Synopsys Inc (SNPS)

Days of Inventory on Hand (DOH) is a financial ratio that measures the average number of days it takes for a company to sell its inventory. A higher DOH value indicates that the company is holding inventory for a longer period, which may tie up working capital and increase carrying costs. On the other hand, a lower DOH value suggests efficient inventory management.

In the case of Synopsys, Inc., the trend in the DOH ratio over the past five years shows fluctuation:

- In Oct 31, 2019, the DOH was 68.60 days, indicating that on average, the company took approximately 68.60 days to sell its inventory.
- In Oct 31, 2020, the DOH increased to 88.34 days, signifying a slower inventory turnover compared to the previous year.
- The DOH further increased to 97.00 days in Oct 31, 2021, reflecting a prolonged time to sell inventory, which could potentially tie up capital and increase holding costs.
- However, in Oct 31, 2022, there was a dip in the DOH to 72.72 days, suggesting a more efficient inventory management compared to the previous year.
- Finally, in Oct 31, 2023, the DOH increased significantly to 97.24 days, indicating a substantial increase in the time it takes for the company to sell its inventory, possibly leading to increased carrying costs and tying up working capital.

It is important to note that an increasing trend in the DOH ratio may indicate potential inventory management issues, such as overstocking or declining demand for products. Conversely, a decreasing trend in the DOH may suggest improved inventory management and efficient use of working capital.

In conclusion, the fluctuation in Synopsys, Inc.'s DOH ratio over the past five years highlights varying levels of efficiency in inventory management. Further analysis of the company's inventory turnover, sales trends, and demand forecasting may provide insights into the factors driving these changes in the DOH ratio.

Peer comparison

Oct 31, 2023

See also:

Synopsys Inc Average Inventory Processing Period