Smart Global Holdings Inc (SGH)

Payables turnover

		Mar 1, 2024	Dec 1, 2023	Aug 25, 2023	May 26, 2023	Feb 24, 2023	Nov 25, 2022	Aug 26, 2022	May 27, 2022	Feb 25, 2022	Nov 26, 2021	Aug 27, 2021	May 28, 2021	Feb 26, 2021	Nov 27, 2020	May 29, 2020	Feb 28, 2020	Nov 29, 2019	Aug 30, 2019	May 31, 2019	Mar 1, 2019
Cost of revenue (ttm)	US$ in thousands	913,689	1,044,661	1,218,737	1,612,326	1,657,952	1,639,060	1,609,863	1,216,874	1,212,065	1,102,223	976,139	1,234,240	1,078,937	1,047,971	1,026,196	983,899	1,002,735	1,083,312	1,147,311	1,207,648
Payables	US$ in thousands	148,008	181,791	134,980	170,884	167,769	325,435	293,165	384,251	380,088	373,460	429,640	354,210	261,443	235,557	245,774	217,256	224,213	164,866	177,519	257,316
Payables turnover		6.17	5.75	9.03	9.44	9.88	5.04	5.49	3.17	3.19	2.95	2.27	3.48	4.13	4.45	4.18	4.53	4.47	6.57	6.46	4.69

March 1, 2024 calculation

Payables turnover = Cost of revenue (ttm) ÷ Payables
= $913,689K ÷ $148,008K
= 6.17

The payables turnover of Smart Global Holdings Inc has exhibited fluctuating trends over the past several quarters. The company's ability to effectively manage its accounts payable varies, as indicated by the changing values of the payables turnover ratio. A higher payables turnover ratio generally implies that the company is paying off its suppliers more frequently, potentially indicating good liquidity management.

Looking at the data provided, the payables turnover ratio ranged from as low as 2.27 to as high as 9.88 over the period under review. The highest values, such as 9.88 and 9.44, suggest that the company is frequently settling its payables within a shorter timeframe, which may be viewed positively by suppliers. Conversely, the lower ratios, such as 2.27 and 2.95, indicate a slower turnover of payables, which could potentially strain supplier relationships or suggest a less efficient use of working capital.

It is crucial for Smart Global Holdings Inc to maintain a balance in its payables turnover, ensuring timely payments to suppliers while optimizing its cash flow and working capital management. Analyzing the payables turnover ratio over time helps in assessing the company's payment practices and their impact on overall financial health and relationships with vendors.