Sitime Corporation (SITM)

Short-term

Turnover ratios

Activity ratios provide insights into how efficiently a company is managing its assets and liabilities to generate sales and cash flow. Let's analyze SiTime Corp's activity ratios based on the data provided.

1. Inventory turnover:
The inventory turnover ratio indicates how many times a company sells and replaces its inventory during a specific period. SiTime Corp's inventory turnover has been decreasing over the years, going from 3.74 in 2019 to 0.94 in 2023. This may suggest that the company is effectively managing its inventory levels to reduce holding costs or that sales are declining relative to inventory levels.

2. Receivables turnover:
The receivables turnover ratio reflects how efficiently a company collects cash from customers. SiTime Corp's receivables turnover has been relatively stable, with a slight increase from 4.49 in 2019 to 6.59 in 2023. A higher turnover ratio indicates that the company is collecting receivables more quickly, which can improve cash flow and reduce the risk of bad debts.

3. Payables turnover:
The payables turnover ratio measures how efficiently a company pays its suppliers. SiTime Corp's payables turnover has fluctuated over the years but generally decreased from 11.51 in 2019 to 7.12 in 2023. A lower turnover ratio may suggest that the company is taking longer to pay its suppliers, which could impact supplier relationships or cash flow management.

4. Working capital turnover:
The working capital turnover ratio indicates how effectively a company utilizes its working capital to generate sales. SiTime Corp's working capital turnover has been decreasing consistently, from 1.81 in 2019 to 0.29 in 2023. A lower turnover ratio may imply that the company is becoming less efficient in utilizing its working capital to support sales activity.

In conclusion, the analysis of SiTime Corp's activity ratios indicates various trends that highlight changes in inventory management, receivables collection, payables payment, and working capital efficiency over the past five years. Interpretation of these ratios can provide valuable insights into the company's operational performance and financial health.

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Average number of days

Days of inventory on hand (DOH), also known as inventory turnover, measures how many days it takes for a company to sell its average inventory. A higher number of days indicates slower-moving inventory. SiTime Corp's DOH has been increasing over the years, from 97.66 days in 2019 to 386.43 days in 2023, suggesting that the company may have excess or slow-moving inventory that needs to be managed efficiently to improve cash flow and profitability.

Days of sales outstanding (DSO) represents the average number of days it takes for a company to collect on its accounts receivable. A higher DSO indicates a longer time to collect revenue from customers. SiTime Corp's DSO has fluctuated over the years, with a slight decrease from 81.32 days in 2019 to 55.41 days in 2023. This trend suggests an improvement in the company's accounts receivable management efficiency.

Number of days of payables measures how long it takes for a company to pay its suppliers. A higher number of days indicates that the company takes longer to pay its bills, which may signal strained supplier relationships or cash flow issues. SiTime Corp's number of days of payables has been increasing since 2019, from 31.72 days to 51.24 days in 2023. This trend could indicate that the company is taking longer to pay its suppliers, which may impact relationships and future credit terms.

Overall, SiTime Corp's activity ratios reflect varying trends in inventory management, accounts receivable collection, and accounts payable practices. Effective management of these ratios is crucial for optimizing working capital and ensuring the company's financial health and operational efficiency.

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Long-term

The fixed asset turnover ratio for SiTime Corp has decreased steadily over the past five years, indicating that the company is generating less revenue relative to its investment in fixed assets. This could suggest declining efficiency or utilization of the company's fixed assets in generating sales.

On the other hand, the total asset turnover ratio has also witnessed a downward trend, implying that SiTime Corp is generating less revenue relative to its total assets. This may indicate that the company's overall asset utilization efficiency has decreased over the years, possibly due to factors such as changes in business operations, market conditions, or asset management strategies.

Overall, the declining trend in both fixed asset turnover and total asset turnover ratios suggests a potential decrease in operational efficiency and asset utilization at SiTime Corp over the past five years. This could be a point of concern for investors and stakeholders, highlighting the need for further analysis and potential operational improvements to enhance the company's long-term profitability and financial performance.