ON Semiconductor Corporation (ON)

Short-term

Turnover ratios

ON Semiconductor Corporation's inventory turnover has shown a slight increase from 2020 to 2021, indicating that the company is managing its inventory more efficiently. However, there has been a decline in the inventory turnover ratio in subsequent years, reaching its lowest point in 2024. This suggests that ON Semiconductor may be facing challenges in selling its inventory at a faster pace.

In terms of receivables turnover, ON Semiconductor has generally shown an increasing trend from 2020 to 2022, indicating that the company is collecting its receivables more quickly over time. However, there was a slight decline in 2023 and a significant drop in 2024, which may raise concerns about the company's ability to efficiently convert credit sales into cash.

The payables turnover ratio of ON Semiconductor has been relatively consistent over the years, with a slight fluctuation. This suggests that the company is managing its accounts payable efficiently, although there was a notable decrease in 2022. A stable payables turnover ratio indicates that ON Semiconductor is effectively managing its payment obligations to suppliers.

The working capital turnover ratio for ON Semiconductor has been decreasing steadily from 2020 to 2024. A declining trend in this ratio may indicate that the company's working capital is becoming less productive in generating sales revenue. This could point to potential inefficiencies in how ON Semiconductor is managing its current assets and liabilities to support its operating activities.

Overall, while ON Semiconductor has shown strengths in managing its receivables and payables turnover, there are areas of concern such as declining inventory turnover and working capital turnover ratios that may require further attention to improve the company's operational efficiency.

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Average number of days

Activity ratios provide insights into how efficiently a company manages its resources related to inventory, sales, and payment cycles. Let's analyze the activity ratios of ON Semiconductor Corporation based on the provided data:

1. Days of Inventory on Hand (DOH):
- The company's DOH has shown a fluctuating trend over the years. It decreased from 129.06 days in 2020 to 125.08 days in 2021, indicating an improvement in managing inventory levels.
- However, there was an increase in DOH to 138.89 days in 2022, followed by a significant rise to 176.41 days in 2023 and further to 211.66 days in 2024. These elevated levels suggest a potential issue with inventory management efficiency.
- Increasing DOH values could indicate slower inventory turnover, excess inventory levels, or potential challenges in selling products.

2. Days of Sales Outstanding (DSO):
- The DSO of ON Semiconductor Corporation has shown a mixed trend over the years. It decreased from 46.95 days in 2020 to 43.83 days in 2021, reflecting an improvement in collecting receivables.
- However, there was a slight increase in DSO to 36.92 days in 2022, followed by a further rise to 41.37 days in 2023 and a significant jump to 59.79 days in 2024.
- Higher DSO values indicate that the company takes longer to collect payments from customers, potentially impacting cash flows and liquidity.

3. Number of Days of Payables:
- The number of days of payables for the company has shown some fluctuations but remained relatively stable over the years.
- It decreased slightly from 59.08 days in 2020 to 57.59 days in 2021, increased to 73.20 days in 2022, and then decreased again to 60.61 days in 2023 and 54.24 days in 2024.
- A lower number of days of payables suggests the company is taking less time to pay its suppliers, which could indicate improved relationships with vendors but might also impact working capital management.

In summary, the analysis of ON Semiconductor Corporation's activity ratios reveals fluctuations in inventory management, receivables collection, and payables payment over the years. The company should focus on optimizing inventory levels, improving collections efficiency, and managing payment cycles effectively to enhance overall operational performance and financial health.

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See also:

ON Semiconductor Corporation Short-term (Operating) Activity Ratios

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Long-term

The Fixed Asset Turnover ratio reflects the efficiency of ON Semiconductor Corporation in generating sales from its fixed assets. The trend in the Fixed Asset Turnover ratio over the years indicates that the company's ability to generate revenue from its fixed assets has fluctuated. From 2020 to 2021, there was an increase in the ratio from 2.09 to 2.67, suggesting improved efficiency in utilizing fixed assets to generate sales. However, this efficiency declined in 2022 with the ratio decreasing to 2.41 and further dropped to 1.88 in 2023 and 1.62 in 2024.

On the other hand, the Total Asset Turnover ratio measures how efficiently a company is utilizing all of its assets to generate revenue. ON Semiconductor Corporation's Total Asset Turnover ratio also exhibited fluctuations over the years. The ratio increased from 0.61 in 2020 to 0.70 in 2021 and remained stable at 0.70 in 2022. However, there was a decline in the ratio to 0.62 in 2023 and a further drop to 0.50 in 2024.

Overall, the fluctuating trends in both Fixed Asset Turnover and Total Asset Turnover ratios indicate varying levels of efficiency in utilizing assets to generate sales over the years. Further analysis would be necessary to understand the specific factors driving these fluctuations and their implications for ON Semiconductor Corporation's long-term operational efficiency and financial performance.

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See also:

ON Semiconductor Corporation Long-term (Investment) Activity Ratios