Photronics Inc (PLAB)

Short-term

Turnover ratios

Photronics, Inc.'s activity ratios provide insight into the efficiency with which the company manages its resources.

1. Inventory Turnover:
The inventory turnover ratio has shown consistent improvement over the last five years, indicating that Photronics, Inc. has been more efficient in managing its inventory. This signifies that the company is effectively selling and replacing its inventory, reducing the risk of obsolete inventory and tying up less capital in inventory management.

2. Receivables Turnover:
The receivables turnover ratio has also depicted a positive trend, representing an increase in the frequency with which Photronics, Inc. collects its receivables. This suggests that the company has improved its credit and collection policies, resulting in quicker conversion of credit sales into cash, which is a positive sign for its cash flow and liquidity.

3. Payables Turnover:
The payables turnover ratio has remained relatively stable over the years. The consistency in this ratio indicates that the company has been able to maintain a steady level of credit purchases and payments to suppliers. This consistency may also reflect good relations with suppliers as well as efficient management of trade credit.

4. Working Capital Turnover:
The working capital turnover ratio has shown a declining trend, which may suggest a decrease in the efficiency of Photronics, Inc.'s working capital management. A lower ratio indicates that the company is generating less revenue with its working capital, signaling a potential decrease in operational efficiency over the years.

In summary, while the inventory and receivables turnover ratios indicate improved efficiency in managing inventory and collecting receivables, the stability of the payables turnover ratio suggests a consistent approach to managing payables. However, caution may be warranted due to the decline in the working capital turnover ratio, which could indicate a need for improved working capital management to enhance overall operational efficiency.

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Average number of days

The activity ratios of Photronics, Inc. provide insight into its efficiency in managing inventory, collecting receivables, and paying off its liabilities. Let's analyze each ratio for the past five years.

Days of Inventory on Hand (DOH):
Photronics' DOH has been on a downward trend over the past five years, indicating that the company has become more efficient in managing its inventory. A lower DOH means that the company is selling its inventory at a faster rate. This could be due to effective inventory management, improved forecasting, or better sales strategies.

Days of Sales Outstanding (DSO):
The DSO ratio measures how long it takes for the company to collect its accounts receivable. Photronics' DSO has fluctuated over the past five years, but the general trend has been a reduction in the number of days it takes to collect receivables. This trend suggests that the company has been more effective in collecting payments from its customers, potentially due to more stringent credit policies or improved collection procedures.

Number of Days of Payables:
The number of days of payables measures how long it takes for the company to pay off its suppliers. Photronics' number of days of payables has fluctuated, but it has generally remained stable over the past five years. This may indicate consistent payment practices and good relationships with its suppliers.

Overall, the trend in Photronics' activity ratios suggests that the company has become more efficient in managing its inventory, collecting receivables, and paying off its liabilities. These improvements may lead to better cash flow management and operational efficiency for the company. However, it's important to further analyze the company's financial statements and other relevant factors to gain a more comprehensive understanding of its performance.

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Long-term

The long-term activity ratios of Photronics, Inc. provide insights into the company's efficiency in managing its long-term assets to generate sales. Here's a detailed analysis of the fixed asset turnover and total asset turnover ratios over the last five years:

Fixed Asset Turnover:
- The fixed asset turnover measures how effectively the company utilizes its long-term or fixed assets to generate sales revenue. A higher ratio indicates better utilization of fixed assets.
- Photronics, Inc.'s fixed asset turnover has fluctuated over the past five years, ranging from 0.87 in 2019 to 1.28 in 2022. The ratio was 1.26 in 2023.
- The general trend suggests that the company has improved its efficiency in generating sales from its fixed assets, albeit with some fluctuations. This is a positive development as it reflects improved asset utilization.

Total Asset Turnover:
- The total asset turnover ratio measures the company's ability to generate sales from all of its assets, including both short-term and long-term assets. A higher ratio indicates better efficiency in generating sales from its total assets.
- Photronics, Inc.'s total asset turnover has also fluctuated over the past five years, ranging from 0.49 in 2019 to 0.63 in 2022. The ratio declined to 0.58 in 2023.
- Despite some fluctuations, the company has shown an overall improvement in utilizing its total assets to generate sales. However, the decline experienced in 2023 may indicate a slight decrease in efficiency in utilizing its total assets for sales generation.

Overall, the trend for both fixed asset turnover and total asset turnover indicates that Photronics, Inc. has made progress in efficiently utilizing its long-term and total assets to generate sales revenue. However, the decline in the total asset turnover in 2023 warrants further investigation to understand the factors contributing to this decrease and to ensure that the company remains efficient in utilizing its total assets for sales generation.