NVIDIA Corporation (NVDA)

Activity ratios

Short-term

Turnover ratios

	Jan 28, 2024	Jan 29, 2023	Jan 30, 2022	Jan 31, 2021	Jan 26, 2020
Inventory turnover	3.15	2.25	3.62	3.44	4.24
Receivables turnover	6.09	7.05	5.79	6.86	6.59
Payables turnover	6.16	9.74	5.29	5.46	6.04
Working capital turnover	1.81	1.63	1.10	1.37	0.92

Activity ratios provide insights into how effectively a company is managing its assets and liabilities to generate revenue. Let's analyze the activity ratios of NVIDIA Corp based on the data provided.

1. Inventory Turnover:
- NVIDIA's inventory turnover has shown fluctuations over the past five years, ranging from 2.25 to 4.24. This ratio indicates how many times the company's inventory is sold and replaced within a specific period.
- A higher inventory turnover generally suggests efficient inventory management, but a significant decrease or increase could signal potential issues, such as overstocking or understocking.

2. Receivables Turnover:
- NVIDIA's receivables turnover has also varied over the years, from 5.79 to 7.05. This ratio reveals how quickly the company collects payments from its customers.
- A higher receivables turnover indicates that the company is efficient in collecting payments, which is a positive sign for cash flow and liquidity.

3. Payables Turnover:
- The payables turnover of NVIDIA Corp has fluctuated between 5.23 and 9.74. This ratio reflects how quickly the company pays off its suppliers and vendors.
- A higher payables turnover suggests that the company is managing its payables effectively, potentially benefiting from favorable credit terms.

4. Working Capital Turnover:
- NVIDIA's working capital turnover has ranged from 0.92 to 1.81. This ratio measures how efficiently the company utilizes its working capital to generate sales revenue.
- A higher working capital turnover signifies that the company is effectively using its resources to generate revenue and indicates strong operational efficiency.

Overall, analyzing NVIDIA Corp's activity ratios provides valuable insights into the company's operational efficiency, inventory management, collection of receivables, payment of payables, and utilization of working capital to generate sales revenue. By evaluating these ratios over time, investors and analysts can assess the company's performance and financial health.

Average number of days

		Jan 28, 2024	Jan 29, 2023	Jan 30, 2022	Jan 31, 2021	Jan 26, 2020
Days of inventory on hand (DOH)	days	115.99	162.08	100.73	106.15	86.10
Days of sales outstanding (DSO)	days	59.91	51.79	63.06	53.17	55.40
Number of days of payables	days	59.27	37.48	68.95	66.79	60.42

NVIDIA Corp's activity ratios provide insights into how efficiently the company manages its inventory, receivables, and payables.

1. Days of Inventory on Hand (DOH):
- The trend in NVIDIA's DOH has been fluctuating over the past five years, with a peak in 2023 and a significant decrease in 2024 compared to the previous year.
- A decrease in DOH from 2023 to 2024 indicates that the company is selling its inventory at a faster rate compared to the previous year.
- However, the current DOH of 115.99 days suggests that NVIDIA is holding inventory for an extended period, which may tie up capital and increase carrying costs.

2. Days of Sales Outstanding (DSO):
- NVIDIA's DSO has shown variation over the years, with the highest value seen in 2022 and the lowest in 2023.
- A decrease in DSO from 2022 to 2023 suggests that the company has been efficient in collecting payments from customers.
- The current DSO of 59.91 days indicates that, on average, it takes approximately 60 days for NVIDIA to collect its receivables.

3. Number of Days of Payables:
- The trend in days of payables for NVIDIA has been inconsistent over the past five years, with 2022 showing the highest value.
- An increase in days of payables from 2021 to 2022 suggests that the company is taking longer to pay its suppliers.
- The current days of payables of 59.27 days indicate that NVIDIA takes around 59 days to settle its payables.

In conclusion, while NVIDIA has shown improvement in managing its accounts receivables, the company could optimize its inventory turnover and payment cycles to enhance overall efficiency.

Long-term

	Jan 28, 2024	Jan 29, 2023	Jan 30, 2022	Jan 31, 2021	Jan 26, 2020
Fixed asset turnover	15.57	7.09	9.69	7.76	6.52
Total asset turnover	0.93	0.65	0.61	0.58	0.63

Long-term activity ratios such as fixed asset turnover and total asset turnover provide insights into the efficiency with which NVIDIA Corp utilizes its assets to generate revenue.

The fixed asset turnover ratio for NVIDIA has shown an increasing trend over the past five years, indicating that the company has been able to generate more revenue per dollar of fixed assets invested. This suggests improved efficiency in utilizing fixed assets like property, plant, and equipment to drive sales. The significant increase in fixed asset turnover from 6.52 in 2020 to 15.57 in 2024 highlights a substantial improvement in asset utilization efficiency.

In contrast, the total asset turnover ratio for NVIDIA has fluctuated over the same period but generally remained at low levels. This indicates that the company generates a relatively low level of sales in relation to its total assets. The lower total asset turnover may be attributed to the nature of NVIDIA's business model, which involves significant investments in research and development and intangible assets that may not directly contribute to revenue generation in the short term.

Overall, the increasing trend in fixed asset turnover suggests improved operational efficiency and asset utilization by NVIDIA, while the consistently low total asset turnover indicates the need for further analysis to understand the company's asset management strategies and revenue generation capabilities.