Synopsys Inc (SNPS)
Activity ratios
Short-term
Turnover ratios
| Oct 31, 2024 | Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 3.44 | 3.17 | 5.02 | 3.76 | 4.13 |
| Receivables turnover | 6.26 | 5.80 | 6.03 | 6.96 | 4.43 |
| Payables turnover | 6.01 | 6.67 | 28.30 | 31.44 | 26.49 |
| Working capital turnover | 1.60 | 13.12 | 21.34 | 10.65 | 9.00 |
Synopsys Inc's activity ratios provide insights into the efficiency of the company's operations and management of its resources.
1. Inventory Turnover:
- The inventory turnover ratio indicates how many times a company's inventory is sold and replaced during a given period.
- Synopsys Inc's inventory turnover has fluctuated over the years, with a high of 5.02 in 2022 and a low of 3.17 in 2023.
- In general, a higher inventory turnover ratio is preferred as it signifies that inventory is being managed efficiently.
2. Receivables Turnover:
- The receivables turnover ratio reflects how efficiently a company collects outstanding receivables from its customers.
- Synopsys Inc has maintained relatively consistent receivables turnover ratios over the years, indicating a stable collection process.
- A higher receivables turnover ratio suggests effective credit policies and cash flow management.
3. Payables Turnover:
- The payables turnover ratio measures how quickly a company pays its suppliers for credit purchases.
- Synopsys Inc's payables turnover has shown significant fluctuation, with a sharp decrease from 2021 to 2022 and a subsequent increase.
- A lower payables turnover ratio may indicate potential issues with liquidity or payment delays to suppliers.
4. Working Capital Turnover:
- The working capital turnover ratio assesses how well a company utilizes its working capital to generate sales revenue.
- Synopsys Inc's working capital turnover has varied, with a notable spike in 2022 and fluctuations in subsequent years.
- A higher working capital turnover ratio suggests efficient utilization of resources to drive revenue growth.
Overall, the analysis of Synopsys Inc's activity ratios indicates varying levels of efficiency in managing inventory, receivables, payables, and working capital over the past five years. Monitoring these ratios can help identify areas for improvement in operational efficiency and financial management.
Average number of days
| Oct 31, 2024 | Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 106.06 | 115.28 | 72.72 | 97.00 | 88.34 |
| Days of sales outstanding (DSO) | days | 58.30 | 62.91 | 60.50 | 52.45 | 82.37 |
| Number of days of payables | days | 60.77 | 54.74 | 12.90 | 11.61 | 13.78 |
Days of inventory on hand (DOH) measures how many days, on average, a company holds its inventory before selling it. Synopsys Inc's DOH has been fluctuating over the past five years, ranging from 72.72 days in 2022 to 115.28 days in 2023. The decreasing trend from 2023 to 2024 indicates that the company has been more efficient in managing its inventory levels.
Days of sales outstanding (DSO) reflects how long it takes for the company to collect payment from its customers. Synopsys Inc's DSO has varied over the years, with the lowest being 52.45 days in 2021 and the highest at 82.37 days in 2020. A lower DSO suggests better cash flow management and efficient collection practices.
Number of days of payables shows how long the company takes to pay its suppliers. Synopsys Inc's payables days have been relatively stable over the years, with a slight increase from 11.61 days in 2021 to 60.77 days in 2024. This increase could indicate a shift towards longer payment terms with suppliers.
Overall, Synopsys Inc's activity ratios reflect some fluctuations but also show signs of improved efficiency in managing inventory and collections, though there is a need to monitor the increasing payable days in recent years to ensure continued healthy cash flow management.
See also:
Synopsys Inc Short-term (Operating) Activity Ratios
Long-term
| Oct 31, 2024 | Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 10.88 | 10.63 | 10.51 | 8.90 | 7.62 |
| Total asset turnover | 0.47 | 0.57 | 0.54 | 0.48 | 0.46 |
The long-term activity ratios of Synopsys Inc, indicated by the fixed asset turnover and total asset turnover, provide insights into the company's efficiency in utilizing its assets.
1. Fixed Asset Turnover:
- The fixed asset turnover ratio measures how efficiently a company generates sales revenue from its investments in fixed assets.
- Synopsys Inc's fixed asset turnover has been consistently increasing over the past five years, reaching a high of 10.88 in 2024.
- This indicates that the company has been able to generate $10.88 in sales for every dollar invested in fixed assets in 2024, reflecting a strong efficiency in utilizing its long-term assets.
2. Total Asset Turnover:
- The total asset turnover ratio shows how efficiently a company generates revenue from its total assets, including both long-term and short-term assets.
- Synopsys Inc's total asset turnover has fluctuated over the years but has generally shown a decreasing trend from 0.46 in 2020 to 0.47 in 2024.
- A lower total asset turnover could be indicative of the company holding more assets relative to its sales revenue, which may suggest lower efficiency in asset utilization. However, the ratio is still within a reasonable range for the industry.
Overall, while the company's total asset turnover has not shown a steady improvement, the increasing trend in the fixed asset turnover ratio signifies that Synopsys Inc has been able to improve its productivity and efficiency in utilizing its long-term assets to generate sales. It is important for the company to continue monitoring and managing its asset turnover ratios to ensure optimal utilization of resources and maximize profitability in the long run.