ON Semiconductor Corporation (ON)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Inventory turnover	2.07	2.10	2.22	2.37	2.63	2.65	2.60	2.71	2.92	2.98	2.91	2.80	2.83	2.74	2.75	2.83	2.88	2.87	2.83	2.98
Receivables turnover	8.82	8.70	8.84	9.47	9.89	9.41	6.69	7.91	8.33	8.81	8.84	7.99	7.77	7.16	7.90	8.30	7.83	7.84	8.10	8.36
Payables turnover	6.02	4.80	4.81	4.41	4.99	5.28	5.12	5.58	6.34	6.61	6.25	5.99	6.18	6.56	6.76	7.04	6.52	6.67	6.63	6.26
Working capital turnover	2.21	2.32	2.42	2.66	2.27	2.27	2.48	2.57	3.01	2.88	3.33	3.75	3.48	2.59	2.22	2.36	4.59	5.24	3.22	3.40

The activity ratios of ON Semiconductor Corp. provide insight into how efficiently the company is managing its assets and liabilities.

1. Inventory Turnover:
The inventory turnover ratio measures how many times a company sells and replaces its inventory during a specific period. ON Semiconductor Corp.'s inventory turnover has shown a declining trend over the past quarters, from 2.71 in Q1 2022 to 2.07 in Q4 2023. This indicates that the company is taking longer to sell its inventory, which may lead to higher storage costs and obsolete inventory.

2. Receivables Turnover:
The receivables turnover ratio reflects how efficiently a company collects its outstanding credit sales. ON Semiconductor Corp. has shown fluctuations in its receivables turnover, ranging from 6.69 in Q2 2022 to 9.89 in Q4 2022. A higher turnover ratio indicates that the company is collecting its receivables more quickly, which improves its cash flow and liquidity.

3. Payables Turnover:
The payables turnover ratio measures how efficiently a company pays its creditors. ON Semiconductor Corp.'s payables turnover has been relatively stable, with a range of 4.41 to 6.02 over the past eight quarters. A higher turnover ratio suggests that the company is paying its suppliers promptly, which may indicate good relationships with vendors.

4. Working Capital Turnover:
The working capital turnover ratio evaluates how efficiently a company utilizes its working capital to generate sales. ON Semiconductor Corp.'s working capital turnover has fluctuated over the quarters, indicating variations in the company's ability to convert working capital into sales revenue. A higher turnover ratio suggests that the company is effectively using its resources to generate sales.

Overall, the analysis of ON Semiconductor Corp.'s activity ratios highlights areas where the company may need to improve its inventory management and maintain consistency in its receivables turnover to enhance efficiency and profitability.

Average number of days

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	176.41	173.88	164.43	153.79	138.89	137.57	140.30	134.87	125.08	122.36	125.26	130.46	129.06	133.36	132.64	128.84	126.92	127.15	129.15	122.44
Days of sales outstanding (DSO)	days	41.37	41.94	41.28	38.55	36.92	38.78	54.53	46.15	43.83	41.45	41.29	45.71	46.95	51.00	46.18	44.00	46.63	46.55	45.04	43.65
Number of days of payables	days	60.61	76.00	75.96	82.72	73.20	69.14	71.24	65.39	57.59	55.23	58.38	60.93	59.08	55.60	53.96	51.86	55.98	54.74	55.04	58.29

ON Semiconductor Corp.'s activity ratios provide insights into the efficiency of its inventory management, accounts receivable collection, and accounts payable practices.

1. Days of Inventory on Hand (DOH): The trend for DOH indicates a gradual increase in the number of days it takes for ON Semiconductor to sell its inventory. This suggests a potential inefficiency in managing inventory levels, as the company is holding onto inventory for longer periods, which could tie up working capital and increase storage costs.

2. Days of Sales Outstanding (DSO): The DSO ratio shows the number of days it takes for ON Semiconductor to collect revenue from its sales. The decreasing trend in DSO indicates an improvement in accounts receivable management efficiency. The company is collecting payments faster, which is a positive sign as it improves cash flow and reduces the risk of bad debts.

3. Number of Days of Payables: The increasing trend in the number of days of payables suggests that ON Semiconductor is taking longer to pay its suppliers. While this may positively impact cash flow in the short term, it could strain relationships with suppliers if delayed payments become a common occurrence.

Overall, ON Semiconductor Corp. should focus on optimizing its inventory levels, further improving accounts receivable collection processes, and carefully manage its accounts payable to maintain strong relationships with suppliers while also ensuring efficient cash flow management.

Long-term

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Fixed asset turnover	1.88	1.93	2.09	2.26	2.41	2.92	2.81	2.81	2.67	2.61	2.41	2.19	2.09	2.07	2.06	2.10	2.13	2.16	2.21	2.28
Total asset turnover	0.62	0.63	0.65	0.68	0.70	0.73	0.71	0.71	0.70	0.71	0.69	0.63	0.61	0.56	0.55	0.57	0.65	0.66	0.68	0.78

The fixed asset turnover ratio for ON Semiconductor Corp. has been fluctuating over the quarters, indicating the company's efficiency in generating revenue from its fixed assets. The gradual decrease in the fixed asset turnover from Q4 2022 to Q1 2023 suggests a potentially declining efficiency in utilizing fixed assets to generate sales. However, there was a slight improvement in the ratio in Q2 and Q3 2023, but it decreased again in Q4 2023.

On the other hand, the total asset turnover ratio, which reflects ON Semiconductor Corp.'s ability to generate revenue from all its assets, shows a consistent downward trend from Q4 2022 to Q4 2023. This may indicate that the company is facing challenges in efficiently utilizing all its assets to generate sales over the quarters.

Overall, the analysis of ON Semiconductor Corp.'s long-term activity ratios suggests that the company may need to reassess its asset utilization strategies to improve efficiency in generating revenue from both fixed and total assets.