Smart Global Holdings Inc (SGH)

Receivables turnover

		Aug 25, 2023	Aug 26, 2022	Aug 27, 2021	Aug 28, 2020	Aug 30, 2019
Revenue	US$ in thousands	1,388,900	1,792,800	1,559,310	1,162,720	1,305,460
Receivables	US$ in thousands	219,247	410,323	327,450	217,324	229,238
Receivables turnover		6.33	4.37	4.76	5.35	5.69

August 25, 2023 calculation

Receivables turnover = Revenue ÷ Receivables
= $1,388,900K ÷ $219,247K
= 6.33

The receivables turnover ratio measures how efficiently a company is collecting its accounts receivable during a specific period. A higher turnover ratio indicates that the company is collecting its receivables more efficiently.

Looking at SMART Global Holdings Inc's receivables turnover over the past five years, we can see a fluctuating trend. In August 2023, the receivables turnover ratio was 6.57, significantly higher than the ratios in the previous years. This suggests that the company has improved its efficiency in collecting receivables compared to the prior year.

In August 2022, the receivables turnover ratio was 4.43, representing a decrease from the previous year. This could indicate a slowdown in the collection of receivables or an increase in the average accounts receivable balance.

In the fiscal years 2021, 2020, and 2019, the receivables turnover ratios were 4.79, 5.17, and 5.27, respectively. These figures indicate relatively stable collection efficiency over these years, with some minor fluctuations.

Overall, a high and increasing receivables turnover ratio, as seen in 2023, is generally favorable as it implies that the company is collecting its receivables more rapidly. However, management should monitor the ratio closely to ensure that the increase is not due to overly aggressive collection practices that might impact customer relationships. Additionally, the fluctuations in the previous years' ratios should be further investigated to understand the underlying reasons and trends in the company's receivables management.