Power Integrations Inc (POWI)

Fixed asset turnover

		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
Revenue (ttm)	US$ in thousands	444,538	479,801	514,523	575,286	651,138	699,022	715,565	711,689	703,277	681,316	625,669	552,391	488,318	452,082	445,112	441,145	420,669	399,519	395,445	402,062
Property, plant and equipment	US$ in thousands	164,213	166,391	168,066	173,506	176,681	181,224	184,245	180,073	179,824	168,498	167,079	168,712	166,188	147,719	138,572	123,430	116,619	114,930	112,939	113,713
Fixed asset turnover		2.71	2.88	3.06	3.32	3.69	3.86	3.88	3.95	3.91	4.04	3.74	3.27	2.94	3.06	3.21	3.57	3.61	3.48	3.50	3.54

December 31, 2023 calculation

Fixed asset turnover = Revenue (ttm) ÷ Property, plant and equipment
= $444,538K ÷ $164,213K
= 2.71

The fixed asset turnover ratio for Power Integrations Inc. has been displaying a consistent declining trend over the past eight quarters, from 3.95 in Q1 2022 to 2.71 in Q4 2023. This indicates that the company's ability to generate revenue from its fixed assets has decreased over this period.

A fixed asset turnover ratio measures how efficiently a company is utilizing its fixed assets to generate sales. A higher ratio typically indicates more efficient utilization of fixed assets in generating revenue. Conversely, a declining ratio suggests that the company may be facing challenges in optimizing the productivity of its fixed assets.

The decreasing trend in Power Integrations Inc.'s fixed asset turnover ratio may stem from various factors, such as underutilization of fixed assets, inefficient asset management, or declining sales relative to fixed asset investment. It is important for the company to closely monitor and address the reasons contributing to this trend to improve operational efficiency and enhance overall financial performance.

Management should assess the company's fixed asset utilization strategies, identify opportunities for improving asset productivity, and consider potential adjustments to optimize the utilization of fixed assets to drive revenue growth and improve profitability in the future.