MKS Instruments Inc (MKSI)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 5.04 | 2.83 | 3.63 | 3.47 | 3.37 |
| Receivables turnover | 5.41 | 4.69 | 6.61 | 5.86 | 5.46 |
| Payables turnover | 15.26 | 6.49 | 12.48 | 15.75 | 17.62 |
| Working capital turnover | 1.76 | 1.83 | 1.73 | 1.61 | 1.67 |
MKS Instruments Inc has shown fluctuations in its activity ratios over the past five years.
1. Inventory turnover: This ratio measures how effectively the company is managing its inventory. MKS's inventory turnover has improved steadily over the years, indicating that the company is selling its inventory more frequently. In 2023, the inventory turnover ratio reached 5.04, suggesting that MKS is selling its inventory more than five times during the year.
2. Receivables turnover: This ratio reflects how efficiently the company is collecting its accounts receivable. MKS's receivables turnover has also shown a positive trend, increasing from 4.69 in 2019 to 5.41 in 2023. This indicates that the company is collecting its receivables at a faster rate.
3. Payables turnover: The payables turnover ratio indicates how quickly the company is paying its suppliers. MKS's payables turnover has varied over the years, reaching a high of 17.62 in 2019 and then decreasing to 15.26 in 2023. A higher payables turnover ratio suggests that the company is paying its suppliers more quickly.
4. Working capital turnover: This ratio measures how efficiently the company is utilizing its working capital to generate sales. MKS's working capital turnover has fluctuated but has remained relatively stable over the years. In 2023, the working capital turnover ratio was 1.76, indicating that for every dollar of working capital invested, MKS generated $1.76 in sales.
Overall, MKS Instruments Inc's activity ratios show a positive trend in inventory turnover and receivables turnover, indicating improved efficiency in managing inventory and collecting receivables. However, the fluctuations in payables turnover suggest varying payment practices with suppliers. The working capital turnover ratio has remained relatively stable, showing consistent efficiency in utilizing working capital to generate sales.
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 | 72.49 | 128.97 | 100.44 | 105.08 | 108.32 |
| Days of sales outstanding (DSO) | days | 67.51 | 77.82 | 55.25 | 62.30 | 66.84 |
| Number of days of payables | days | 23.92 | 56.24 | 29.24 | 23.18 | 20.72 |
The activity ratios provide insights into how efficiently MKS Instruments Inc manages its inventory, receivables, and payables.
1. Days of Inventory on Hand (DOH):
- The trend of DOH shows a significant improvement from 2019 to 2023, indicating better inventory management. Higher DOH in earlier years such as 2019 and 2020 suggests that MKS Instruments held inventory for a longer period before selling, which could tie up capital.
- The decrease in DOH from 2020 to 2023 reflects a more efficient inventory turnover process, which could result from better demand forecasting or inventory control.
2. Days of Sales Outstanding (DSO):
- The trend of DSO indicates a fluctuation over the years, with a peak in 2022 and improvements in 2023. A decreasing DSO suggests that MKS Instruments is collecting receivables more quickly.
- Lower DSO in 2023 compared to 2022 and 2019 signifies better credit management practices or more prompt invoice collections, enhancing cash flow.
3. Number of Days of Payables:
- The days of payables exhibit variability over the years, with the lowest in 2019 and 2020. A longer period of payables suggests that MKS Instruments is taking longer to pay its suppliers, potentially benefiting from trade credit terms.
- The increase in the number of days of payables from 2020 to 2023 may indicate a change in supplier payment strategies or relationships.
Overall, the improving trend in DOH and DSO, along with the variable trend in the number of days of payables, suggest that MKS Instruments Inc has been enhancing its working capital management efficiency in recent years.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 4.16 | 4.22 | 8.97 | 8.09 | 7.70 |
| Total asset turnover | 0.36 | 0.29 | 0.64 | 0.59 | 0.55 |
MKS Instruments Inc's long-term activity ratios, specifically the fixed asset turnover and total asset turnover, provide insight into how efficiently the company is utilizing its assets to generate sales.
The fixed asset turnover ratio has fluctuated over the past five years, indicating changes in the efficiency of the company's fixed asset utilization. In 2023 and 2022, the fixed asset turnover ratios were 4.16 and 4.22, respectively, suggesting that for every dollar invested in fixed assets, the company generated $4.16 and $4.22 in sales, showcasing consistent performance in this aspect. However, there was a significant decrease in efficiency in 2021 when the ratio surged to 8.97, which might indicate improved asset utilization or changes in the asset base. The subsequent years saw a slight decline but remained relatively stable, indicating stable asset efficiency.
On the other hand, the total asset turnover ratio, which measures how efficiently the company is using all its assets to generate revenue, depicts a gradual improvement over the five-year period. In 2023, the total asset turnover ratio stood at 0.36, showcasing that for every dollar of assets, the company generated $0.36 in sales, indicating increasing efficiency in asset utilization compared to previous years. This improvement trend is evident when compared to the ratios of 2022 (0.29), 2021 (0.64), 2020 (0.59), and 2019 (0.55), signifying that the company is generating more revenue per dollar of assets employed.
Overall, the analysis of MKS Instruments Inc's long-term activity ratios suggests that the company has maintained relatively strong fixed asset turnover efficiency over the years, with fluctuations possibly due to changes in the asset base or operational strategies. Furthermore, the consistent improvement in the total asset turnover ratio demonstrates enhanced efficiency in utilizing all assets to generate revenue, reflecting positively on the company's operational performance and asset utilization strategies.