Qualcomm Incorporated (QCOM)

Activity ratios

Short-term

Turnover ratios

	Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Inventory turnover	2.66	2.47	2.94	4.42	3.56
Receivables turnover	16.35	18.28	10.50	15.09	8.72
Payables turnover	6.60	8.30	4.91	5.19	4.12
Working capital turnover	2.65	2.79	4.99	4.13	2.39

The activity ratios of Qualcomm Incorporated provide insights into the efficiency of the company's operations in managing its inventory, receivables, payables, and working capital.

1. Inventory Turnover:
Qualcomm's inventory turnover has fluctuated over the past five years, ranging from 2.47 to 4.42. A higher inventory turnover indicates that the company is effectively selling its inventory and replenishing it quickly. The increase in 2021 followed by a decrease in 2022 suggests a potential change in sales strategy or inventory management.

2. Receivables Turnover:
The receivables turnover ratio reflects how efficiently Qualcomm collects on credit sales. The company has demonstrated strong performance in this area with consistently high turnover ratios ranging from 8.72 to 18.28. A higher turnover ratio signifies prompt collection and efficient management of accounts receivable.

3. Payables Turnover:
Qualcomm's payables turnover has also varied, ranging from 4.12 to 8.30. A higher turnover ratio indicates that the company is paying its suppliers more frequently, which could be beneficial in negotiating favorable credit terms. The fluctuation in this ratio may be influenced by changes in procurement practices or supplier relationships.

4. Working Capital Turnover:
The working capital turnover ratio measures how effectively Qualcomm utilizes its working capital to generate sales revenue. The company's turnover ratios have fluctuated between 2.39 and 4.99 over the past five years. A higher ratio suggests better utilization of resources. The drop in 2021 followed by an increase in 2022 indicates potential changes in operational efficiency or sales strategies.

Overall, Qualcomm's activity ratios reflect a mixed performance in managing its operational assets and liabilities. The company has demonstrated efficiency in collecting receivables but shows variability in inventory and payables management. Further analysis of trends and industry benchmarks can provide additional insights into Qualcomm's operational efficiency and future prospects.

Average number of days

		Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Days of inventory on hand (DOH)	days	137.42	147.71	124.20	82.61	102.46
Days of sales outstanding (DSO)	days	22.32	19.97	34.75	24.19	41.85
Number of days of payables	days	55.28	43.98	74.35	70.38	88.66

Activity ratios provide insights into how efficiently a company manages its assets and operations. Let's analyze Qualcomm Incorporated's activity ratios based on the given data:

1. Days of Inventory on Hand (DOH):
- The DOH measures how many days, on average, inventory is held before being sold. A higher DOH indicates a longer time for inventory turnover.
- Qualcomm's DOH has fluctuated over the past five years, with a notable increase from 2019 to 2020 and a subsequent decrease in 2023.
- The latest DOH of 137.42 days in 2024 suggests an increase in the holding period of inventory, which may impact liquidity and working capital management.

2. Days of Sales Outstanding (DSO):
- The DSO metric reflects the average number of days it takes for a company to collect its accounts receivable. A lower DSO is favorable as it indicates quicker cash conversion.
- Qualcomm's DSO has exhibited fluctuations, with a significant decrease from 2021 to 2022, followed by a slight increase in 2024.
- The DSO of 22.32 days in 2024 implies efficient collection of receivables, which may enhance cash flow and liquidity.

3. Number of Days of Payables:
- This ratio indicates the average number of days it takes for a company to pay its suppliers or creditors. A higher number of days suggests extended payment terms.
- Qualcomm's days of payables have varied, with fluctuations in the past five years.
- The increase in the number of days of payables from 2021 to 2022 followed by a decrease in 2024 may reflect changes in the company's payment practices.

Overall, Qualcomm's activity ratios show fluctuations in inventory management, receivables collection, and payables payment over the years. Monitoring these ratios can provide insights into the company's operational efficiency, working capital management, and potential liquidity challenges.

Long-term

	Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Fixed asset turnover	8.35	7.10	8.55	7.36	6.34
Total asset turnover	0.71	0.70	0.90	0.81	0.66

Qualcomm's long-term activity ratios provide insights into how effectively the company is utilizing its assets to generate revenue. The fixed asset turnover ratio measures the efficiency of Qualcomm in generating sales from its fixed assets. Over the past five years, Qualcomm has shown a positive trend in its fixed asset turnover ratio, with values ranging from 6.34 to 8.55, indicating an improvement in utilizing its fixed assets to generate sales.

On the other hand, the total asset turnover ratio reflects Qualcomm's ability to generate revenue from all its assets. The total asset turnover ratio has been relatively stable over the years, with values ranging from 0.66 to 0.90. This indicates that Qualcomm has maintained consistent efficiency in generating revenue from its total assets.

Overall, Qualcomm's long-term activity ratios suggest that the company has been successful in efficiently utilizing its assets to generate revenue, as shown by the increasing trend in fixed asset turnover and stable total asset turnover ratios over the past five years.