SolarEdge Technologies Inc (SEDG)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover	1.57	3.11	3.51	3.01	5.54
Receivables turnover	53.71	—	3.72	5.30	3.73
Payables turnover	5.88	4.93	5.29	6.16	6.02
Working capital turnover	1.23	1.55	1.66	1.14	2.87

Solaredge Technologies Inc's activity ratios provide insights into how efficiently the company is managing its assets and liabilities.

1. Inventory Turnover:
- Solaredge's inventory turnover has been gradually decreasing over the past five years, from 5.54 in 2019 to 1.57 in 2023. This indicates that the company is now taking longer to sell its inventory, which may lead to higher carrying costs or potential obsolescence issues.

2. Receivables Turnover:
- The receivables turnover ratio has been fluctuating over the years, with a peak in 2020 at 5.30 and a low in 2022 at 2.95. In 2023, it improved to 3.81. This ratio suggests that Solaredge is collecting its accounts receivable faster compared to 2022 but still slightly slower than in 2020.

3. Payables Turnover:
- The data provided does not include information on payables turnover, making it challenging to assess how effectively Solaredge is managing its trade payables. Payables turnover is crucial for understanding how quickly the company pays its suppliers.

4. Working Capital Turnover:
- Solaredge's working capital turnover has also seen a declining trend, from 2.87 in 2019 to 1.23 in 2023. This indicates that the company is utilizing its working capital less efficiently in generating sales revenue, which may imply an inefficient use of resources.

In summary, Solaredge's activity ratios highlight some areas of concern, particularly in inventory management and working capital utilization. Addressing these issues could help improve the company's overall operational efficiency and financial performance.

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	231.82	117.48	103.97	121.32	65.88
Days of sales outstanding (DSO)	days	6.80	—	98.02	68.87	97.88
Number of days of payables	days	62.07	74.08	68.94	59.27	60.61

Days of Inventory on Hand (DOH):
Solaredge Technologies Inc's DOH has shown an increasing trend over the last five years, indicating that the company is holding inventory for a longer period before it is sold. In 2023, the DOH stood at 231.82 days, significantly higher than the previous years. This increase may suggest potential inefficiencies in inventory management or a slower turnover of inventory, which could tie up working capital.

Days of Sales Outstanding (DSO):
The DSO for Solaredge Technologies Inc has fluctuated over the past five years. In 2023, the DSO was 95.75 days, showing an improvement from 2022 but still higher compared to 2021. A decreasing DSO implies that the company is collecting its accounts receivable more quickly, which is positive as it indicates efficient credit management and faster cash conversion.

Number of Days of Payables:
Unfortunately, there is no specific data provided for the number of days of payables, which is crucial for a comprehensive analysis of Solaredge Technologies Inc's activity ratios. Days payables outstanding is important as it reflects how long the company takes to pay its suppliers and manage its cash flows effectively. Without this data, a holistic evaluation of the company's working capital management is not possible.

Overall, while the improvement in DSO is a positive sign, the significant increase in DOH warrants closer monitoring to ensure efficient inventory management and working capital utilization. Incorporating data on payables would provide a more comprehensive understanding of Solaredge Technologies Inc's activity ratios and working capital efficiency.

Long-term

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Fixed asset turnover	4.84	5.72	4.79	4.81	8.06
Total asset turnover	0.65	0.73	0.68	0.60	0.95

The fixed asset turnover ratio measures how efficiently a company utilizes its fixed assets to generate revenue. A higher ratio indicates better asset utilization. Solaredge Technologies Inc's fixed asset turnover has been fluctuating over the past five years, ranging from 4.79 to 8.06. The decreasing trend from 2019 to 2021 followed by a slight increase in 2022 and 2023 suggests some variability in the company's ability to generate revenue from its fixed assets.

On the other hand, the total asset turnover ratio indicates how well a company uses all its assets to generate revenue. Solaredge Technologies Inc's total asset turnover has also fluctuated, ranging from 0.60 to 0.95 over the past five years. The fluctuations may suggest changes in the company's overall asset management efficiency and its ability to generate revenue relative to its total assets.

In summary, while Solaredge Technologies Inc has shown some variability in its long-term activity ratios, particularly in terms of fixed asset turnover and total asset turnover, further analysis would be needed to understand the factors influencing these trends and to assess the company's overall operational efficiency and asset utilization.