SolarEdge Technologies Inc (SEDG)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Inventory turnover	2.75	1.57	3.11	3.51	3.01
Receivables turnover	—	53.71	—	3.72	5.30
Payables turnover	19.02	5.88	4.93	5.29	6.16
Working capital turnover	0.91	1.23	1.55	1.66	1.14

SolarEdge Technologies Inc's inventory turnover has shown some fluctuations over the years, ranging from 3.01 in 2020 to 3.11 in 2022. However, there was a significant decrease in inventory turnover to 1.57 in 2023 before a slight recovery to 2.75 in 2024. This indicates that the company is managing its inventory less efficiently in 2023 but has improved in 2024.

The receivables turnover of SolarEdge has been relatively stable, with a high of 5.30 in 2020, a decline to 3.72 in 2021, and then a substantial increase to 53.71 in 2023, suggesting a notable improvement in collecting receivables. However, data for 2022 and 2024 are missing, so the trend is unclear for those years.

In terms of payables turnover, SolarEdge saw a slight decrease from 6.16 in 2020 to 4.93 in 2022 before a slight increase to 5.88 in 2023 and a significant jump to 19.02 in 2024. This indicates that the company is taking longer to pay its suppliers in 2022 but improved its payment efficiency in 2023 and notably in 2024.

The working capital turnover of SolarEdge has been relatively stable over the years, ranging from 0.91 in 2024 to 1.66 in 2021. A decrease to 0.91 in 2024 may suggest a lower level of sales generated for each dollar of working capital. However, further analysis is needed to understand the impact of this ratio on the company's overall financial performance and efficiency.

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	132.54	231.82	117.48	103.97	121.32
Days of sales outstanding (DSO)	days	—	6.80	—	98.02	68.87
Number of days of payables	days	19.19	62.07	74.08	68.94	59.27

Based on the provided data for SolarEdge Technologies Inc, the activity ratios can be analyzed as follows:

1. Days of Inventory on Hand (DOH): This ratio measures how many days, on average, it takes for the company to sell its inventory. A lower DOH indicates efficient inventory management. SolarEdge's DOH showed an improving trend from 121.32 days in 2020 to 103.97 days in 2021, but then increased in 2022 to 117.48 days. However, a significant spike was observed in 2023 to 231.82 days, indicating potential inventory management challenges. In 2024, the DOH decreased to 132.54 days.

2. Days of Sales Outstanding (DSO): DSO reflects how long it takes for the company to collect its accounts receivable. A lower DSO is favorable as it indicates quicker cash conversion. SolarEdge's DSO increased from 68.87 days in 2020 to 98.02 days in 2021, suggesting slower collections. In 2023, a significant decrease to 6.80 days was observed, indicating efficient collections. Data for 2022 and 2024 is missing, making it challenging to assess the trend accurately.

3. Number of Days of Payables: This ratio represents how long the company takes to pay its suppliers. A longer period indicates favorable payment terms for the company. SolarEdge's days of payables increased from 59.27 days in 2020 to 68.94 days in 2021 and further to 74.08 days in 2022, suggesting a potential stretching of payables. However, in 2024, a notable decrease to 19.19 days was observed, indicating the company may be paying its suppliers more promptly or receiving better payment terms.

Overall, SolarEdge Technologies Inc's activity ratios reflect fluctuations in inventory management, accounts receivable collection, and payment terms with suppliers over the years, highlighting the importance of monitoring these metrics for operational efficiency and liquidity management.

Long-term

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Fixed asset turnover	2.62	4.84	5.72	4.79	4.81
Total asset turnover	0.34	0.65	0.73	0.68	0.60

Long-term activity ratios provide insights into how efficiently a company utilizes its assets over an extended period. Let's analyze SolarEdge Technologies Inc's performance based on the provided data:

1. Fixed Asset Turnover:
- The company's fixed asset turnover ratio has been relatively stable over the years, ranging from 4.79 to 5.72.
- A high fixed asset turnover ratio indicates that the company efficiently generates sales from its fixed assets such as property, plant, and equipment.
- SolarEdge's consistent performance in this area suggests effective utilization of its long-term assets to generate revenue.

2. Total Asset Turnover:
- The total asset turnover ratio measures how efficiently a company is generating revenue from all its assets.
- SolarEdge's total asset turnover ratio has shown some fluctuations, with values ranging from 0.34 to 0.73.
- An increasing trend in total asset turnover ratio can indicate improved efficiency in asset utilization, while a decreasing trend may suggest inefficiencies in generating sales from all assets.
- The company's performance in recent years may indicate varying levels of efficiency in utilizing its total assets to generate sales.

In conclusion, SolarEdge Technologies Inc's analysis of long-term activity ratios suggests that the company has been effectively utilizing its fixed assets to generate revenue, as reflected in its stable fixed asset turnover ratio. However, there have been fluctuations in the total asset turnover ratio, indicating potential variations in the efficiency of utilizing all assets to generate sales. Further analysis and comparison with industry benchmarks can provide a more comprehensive understanding of the company's long-term asset management efficiency.