Penguin Solutions, Inc. (PENG)

Short-term

Turnover ratios

The activity ratios of Penguin Solutions, Inc. reveal notable trends across the analyzed period from August 31, 2020, to August 31, 2024.

Inventory Turnover:
The ratio experienced fluctuations over the four-year span, beginning at 5.56 in 2020. It declined significantly to 2.25 in 2021, indicating a slowdown in inventory management or increased inventory levels relative to sales. Subsequently, the ratio improved to 3.81 in 2022, suggesting some recovery in inventory turnover. The ratio further increased to 5.86 in 2023, surpassing the 2020 level, before slightly decreasing to 5.47 in 2024. Overall, the trend indicates periods of efficiency gains in inventory management, especially in 2023.

Receivables Turnover:
The receivables turnover ratio decreased from 5.20 in 2020 to 3.37 in 2021, reflecting a slowdown in collection efficiency. It improved marginally to 3.93 in 2022 but then increased significantly to 6.57 in 2023, suggesting enhanced receivables collection practices or shorter collection periods. However, in 2024, the ratio declined to 4.65, indicating some deterioration in receivables collection efficiency compared to 2023 but remaining above early 2020 levels.

Payables Turnover:
The payables turnover ratio was 4.03 in 2020, then decreased sharply to 1.90 in 2021, signaling extended payment periods or less aggressive repayment practices. It rebounded substantially to 3.43 in 2022, marking improved payment activity, and peaked at 7.60 in 2023, which may indicate more prompt payments to suppliers or shorter payables cycles. In 2024, the ratio declined again to 4.56, suggesting a moderation from the peak experienced in 2023 but still higher than the 2020 and 2021 figures.

Working Capital Turnover:
The ratio fluctuated from 4.09 in 2020, declining to 2.88 in 2021 and further to 2.19 in 2022, reflecting a decrease in efficiency in utilizing working capital based on sales. In 2023, the ratio increased to 3.00, indicating improved efficiency, but then decreased once more to 2.17 in 2024. These changes may reflect variations in sales volume or working capital management strategies over the years.

Summary:
Overall, Penguin Solutions, Inc. demonstrated considerable variability in its activity ratios during the analyzed period. The inventory turnover ratio rebounded strongly in 2023, indicating improved inventory management. Receivables turnover showed substantial improvement in 2023, suggesting more effective collection efforts. Payables turnover peaked in 2023, potentially indicating a period of increased liquidity or strategic payment practices. The working capital turnover experienced fluctuations consistent with changes in operational efficiency and sales performance. Collectively, these trends depict an evolving operational landscape with periods of enhanced efficiency interspersed with slower intervals.

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Average number of days

The activity ratios for Penguin Solutions, Inc. reveal significant insights into the company's operational efficiency over the period from August 2020 to August 2024.

Beginning with the Days of Inventory on Hand (DOH), there is notable fluctuation over the analyzed period. In August 2020, the DOH was approximately 65.67 days, indicating a relatively swift turnover of inventory. This ratio sharply increased to 162.33 days in August 2021, suggesting a substantial accumulation of inventory, which could indicate inventory buildup, slower sales, or supply chain issues during that period. The subsequent decrease to 95.81 days in 2022 reflects some improvement, although inventory levels remained higher than in 2020. By August 2023, DOH further declined to 62.24 days, aligning closely with early 2020 levels and indicating a significant reduction in inventory holdings. The slight increase to 66.67 days in August 2024 suggests a stabilization but still close to the initial efficiency levels observed in 2020.

The Days of Sales Outstanding (DSO) demonstrates another dynamic pattern. In August 2020, DSO was around 70.22 days, indicating an average collection period that was relatively high. This duration increased markedly to 108.37 days in August 2021, implying extended credit terms or delays in receivables collections. In 2022, DSO decreased to 92.83 days, indicating some improvement in accounts receivable management. The improvement continued in August 2023, with DSO decreasing further to 55.52 days, indicating more efficient collection processes. However, in August 2024, DSO increased again to 78.48 days, suggesting a slowdown in receivables collection efficiency or potentially more lenient credit policies.

The Number of Days of Payables reflects the company’s payables management practices. In August 2020, the payables period was 90.51 days, indicating that the company was delaying payments to suppliers substantially. The period lengthened significantly to 191.81 days in August 2021, signifying an even greater extension or possibly difficulties in meeting obligations. In 2022, this ratio decreased to 106.49 days, indicating a move towards more timely payments but still relatively prolonged. By August 2023, the payables period sharply declined to 48.02 days, suggesting accelerated payments and improved payables management. In August 2024, the payables period increased again to 80.08 days, indicating a relaxation in payment timing but still below the 2022 level.

Overall, the activity ratios depict a company that experienced volatility in its inventory and receivables management, with a notable improvement in inventory turnover and receivables collection efficiencies by 2023, followed by some deterioration in these areas in 2024. The company’s payables management has also fluctuated, with a trend toward more prompt payments by 2023 after a period of extended creditor days in 2021. These variations reflect shifts in operational strategies, market conditions, or both, and highlight periods of operational stabilization and challenges within the analyzed timeframe.

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Long-term

The long-term activity ratios for Penguin Solutions, Inc. reveal insights into the company's efficiency in utilizing its assets over the specified periods. Notably, the fixed asset turnover ratio is unavailable for all observed periods, indicating either a lack of significant fixed assets during these years or that the company did not report or emphasize this metric.

Focusing on total asset turnover, the ratios demonstrate fluctuations across the analyzed timeframe. In August 2020, the ratio stood at 1.43, suggesting a relatively high efficiency in generating sales from the company's total assets. However, by August 2021, this ratio declined sharply to 0.78, indicating a reduced level of sales generated per dollar of total assets, which could be attributed to various factors such as reduced asset efficiency or increased asset base not proportionally contributing to sales.

Subsequent years show a slight recovery; the ratio increased to 0.89 in August 2022 and further to 0.96 in August 2023, approaching the 2020 level but not surpassing it. This trend suggests a gradual improvement in asset utilization efficiency, possibly due to operational improvements or asset restructuring. Nonetheless, by August 2024, the total asset turnover decreased again to 0.79, indicating a decline in asset utilization efficiency relative to the prior year.

Overall, the data indicates variability in the company's ability to efficiently convert its assets into sales over the observed period. The absence of fixed asset turnover ratios underscores the need for more detailed asset base data to better understand fixed asset management. The fluctuations in total asset turnover reflect changing operational efficiencies and potentially shifts in strategic focus or asset composition.