Onto Innovation Inc (ONTO)

Short-term

Turnover ratios

Inventory turnover for Onto Innovation Inc has decreased slightly over the past five years, indicating that the company is holding onto its inventory for a slightly longer period. This could potentially tie up more cash in inventory and may signal inefficiencies in managing inventory levels.

Receivables turnover has shown a fluctuating pattern over the years, with a significant increase in 2022 compared to 2019 and 2021. This implies that the company is collecting its accounts receivables more efficiently, which is a positive sign of effective credit management.

Payables turnover has also shown variability but generally stayed within a moderate range. A higher payables turnover indicates that the company is paying its suppliers more frequently, which can be beneficial for cash flow management.

Working capital turnover has generally increased over the years, indicating that the company is generating more revenue for each unit of working capital employed. This could suggest improved efficiency in the utilization of working capital to generate sales.

Overall, while there are fluctuations in activity ratios over the years, Onto Innovation Inc appears to have made some improvements in managing its receivables and working capital turnover, although there may be room for optimization in inventory management.

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Average number of days

Activity ratios provide insights into how efficiently a company manages its assets and liabilities. Let's analyze the activity ratios of Onto Innovation Inc based on the provided data.

1. Days of Inventory on Hand (DOH):
- The trend shows that Onto Innovation Inc's days of inventory on hand have been fluctuating over the past five years, ranging from 246.61 days to 376.25 days.
- A decreasing trend in DOH, such as the drop from 376.25 days in 2019 to 302.41 days in 2023, indicates that the company is managing its inventory more efficiently.
- However, the current level of 302.41 days still suggests that the company may be holding onto inventory for an extended period, tying up funds that could be used elsewhere in the business.

2. Days of Sales Outstanding (DSO):
- The DSO ratio provides insights into how long it takes for Onto Innovation Inc to collect its accounts receivable.
- The company has shown a mixed trend in DSO, with values ranging from 87.66 days to 147.55 days.
- A lower DSO is generally considered favorable as it indicates that the company is collecting receivables more quickly. The decrease from 147.55 days in 2019 to 101.36 days in 2023 is a positive sign, reflecting improved efficiency in collecting payments from customers.

3. Number of Days of Payables:
- Onto Innovation Inc's number of days of payables has shown some variability over the years, ranging from 42.71 days to 59.25 days.
- A longer time to pay suppliers (higher number of days of payables) can indicate favorable cash management but may also strain supplier relationships.
- The slight increase in the number of days of payables from 42.71 days in 2022 to 46.01 days in 2023 may suggest that the company is taking slightly longer to settle its payables.

In conclusion, while Onto Innovation Inc has shown improvements in managing its inventory and collecting receivables more efficiently, there may still be opportunities to optimize inventory levels further and manage payables effectively to enhance overall working capital management.

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Long-term

Onto Innovation Inc's fixed asset turnover has shown a decreasing trend over the past five years, indicating that the company may be less efficient in generating sales from its fixed assets. This could be a result of underutilization or inefficiencies in the use of these assets. However, it is worth noting that the ratio is still relatively high, indicating that the company is able to generate a significant amount of revenue from its fixed assets.

In contrast, the total asset turnover ratio has also shown a decreasing trend over the same period, indicating that Onto Innovation Inc is becoming less efficient in generating sales from its total assets. This may be due to an increase in total assets that are not contributing as much to revenue generation.

Overall, the declining trend in both fixed asset turnover and total asset turnover ratios suggests that Onto Innovation Inc may need to reassess its asset management strategies to improve efficiency and profitability. This could involve optimizing the use of fixed assets and ensuring that total assets are generating sufficient returns to support the company's growth and profitability objectives.