 days to 37.61 days. The recent number of days of payables of 32.92 days (as of Oct 31, 2024) is slightly higher compared to the previous quarter, indicating a potential delay in paying suppliers.

In conclusion, while Keysight Technologies Inc has generally maintained stable activity ratios over the analyzed periods, the recent trends suggest a slight decrease in inventory turnover efficiency and delays in collecting payments from customers. Monitoring and managing these activity ratios will be crucial for improving working capital management and overall operational efficiency in the future.

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Long-term

Keysight Technologies Inc has shown consistent efficiency in utilizing its fixed assets to generate revenue over the past few years, as evidenced by its high fixed asset turnover ratios ranging from 6.43 to 7.90. This indicates that the company is effectively managing its fixed assets to generate sales.

On the other hand, the total asset turnover ratios range from 0.54 to 0.67, showing that the company is generating sales relative to its total assets. Despite some fluctuations, the total asset turnover ratios suggest that Keysight Technologies is efficiently using its total assets to generate revenue.

Overall, both the fixed asset turnover and total asset turnover ratios indicate that Keysight Technologies Inc is effectively managing its assets to generate sales, which is a positive sign for investors and stakeholders.