Monolithic Power Systems Inc (MPWR)

Payables turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cost of revenue	US$ in thousands	799,953	745,596	522,339	378,498	281,596
Payables	US$ in thousands	62,958	61,461	83,027	38,169	27,271
Payables turnover		12.71	12.13	6.29	9.92	10.33

December 31, 2023 calculation

Payables turnover = Cost of revenue ÷ Payables
= $799,953K ÷ $62,958K
= 12.71

The payables turnover ratio measures how efficiently a company is managing its accounts payable by assessing how many times during a period a company pays off its suppliers. A higher payables turnover ratio indicates that the company is paying its suppliers more frequently.

Analyzing Monolithic Power System Inc's payables turnover over the past 5 years, we observe fluctuations in the ratio.

In 2023, the payables turnover increased to 12.71 compared to 12.13 in 2022. This indicates that the company paid its suppliers more frequently in 2023, demonstrating an improvement in managing its accounts payable.

In 2021, there was a significant drop in the payables turnover ratio to 6.29 from 9.92 in 2020. This suggests that the company took longer to pay off its suppliers in 2021 compared to the previous year, which could indicate potential liquidity issues or changes in payment terms.

In 2019 and 2020, the payables turnover remained relatively stable at around 10 times. This consistent performance indicates that Monolithic Power System Inc was effectively managing its accounts payable during these years.

Overall, fluctuations in the payables turnover ratio can reflect changes in a company's payment practices, liquidity position, or relationships with suppliers. It is essential for Monolithic Power System Inc to monitor and manage its payables turnover effectively to maintain healthy supplier relationships and optimize working capital management.