MACOM Technology Solutions Holdings Inc (MTSI)

Short-term

Turnover ratios

MACOM Technology Solutions Holdings Inc's activity ratios provide insights into the efficiency of the company's operations in managing its inventory, receivables, payables, and working capital.

1. Inventory turnover:
- The inventory turnover ratio has fluctuated over the past five years, ranging from a low of 1.73 in 2024 to a high of 3.21 in 2021.
- A lower inventory turnover ratio in 2024 suggests that MACOM Technology Solutions Holdings Inc is taking longer to sell its inventory compared to previous years.
- A high inventory turnover ratio is generally preferred as it indicates that inventory is moving quickly, preventing excess holding costs.

2. Receivables turnover:
- The receivables turnover ratio has been relatively consistent over the years, with values ranging from 6.65 to 11.55.
- The ratio indicates how many times MACOM collects its accounts receivable during the period.
- A higher receivables turnover ratio signifies that the company is efficient in collecting payments from customers.

3. Payables turnover:
- The payables turnover ratio has also shown variability, with values ranging from 7.77 to 11.28.
- A higher payables turnover ratio indicates that MACOM is paying its suppliers more frequently.
- A declining payables turnover ratio may suggest a change in payment terms with suppliers or a shift in the company's financing strategy.

4. Working capital turnover:
- The working capital turnover ratio has gradually decreased from 1.42 in 2021 to 0.92 in 2024.
- A lower working capital turnover ratio implies that MACOM is generating less revenue for each dollar of working capital invested.
- This trend may indicate inefficiencies in managing working capital or a decrease in sales relative to working capital employed.

In conclusion, the analysis of MACOM Technology Solutions Holdings Inc's activity ratios reveals fluctuations and trends in the efficiency of its inventory management, receivables collection, payables payment, and utilization of working capital over the years.

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Average number of days

The activity ratios of MACOM Technology Solutions Holdings Inc provide insights into how efficiently the company manages its inventory, collects its receivables, and pays its payables.

Days of Inventory on Hand (DOH):
- The trend in DOH shows an increasing trend from 128.63 days in 2020 to 211.40 days in 2024. This suggests that the company is holding inventory for a longer period, which may tie up working capital and increase holding costs. It could indicate issues with inventory management or slowing sales.

Days of Sales Outstanding (DSO):
- DSO has fluctuated over the years but generally remained within a relatively stable range, indicating consistent collection efforts. The slight increase from 31.60 days in 2020 to 52.88 days in 2024 may indicate a slower collection of receivables, which could impact cash flow and liquidity.

Number of Days of Payables:
- The number of days of payables has also shown some volatility but has been trending upward, from 32.36 days in 2020 to 46.96 days in 2024. This indicates that the company is taking more time to pay its suppliers, which can be a positive strategy to manage cash flow and working capital efficiently.

Overall, the increasing trend in DOH along with stable but slightly increasing DSO and an upward trend in the number of days of payables may indicate some potential inefficiencies in inventory management and working capital cycle. Further analysis is necessary to understand the reasons behind these trends and their potential impact on the company's overall financial performance.

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Long-term

MACOM Technology Solutions Holdings Inc's long-term activity ratios provide insight into how efficiently the company utilizes its assets to generate revenues. The fixed asset turnover ratio has been declining over the years, indicating that the company is generating fewer sales relative to its investment in fixed assets. This could suggest that the company's fixed assets are not being utilized as efficiently as in the past.

On the other hand, the total asset turnover ratio has remained relatively stable over the period, indicating that the company is generating sales in line with its total asset base. However, the ratios for total asset turnover are relatively low compared to industry benchmarks, which may indicate that MACOM Technology Solutions Holdings Inc may not be efficiently utilizing its total assets to generate revenues.

Overall, the trends in both fixed asset turnover and total asset turnover ratios suggest that MACOM Technology Solutions Holdings Inc may need to assess and improve its asset utilization efficiency to enhance its long-term profitability and financial performance.