Power Integrations Inc (POWI)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 1.17 | 1.32 | 2.10 | 3.45 | 2.38 |
| Receivables turnover | 15.42 | 30.29 | 31.25 | 16.99 | 13.60 |
| Payables turnover | 6.52 | 8.17 | 9.45 | 7.84 | 7.05 |
| Working capital turnover | 0.91 | 0.96 | 1.40 | 1.14 | 0.91 |
The analysis of Power Integrations Inc's activity ratios reveals trends in how efficiently the company manages its operations related to inventory, receivables, payables, and working capital turnover.
- Inventory Turnover: The inventory turnover ratio demonstrates how effectively the company is managing its inventory. The ratio has fluctuated over the years, starting at 2.38 in 2020 and peaking at 3.45 in 2021. However, it has since declined to 1.17 in 2024, indicating a decrease in the frequency at which inventory is sold and replaced. This trend may suggest potential issues with inventory management or changing demand patterns.
- Receivables Turnover: The receivables turnover ratio reflects how quickly the company collects outstanding payments from customers. Power Integrations Inc has shown a significant improvement in this ratio from 13.60 in 2020 to 31.25 in 2022, indicating a faster collection of accounts receivables. However, the ratio decreased slightly to 15.42 in 2024, which could suggest a slowing in the collection process.
- Payables Turnover: The payables turnover ratio represents how rapidly the company pays its suppliers. Power Integrations Inc has maintained a relatively stable payables turnover ratio over the years, ranging from 6.52 to 9.45. This stability indicates a consistent approach to managing supplier payments within the business.
- Working Capital Turnover: The working capital turnover ratio signifies how efficiently the company utilizes its working capital to generate sales. The ratio has shown some fluctuations, with a peak of 1.40 in 2022 and a low of 0.91 in both 2020 and 2024. This variability suggests changes in how well the company is leveraging its working capital to support revenue generation.
Overall, the analysis of Power Integrations Inc's activity ratios highlights areas of both strength and potential concern in the company's operational efficiency, such as inventory management, receivables collection, and working capital utilization. Monitoring these ratios over time can provide valuable insights into the company's operational performance and help identify areas for improvement.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 311.23 | 276.25 | 173.90 | 105.74 | 153.44 |
| Days of sales outstanding (DSO) | days | 23.67 | 12.05 | 11.68 | 21.48 | 26.84 |
| Number of days of payables | days | 55.98 | 44.68 | 38.64 | 46.57 | 51.77 |
The activity ratios of Power Integrations Inc indicate how efficiently the company manages its assets and operations.
1. Days of Inventory on Hand (DOH):
- The trend in DOH shows a decrease from 2020 to 2021, indicating that the company has improved its inventory management.
- However, there is a significant increase in DOH from 2021 to 2024, which may suggest inventory management challenges or changes in the business model.
2. Days of Sales Outstanding (DSO):
- DSO declined from 2020 to 2022, reflecting the company's ability to collect receivables more efficiently.
- The increase in DSO from 2022 to 2024 may indicate a lengthening in the collection period or potential credit risks with customers.
3. Number of Days of Payables:
- The company has effectively managed its payables as the number of days has decreased consistently from 2020 to 2022.
- The slight increase in payables days in 2023 and 2024 could indicate changes in payment terms or relationships with suppliers.
Overall, Power Integrations Inc should closely monitor its inventory levels and collection processes to maintain efficient operations, while continuing to manage payables effectively to support cash flow and working capital management.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 2.80 | 2.71 | 3.69 | 3.91 | 2.94 |
| Total asset turnover | 0.51 | 0.54 | 0.78 | 0.69 | 0.54 |
Long-term activity ratios provide insight into how efficiently a company manages its assets to generate sales.
1. Fixed Asset Turnover:
- Power Integrations Inc's Fixed Asset Turnover has shown fluctuations over the years. It increased from 2.94 in 2020 to 3.91 in 2021, indicating that the company generated $3.91 in sales for every dollar invested in fixed assets.
- The ratio slightly decreased to 3.69 in 2022 before dropping notably to 2.71 in 2023 and then recovering to 2.80 in 2024. This suggests that the company may have experienced challenges in utilizing its fixed assets effectively to generate sales in 2023.
2. Total Asset Turnover:
- The Total Asset Turnover ratio for Power Integrations Inc has also varied. It rose from 0.54 in 2020 to 0.69 in 2021, indicating an increase in sales generated per dollar of total assets.
- By 2022, the ratio further improved to 0.78 before declining to 0.54 in 2023 and then dropping to 0.51 in 2024. The decrease in 2023 and 2024 may indicate inefficiencies in utilizing the company's total assets to generate sales.
In summary, while Power Integrations Inc experienced fluctuations in both Fixed Asset Turnover and Total Asset Turnover ratios, the trend indicates some effectiveness in managing fixed assets to generate sales, with a slight decline in total asset efficiency in the later years. Analyzing these ratios can help stakeholders assess the company's asset utilization and efficiency over time.