Synopsys Inc (SNPS)

Activity ratios

Short-term

Turnover ratios

	Jan 31, 2024	Oct 31, 2023	Jul 31, 2023	Apr 30, 2023	Jan 31, 2023	Oct 31, 2022	Jul 31, 2022	Apr 30, 2022	Jan 31, 2022	Oct 31, 2021	Jul 31, 2021	Apr 30, 2021	Jan 31, 2021	Oct 31, 2020	Jul 31, 2020	Apr 30, 2020	Jan 31, 2020	Oct 31, 2019	Jul 31, 2019	Apr 30, 2019
Inventory turnover	3.31	3.75	4.15	4.43	4.94	5.02	4.62	4.45	4.28	3.76	3.53	3.65	3.51	4.13	4.71	4.49	5.09	5.32	4.90	4.57
Receivables turnover	5.76	5.80	8.29	6.78	5.00	6.03	7.25	6.58	4.34	6.96	7.06	6.51	4.84	4.43	5.50	5.36	4.22	5.68	7.23	6.14
Payables turnover	16.50	7.84	17.62	13.46	15.53	28.30	14.11	12.75	31.19	31.44	20.62	19.02	31.91	26.49	20.28	14.42	28.33	38.00	51.25	24.33
Working capital turnover	8.03	13.12	10.27	12.83	17.05	21.34	14.02	7.78	9.47	10.65	9.50	9.18	16.88	9.00	27.06	—	—	—	—	—

Activity ratios help to evaluate how efficiently a company is managing its resources to generate sales and cash flow. Here is a detailed analysis of Synopsys, Inc.'s activity ratios based on the provided data:

1. Inventory Turnover: Synopsys' inventory turnover has been gradually decreasing from Q1 2023 to Q1 2024, indicating that the company is holding onto its inventory for a longer period before selling it. This could signify potential issues with demand forecasting or production inefficiencies.

2. Receivables Turnover: The receivables turnover ratio shows a fluctuating trend over the quarters, with some periods indicating faster collection of receivables compared to others. This could be due to changes in credit policies, customer payment behavior, or the effectiveness of the company's collections process.

3. Payables Turnover: Synopsys' payables turnover has been volatile, with significant fluctuations in a short period. A higher turnover ratio could suggest that the company is paying its suppliers more frequently, possibly taking advantage of early payment discounts. Conversely, a lower ratio may indicate extended payment terms or potential liquidity issues.

4. Working Capital Turnover: The working capital turnover reveals how well Synopsys is utilizing its working capital to generate revenue. A higher turnover ratio generally indicates more effective use of working capital to support sales, while a lower ratio might point to inefficiencies in managing current assets and liabilities.

Overall, the company's activity ratios show variations over the quarters, highlighting the need for further investigation into operational efficiency, inventory management, receivables collection, and payables strategy to optimize working capital utilization and enhance overall financial performance.

Average number of days

		Jan 31, 2024	Oct 31, 2023	Jul 31, 2023	Apr 30, 2023	Jan 31, 2023	Oct 31, 2022	Jul 31, 2022	Apr 30, 2022	Jan 31, 2022	Oct 31, 2021	Jul 31, 2021	Apr 30, 2021	Jan 31, 2021	Oct 31, 2020	Jul 31, 2020	Apr 30, 2020	Jan 31, 2020	Oct 31, 2019	Jul 31, 2019	Apr 30, 2019
Days of inventory on hand (DOH)	days	110.26	97.24	88.03	82.37	73.89	72.72	78.96	82.08	85.33	97.00	103.34	100.02	104.07	88.34	77.48	81.38	71.77	68.60	74.42	79.93
Days of sales outstanding (DSO)	days	63.36	62.91	44.01	53.83	73.06	60.50	50.34	55.45	84.18	52.45	51.73	56.09	75.40	82.37	66.38	68.15	86.43	64.30	50.52	59.49
Number of days of payables	days	22.13	46.56	20.72	27.11	23.50	12.90	25.87	28.62	11.70	11.61	17.70	19.19	11.44	13.78	18.00	25.31	12.88	9.61	7.12	15.00

The analysis of Synopsys, Inc.'s activity ratios indicates some fluctuations in the efficiency of the company's operations over the past eight quarters.

1. Days of Inventory on Hand (DOH): The trend in DOH shows an increasing level of inventory holding period from Q2 2022 to Q1 2024, suggesting a potential inefficiency in managing and selling inventory. The spike in DOH from 73.89 days in Q1 2023 to 110.26 days in Q1 2024 indicates a significant rise in the time taken to convert inventory into sales. This rise may be a concern as high levels of inventory can tie up capital and increase storage costs.

2. Days of Sales Outstanding (DSO): The DSO ratio reflects the average number of days it takes for the company to collect revenue after a sale is made. The decreasing trend in DSO from Q1 2023 to Q3 2023 indicates an improvement in the company's collection efficiency. However, there was an increase in DSO in Q1 2024 compared to Q3 2023, which may suggest a slower collection process in the most recent quarter.

3. Number of Days of Payables: The trend in the number of days of payables shows some fluctuations over the quarters. The peak in Q4 2023, with 46.56 days, compared to Q4 2022 with 12.90 days, indicates a significant increase in the time taken by Synopsys to pay its suppliers. This trend might suggest a potential strain on cash flow or a change in payment terms with suppliers.

Overall, a high level of inventory relative to sales, coupled with an increase in days of payables and potential slowdown in receivables collection, may pose challenges to the company's liquidity and working capital management. Further monitoring and analysis of these activity ratios are recommended to assess the efficiency of Synopsys, Inc.'s operations and financial health.

Long-term

	Jan 31, 2024	Oct 31, 2023	Jul 31, 2023	Apr 30, 2023	Jan 31, 2023	Oct 31, 2022	Jul 31, 2022	Apr 30, 2022	Jan 31, 2022	Oct 31, 2021	Jul 31, 2021	Apr 30, 2021	Jan 31, 2021	Oct 31, 2020	Jul 31, 2020	Apr 30, 2020	Jan 31, 2020	Oct 31, 2019	Jul 31, 2019	Apr 30, 2019
Fixed asset turnover	10.81	10.48	10.31	9.68	10.01	10.51	10.17	9.68	9.43	8.90	8.67	8.32	7.85	7.62	7.25	7.23	7.38	7.82	8.87	9.39
Total asset turnover	0.58	0.57	0.56	0.54	0.54	0.54	0.53	0.52	0.51	0.48	0.48	0.48	0.48	0.46	0.46	0.46	0.47	0.52	0.54	0.52

The fixed asset turnover ratio measures how efficiently a company generates revenue from its fixed assets. Synopsys, Inc. has consistently maintained a high fixed asset turnover ratio, with values ranging from 9.68 to 10.81 over the past eight quarters. This indicates that Synopsys is effectively utilizing its fixed assets to generate revenue.

On the other hand, the total asset turnover ratio reflects how well a company utilizes all its assets to generate sales. Synopsys, Inc. has shown a stable total asset turnover ratio, ranging from 0.52 to 0.58 during the same period. This implies that the company is able to generate revenue relative to its total asset base.

Overall, Synopsys, Inc. demonstrates strong efficiency in utilizing both fixed and total assets to generate sales, as indicated by its consistently high fixed asset turnover and stable total asset turnover ratios over the past quarters.