ON Semiconductor Corporation (ON)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover	2.07	2.63	2.92	2.83	2.88
Receivables turnover	8.82	9.89	8.33	7.77	7.83
Payables turnover	6.02	4.99	6.34	6.18	6.52
Working capital turnover	2.21	2.27	3.01	3.48	4.59

The activity ratios of ON Semiconductor Corp. provide insight into how effectively the company manages its assets and liabilities to generate revenue.

1. Inventory turnover: This ratio measures how efficiently the company is managing its inventory. A decrease in inventory turnover over the years could indicate potential issues related to managing inventory levels or demand for their products.

2. Receivables turnover: This ratio assesses the company's ability to collect its accounts receivable. An increase in receivables turnover suggests that the company is collecting its outstanding receivables more quickly, which is a positive sign of efficient credit management.

3. Payables turnover: The payables turnover ratio reflects how quickly the company pays its suppliers. An increase in payables turnover indicates that the company is paying its suppliers more efficiently, which could potentially strengthen supplier relationships.

4. Working capital turnover: This ratio evaluates how effectively the company is utilizing its working capital to generate sales. A decreasing trend in this ratio could indicate inefficiencies in managing working capital or lower sales generated from the same level of investment.

In conclusion, while each activity ratio provides valuable insights into different aspects of ON Semiconductor Corp.'s operations, it is essential to analyze them collectively to gain a comprehensive understanding of the company's overall efficiency in managing its assets and liabilities to drive revenue growth.

Average number of days

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	176.41	138.89	125.08	129.06	126.92
Days of sales outstanding (DSO)	days	41.37	36.92	43.83	46.95	46.63
Number of days of payables	days	60.61	73.20	57.59	59.08	55.98

Activity ratios provide insights into how efficiently a company is managing its assets and liabilities.

1. Days of Inventory on Hand (DOH): ON Semiconductor Corp.'s DOH has been increasing over the past five years, indicating that the company is holding inventory for a longer period before selling it. This could be a concern as it ties up working capital and may indicate potential issues with inventory management or demand forecasting.

2. Days of Sales Outstanding (DSO): The DSO for ON Semiconductor Corp. has fluctuated slightly over the years but generally shows a decreasing trend. A lower DSO suggests that the company is collecting receivables more quickly, which is a positive sign as it indicates efficient management of accounts receivable and cash flow generation.

3. Number of Days of Payables: ON Semiconductor Corp.'s days of payables have varied over the years but appear to be relatively stable. A longer period of payables turnover could indicate that the company is taking longer to pay its suppliers, which may be beneficial in terms of cash flow management but could also strain supplier relationships if extended excessively.

Overall, these activity ratios suggest that while ON Semiconductor Corp. is effectively managing its receivables, there may be room for improvement in inventory management to reduce the number of days inventory is held and in optimizing the payment period for suppliers to maintain good relationships while managing cash flow efficiently.

Long-term

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Fixed asset turnover	1.88	2.41	2.67	2.09	2.13
Total asset turnover	0.62	0.70	0.70	0.61	0.65

The long-term activity ratios for ON Semiconductor Corp. indicate how efficiently the company is utilizing its assets to generate revenue over the years.

1. Fixed Asset Turnover:
- The fixed asset turnover ratio measures the efficiency of a company in generating sales revenue from its investment in fixed assets like property, plant, and equipment.
- ON Semiconductor Corp.'s fixed asset turnover has fluctuated over the past five years, with values ranging from 1.88 to 2.67.
- A higher fixed asset turnover ratio implies that the company is efficiently utilizing its fixed assets to generate sales, indicating improved operational efficiency.
- The declining trend observed in recent years may suggest decreased efficiency in generating revenue from fixed assets, which could be due to various factors such as underutilization of assets or changes in the production process.

2. Total Asset Turnover:
- The total asset turnover ratio reflects how effectively a company is utilizing all its assets to generate sales.
- ON Semiconductor Corp.'s total asset turnover ratios have been relatively stable around 0.60 to 0.70 over the past five years.
- A lower total asset turnover ratio could indicate that the company is inefficient in generating sales relative to its asset base.
- While the ratios are lower compared to some industry benchmarks, they have remained consistent, suggesting a stable level of asset utilization despite fluctuations in fixed asset turnover.

In conclusion, ON Semiconductor Corp. should closely monitor its fixed asset turnover to ensure efficient utilization of fixed assets and investigate any factors contributing to the fluctuation in the ratios. Despite lower total asset turnover ratios, the company has maintained stability in asset utilization, indicating a steady performance in generating sales with its overall asset base.