Sitime Corporation (SITM)

Days of inventory on hand (DOH)

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover		0.94	1.75	3.36	4.71	3.74
DOH	days	386.43	209.08	108.70	77.42	97.66

December 31, 2023 calculation

DOH = 365 ÷ Inventory turnover
= 365 ÷ 0.94
= 386.43

The days of inventory on hand (DOH) for SiTime Corp have exhibited a notable increasing trend over the past five years, starting at 97.66 days in 2019 and climbing to 386.43 days in 2023. This significant rise indicates that the company is holding inventory for a longer period before selling it, which may tie up working capital and potentially lead to higher carrying costs.

The substantial increase in DOH from 2019 to 2020, followed by further escalation in subsequent years, suggests that SiTime Corp may be experiencing challenges in managing its inventory effectively. This prolonged holding period could be indicative of overstocking, inefficient inventory management practices, or slowed inventory turnover.

It is crucial for the company to assess and address the reasons behind the prolonged DOH to optimize its inventory management processes, enhance operational efficiency, and improve cash flow management. Monitoring and controlling the DOH metric can help SiTime Corp better align its inventory levels with demand, reduce carrying costs, and enhance overall financial performance.