Monolithic Power Systems Inc (MPWR)

Fixed asset turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Revenue	US$ in thousands	1,821,070	1,794,150	1,207,800	844,452	627,921
Property, plant and equipment	US$ in thousands	368,952	357,157	362,962	281,528	228,315
Fixed asset turnover		4.94	5.02	3.33	3.00	2.75

December 31, 2023 calculation

Fixed asset turnover = Revenue ÷ Property, plant and equipment
= $1,821,070K ÷ $368,952K
= 4.94

Monolithic Power System Inc's fixed asset turnover has shown a generally increasing trend over the past five years, indicating a more efficient utilization of its fixed assets to generate sales revenue. The company's fixed asset turnover ratio was 4.94 in 2023, slightly lower than the previous year but still relatively high compared to the earlier years. This suggests that the company has been able to generate approximately $4.94 in sales for every $1 invested in fixed assets in 2023.

The improvement in fixed asset turnover from 2019 to 2023 indicates that Monolithic Power System Inc has managed to enhance its operational efficiency and productivity, possibly through better asset management or streamlined production processes. A higher fixed asset turnover ratio is generally seen as a positive indicator of operational efficiency and effective resource utilization.

However, it is important to note that a very high fixed asset turnover ratio may also indicate aggressive sales practices or underinvestment in fixed assets which could potentially affect long-term sustainability. Monitoring this ratio in conjunction with other financial metrics can provide a more comprehensive assessment of the company's financial health and operational performance.