Monolithic Power Systems Inc (MPWR)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover	2.08	1.67	2.01	2.41	2.21
Receivables turnover	7.92	9.37	10.96	12.28	11.38
Payables turnover	12.71	12.13	6.29	9.92	10.33
Working capital turnover	1.15	1.56	1.35	1.21	1.13

The inventory turnover ratio for Monolithic Power System Inc has fluctuated over the past five years, ranging from 1.67 to 2.41. This ratio indicates how efficiently the company manages its inventory by measuring how many times it sells and replaces its inventory within a specific period. The increase in inventory turnover from 2022 to 2023 suggests that the company is managing its inventory more efficiently in the most recent year.

The receivables turnover ratio shows how many times a company collects its accounts receivable during a period. Monolithic Power System Inc has maintained a relatively stable receivables turnover ratio over the past five years, ranging from 9.37 to 12.28. A higher receivables turnover ratio indicates that the company is collecting its receivables more quickly.

The payables turnover ratio measures how often a company pays its suppliers. Monolithic Power System Inc's payables turnover ratio has varied significantly over the past five years, with a noticeable increase in 2023 compared to the preceding years. A higher payables turnover ratio may indicate that the company is paying its suppliers more quickly.

The working capital turnover ratio assesses how effectively a company utilizes its working capital to generate revenue. Monolithic Power System Inc's working capital turnover ratio has fluctuated over the past five years, with a slight decrease in 2023 compared to the previous year. A higher working capital turnover ratio signifies that the company is generating more revenue per dollar of working capital invested.

Overall, the activity ratios for Monolithic Power System Inc illustrate various aspects of the company's operational efficiency, including inventory management, accounts receivable collection, supplier payment practices, and working capital utilization. Monitoring these ratios over time can provide insights into the company's performance and efficiency in managing its operating activities.

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	175.07	218.97	181.28	151.46	165.26
Days of sales outstanding (DSO)	days	46.07	38.95	33.31	29.72	32.08
Number of days of payables	days	28.73	30.09	58.02	36.81	35.35

Days of Inventory on Hand (DOH) measures how many days, on average, a company holds inventory before selling it. A decreasing trend in DOH is generally favorable as it indicates efficient inventory management. Monolithic Power System Inc's DOH has fluctuated over the past five years, with a peak in 2022 and a decline in 2023. However, the current level of 175.07 days in 2023 is still relatively high compared to previous years.

Days of Sales Outstanding (DSO) evaluates how long it takes for a company to collect its accounts receivable. A lower DSO suggests efficient accounts receivable management. Monolithic Power System Inc has shown a decreasing trend in DSO over the past five years, indicating an improvement in collecting payments from customers. The DSO decreased from 32.08 days in 2019 to 36.05 days in 2023.

Number of Days of Payables measures how long it takes for a company to pay its suppliers. An increasing trend in this ratio could indicate that the company is taking longer to pay its suppliers. Monolithic Power System Inc's days of payables have fluctuated over the past five years, with a significant increase in 2021 and a subsequent decrease in 2023. The current level of 28.73 days in 2023 is lower compared to previous years, suggesting the company is paying its suppliers more quickly.

Overall, Monolithic Power System Inc's activity ratios suggest varying levels of efficiency in managing inventory, accounts receivable, and accounts payable over the past five years. It is important for the company to closely monitor these ratios to ensure optimal working capital management and operational efficiency.

Long-term

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Fixed asset turnover	4.94	5.02	3.33	3.00	2.75
Total asset turnover	0.75	0.87	0.76	0.70	0.66

The long-term activity ratios of Monolithic Power System Inc provide insights into the company's efficiency in utilizing its assets to generate sales over the years.

1. Fixed Asset Turnover:
- Monolithic Power System Inc's fixed asset turnover ratio has shown a fluctuating trend over the past five years, ranging from 2.75 in 2019 to 5.02 in 2022. This ratio measures how effectively the company is using its fixed assets to generate revenue.
- The increasing trend in the fixed asset turnover ratio from 2019 to 2022 indicates that the company has been able to generate more revenue per dollar invested in fixed assets during this period.
- However, the slight decrease in 2023 from the peak in 2022 suggests a potential decrease in the efficiency of utilizing fixed assets to generate sales. Further investigation is needed to understand the reasons behind this decline.

2. Total Asset Turnover:
- Monolithic Power System Inc's total asset turnover ratio has also shown fluctuations, ranging from 0.66 in 2019 to 0.87 in 2022. This ratio reflects the company's ability to generate sales in relation to its total assets.
- The gradual increase in the total asset turnover ratio from 2019 to 2022 indicates that the company has become more efficient in generating sales relative to its total asset base during this period.
- However, the decrease in 2023 to 0.75 suggests a potential decline in the company's ability to generate sales in relation to its total assets. Further analysis is necessary to identify the factors contributing to this decline.

In conclusion, while Monolithic Power System Inc has shown improvements in asset turnover efficiency over the years, the recent fluctuations in both fixed asset turnover and total asset turnover ratios warrant further investigation to assess the company's long-term asset management strategies and operational performance.