Smart Global Holdings Inc (SGH)

To analyze SMART Global Holdings Inc days of inventory on hand (DOH) over the past five years, we can use the formula:

DOH = (Average Inventory / Cost of Goods Sold) * Number of days in a period

Where Average Inventory = (Beginning Inventory + Ending Inventory) / 2

Using the provided data, we can calculate the DOH for each year:

For Aug 25, 2023:
DOH = (Average Inventory / Cost of Goods Sold) * 365
DOH = (62.24 / COGS) * 365

For Aug 26, 2022:
DOH = (Average Inventory / Cost of Goods Sold) * 365
DOH = (86.32 / COGS) * 365

For Aug 27, 2021:
DOH = (Average Inventory / Cost of Goods Sold) * 365
DOH = (111.27 / COGS) * 365

For Aug 28, 2020:
DOH = (Average Inventory / Cost of Goods Sold) * 365
DOH = (65.67 / COGS) * 365

For Aug 30, 2019:
DOH = (Average Inventory / Cost of Goods Sold) * 365
DOH = (44.47 / COGS) * 365

Analyzing the trend in DOH, we observed that it fluctuated over the past five years. The DOH increased significantly in 2021, up to 111.27 days, indicating a longer period of time inventory was held. However, it slightly decreased in 2023 compared to the previous year.

A high DOH could suggest inefficiencies in inventory management, tying up working capital and potentially indicating obsolete or slow-moving inventory. On the other hand, a low DOH may point to possible stockouts and lost sales.

It's important to understand the industry benchmarks and compare SMART Global Holdings Inc's DOH to its peers for a more comprehensive assessment of its inventory management efficiency. Additionally, further analysis of inventory turnover and the nature of the company's business could provide deeper insights into the implications of its DOH.

Peer comparison

Aug 25, 2023