Monolithic Power Systems Inc (MPWR)

Working capital turnover

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Revenue	US$ in thousands	2,207,100	1,821,070	1,794,150	1,207,800	844,452
Total current assets	US$ in thousands	1,565,050	1,819,500	1,410,620	1,124,850	841,998
Total current liabilities	US$ in thousands	294,567	235,035	263,400	226,944	146,969
Working capital turnover		1.74	1.15	1.56	1.35	1.21

December 31, 2024 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $2,207,100K ÷ ($1,565,050K – $294,567K)
= 1.74

The working capital turnover ratio for Monolithic Power Systems Inc has shown fluctuations over the past five years. In December 2020, the ratio was 1.21, indicating that the company generated $1.21 in revenue for every dollar of working capital.

Subsequently, the ratio increased to 1.35 by December 2021, showing a more efficient utilization of working capital in generating sales. This improvement continued into December 2022, with a ratio of 1.56, suggesting a further enhancement in working capital management.

However, in December 2023, the working capital turnover ratio dropped to 1.15, signaling a potential decrease in efficiency in utilizing working capital to generate revenue. This decline could be a concern as it may indicate inefficiencies in managing the company's short-term assets and liabilities.

Nonetheless, Monolithic Power Systems Inc rebounded in December 2024 with a working capital turnover ratio of 1.74, marking a significant improvement in efficiently converting working capital into sales revenue. This positive trend suggests a more effective management of working capital to support the company's operations and growth.

Overall, the fluctuating trend in the working capital turnover ratio for Monolithic Power Systems Inc indicates varying levels of efficiency in utilizing working capital over the years, with the company demonstrating both strengths and potential areas for improvement in managing its short-term resources.