SolarEdge Technologies Inc (SEDG)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Inventory turnover	2.75	2.31	0.97	1.20	1.57	2.15	2.60	2.78	3.11	3.61	3.76	3.57	3.51	3.91	3.31	2.86	3.01	3.45	4.03	5.30
Receivables turnover	—	32.41	18.36	36.39	53.71	437.07	2.84	3.04	—	3.53	3.68	3.27	3.72	4.25	4.60	5.28	5.30	8.30	8.76	6.73
Payables turnover	19.02	19.45	10.88	10.85	5.88	6.34	5.90	5.96	4.93	6.51	6.97	6.40	5.29	8.65	7.56	7.96	6.16	8.40	6.74	7.56
Working capital turnover	0.91	0.86	0.65	0.96	1.23	1.43	1.44	1.45	1.55	1.58	1.47	1.17	1.66	1.54	1.45	1.21	1.14	1.12	2.38	2.80

SolarEdge Technologies Inc's activity ratios suggest a fluctuating efficiency in managing its assets.

1. Inventory turnover has been gradually decreasing from 5.30 in March 2020 to 0.97 in June 2024, indicating the company took longer to sell its inventory, which may lead to holding costs and possible obsolescence.

2. Receivables turnover varied significantly, with values ranging from 2.15 in September 2023 to 437.07 in December 2023. This may suggest inconsistencies in collecting outstanding payments from customers, impacting the company's cash flow.

3. Payables turnover remained relatively stable, indicating a consistent relationship with suppliers over the years. The increase in the ratio from 10.85 in March 2024 to 19.02 in December 2024 might indicate a longer period to pay off obligations.

4. Working capital turnover decreased steadily from 2.80 in March 2020 to 0.91 in December 2024, reflecting a decline in the company's ability to generate revenue per dollar of working capital employed. This could indicate inefficiencies in asset utilization or a decrease in sales relative to working capital.

In conclusion, SolarEdge Technologies Inc should focus on managing its inventory levels, improving receivables collection procedures, and possibly renegotiating payment terms with suppliers to enhance its overall efficiency and financial performance.

Average number of days

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Days of inventory on hand (DOH)	days	132.54	158.15	375.78	304.07	231.82	169.93	140.21	131.14	117.48	101.06	97.17	102.16	103.97	93.39	110.11	127.67	121.32	105.76	90.52	68.91
Days of sales outstanding (DSO)	days	—	11.26	19.88	10.03	6.80	0.84	128.72	119.92	—	103.43	99.23	111.61	98.02	85.83	79.30	69.18	68.87	44.00	41.66	54.27
Number of days of payables	days	19.19	18.76	33.56	33.65	62.07	57.61	61.91	61.28	74.08	56.09	52.36	57.07	68.94	42.18	48.29	45.83	59.27	43.48	54.17	48.29

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

1. Days of Inventory on Hand (DOH):
The trend in DOH reflects the number of days the company holds inventory before it is sold. SolarEdge's DOH has shown fluctuations over the past years, ranging from 68.91 days to 375.78 days. The increase in DOH from March 31, 2024, to December 31, 2024, followed by a decrease in the subsequent period, indicates potential inventory management challenges. The company should monitor and optimize its inventory levels to avoid excess holding costs.

2. Days of Sales Outstanding (DSO):
DSO measures the average number of days it takes for the company to collect its accounts receivable. SolarEdge's DSO ranged from 0.84 days to 128.72 days over the period. The significant increase in DSO from March 31, 2023, to June 30, 2023, followed by a sharp decline, suggests potential issues in credit and collection procedures. The company needs to enhance its credit policies to accelerate cash inflows and reduce the risk of bad debts.

3. Number of Days of Payables:
This ratio indicates the average number of days the company takes to pay its suppliers. SolarEdge's payables days ranged from 18.76 days to 74.08 days. The decreasing trend in payables days from March 31, 2024, to December 31, 2024, suggests the company is paying its suppliers more efficiently. However, it is essential to strike a balance between prompt payment and optimizing cash flow.

In conclusion, SolarEdge Technologies Inc should focus on improving inventory management, enhancing collection procedures, and maintaining effective payable practices to optimize its working capital efficiency and overall operational performance.

Long-term

	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Fixed asset turnover	2.62	2.47	2.54	3.70	4.84	5.87	6.31	6.11	5.72	5.64	5.03	4.67	4.79	5.01	4.65	4.59	4.81	5.90	7.03	8.09
Total asset turnover	0.34	0.37	0.38	0.54	0.65	0.76	0.78	0.76	0.73	0.71	0.65	0.60	0.68	0.67	0.62	0.58	0.60	0.67	0.99	1.05

The Fixed Asset Turnover ratio for SolarEdge Technologies Inc has been fluctuating over the years, indicating changes in the efficiency of the company's utilization of fixed assets to generate sales. The ratio has shown a decreasing trend from 8.09 in March 2020 to 2.62 in December 2024, with notable fluctuations in between.

On the other hand, the Total Asset Turnover ratio reflects how efficiently the company is using all assets to generate revenue. Similarly to the Fixed Asset Turnover ratio, the Total Asset Turnover ratio has decreased from 1.05 in March 2020 to 0.34 in December 2024, indicating a declining trend in asset utilization efficiency over the years.

Overall, the decreasing trends in both Fixed Asset Turnover and Total Asset Turnover ratios suggest potential issues in asset management and operational efficiency at SolarEdge Technologies Inc. Management should closely monitor these ratios and seek opportunities to improve asset utilization to enhance the company's overall operational performance and profitability in the long term.