Rambus Inc (RMBS)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 2.86 | 5.15 | 8.30 | 4.20 | 5.09 |
| Receivables turnover | 3.45 | 2.51 | 1.83 | 1.48 | 1.00 |
| Payables turnover | 5.72 | 4.34 | 6.24 | 6.76 | 5.38 |
| Working capital turnover | 0.85 | 1.14 | 0.79 | 0.40 | 0.39 |
Activity ratios provide insights into how efficiently a company is managing its assets and liabilities to generate sales. Looking at the activity ratios of Rambus Inc. over the past five years, we can see various trends:
1. Inventory Turnover: This ratio indicates how many times a company's inventory is sold and replaced over a period. Rambus Inc.'s inventory turnover has shown a decreasing trend from 2019 to 2023, implying that the company is holding onto its inventory for longer periods. This could suggest potential issues with inventory management or slower sales.
2. Receivables Turnover: This ratio measures how many times receivables (outstanding payments) are collected during a period. Rambus Inc.'s receivables turnover has generally increased over the years, indicating that the company is collecting payments more efficiently. A higher ratio is generally a positive sign as it suggests faster cash conversion.
3. Payables Turnover: This ratio reflects how many times a company pays its suppliers within a period. Rambus Inc.'s payables turnover has fluctuated over the years but remained relatively stable. A higher turnover ratio indicates that the company is paying its suppliers more frequently, which can improve relationships but may also strain liquidity.
4. Working Capital Turnover: This ratio shows how efficiently a company utilizes its working capital to generate sales. Rambus Inc.'s working capital turnover has fluctuated but generally increased from 2019 to 2023. This suggests that the company is generating more sales relative to its working capital, implying improved efficiency in utilizing its resources.
Overall, Rambus Inc. should closely monitor its inventory turnover to ensure optimal inventory management, while maintaining efficient collections through its increasing receivables turnover. The stability in payables turnover indicates a balanced approach to supplier payments, while the improving working capital turnover reflects enhanced operational efficiency.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 127.60 | 70.91 | 43.98 | 86.92 | 71.66 |
| Days of sales outstanding (DSO) | days | 105.91 | 145.32 | 199.76 | 247.04 | 366.29 |
| Number of days of payables | days | 63.79 | 84.19 | 58.48 | 54.03 | 67.84 |
Looking at Rambus Inc.'s activity ratios over the past five years, we can observe the following trends:
1. Days of Inventory on Hand (DOH): The number of days it takes for Rambus to convert its inventory into sales has fluctuated significantly over the years. In 2023, the DOH increased to 146.79 days from 81.46 days in 2022, indicating that Rambus held on to its inventory for a longer period before selling it. This could signal potential inefficiencies in managing inventory levels, leading to higher holding costs.
2. Days of Sales Outstanding (DSO): Rambus' DSO has shown a decreasing trend from 2019 to 2023, indicating an improvement in the collection of accounts receivable. The company took fewer days to collect payments from customers, which suggests better credit policies or more efficient collection efforts. A lower DSO is generally considered favorable as it indicates a shorter time between sales and cash receipt.
3. Number of Days of Payables: Rambus' days of payables have varied over the years, with a slight decrease in 2023 compared to 2022. A lower number of days of payables implies that the company is paying its suppliers more quickly. This could be due to negotiated payment terms or a desire to maintain strong relationships with suppliers. However, a very low number of days of payables may indicate cash flow constraints or potential strain on liquidity.
In summary, Rambus Inc. should focus on managing its inventory levels more efficiently to avoid excessive holding costs, maintain the improvements in accounts receivable collection reflected in the decreasing DSO trend, and carefully balance its payables strategy to optimize cash flow and maintain good relationships with suppliers.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 6.80 | 5.27 | 5.86 | 4.27 | 5.00 |
| Total asset turnover | 0.37 | 0.45 | 0.27 | 0.20 | 0.17 |
The fixed asset turnover ratio for Rambus Inc. has shown fluctuations over the past five years, with the highest value observed in 2023 at 6.80 and the lowest in 2020 at 4.27. This ratio indicates the company's ability to generate sales relative to its investment in fixed assets, such as property, plant, and equipment. The increasing trend in the fixed asset turnover suggests improved efficiency in utilizing fixed assets to generate revenue.
On the other hand, the total asset turnover ratio has also varied during the same period, with a peak value of 0.45 in 2022 and a low of 0.17 in 2019. This ratio evaluates the company's overall efficiency in utilizing all assets to generate sales. The increase in total asset turnover signifies that the company has been able to generate more revenue from its total assets, which include both fixed and current assets.
Comparing both ratios, the fixed asset turnover ratio consistently outperforms the total asset turnover ratio over the years. This indicates that Rambus Inc. is more efficient in generating revenue from its fixed assets compared to its total assets. However, the decreasing trend in the total asset turnover may suggest that the company is becoming less efficient in utilizing its total asset base to generate sales. Management should monitor and analyze these trends to ensure optimal asset utilization and sustainable growth in the long term.