Synaptics Incorporated (SYNA)

Short-term

Turnover ratios

The activity ratios of Synaptics Incorporated reflect the efficiency and effectiveness of the company in managing its operating assets and liabilities.

1. Inventory turnover: Synaptics has shown consistency in managing its inventory levels efficiently over the years, with a slight increase in the inventory turnover ratio from 2020 to 2024. This indicates that the company is selling its inventory more frequently, which is a positive sign for reducing holding costs and improving cash flow.

2. Receivables turnover: The receivables turnover ratio has fluctuated over the years, with a notable decrease in 2022. However, the ratio improved in 2023 and 2024, showing that Synaptics is collecting its receivables more quickly. This indicates effective management of credit policies and collection procedures.

3. Payables turnover: The payables turnover ratio has shown variability, with a significant decrease in 2021 followed by fluctuations in the subsequent years. A lower payables turnover could indicate an extension in payment terms to suppliers or potential liquidity issues, while a higher ratio suggests efficient management of accounts payable.

4. Working capital turnover: The working capital turnover ratio has decreased steadily from 3.34 in 2021 to 1.01 in 2024. This indicates that Synaptics is generating less revenue relative to its working capital over the years. A declining trend in this ratio might signify inefficiencies in utilizing working capital to generate sales.

Overall, while Synaptics has demonstrated strong inventory and receivables turnover ratios, indicating efficient management of assets, the variability in payables turnover and decreasing trend in working capital turnover highlight potential areas for improvement in managing liabilities and working capital effectively.

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Average number of days

Activity ratios provide insight into how efficiently a company is managing its assets and operating cycle. Let's analyze the activity ratios of Synaptics Incorporated based on the data provided:

1. Days of Inventory on Hand (DOH):
- The DOH measures how many days it takes for a company to sell its inventory.
- Synaptics' DOH has fluctuated over the last five years, ranging from 33.17 days in 2021 to 61.49 days in 2022.
- A longer DOH suggests slower inventory turnover, which may tie up capital and increase holding costs.
- While the DOH increased in 2022 compared to 2021, it decreased in 2024, indicating a potential improvement in inventory management efficiency.

2. Days of Sales Outstanding (DSO):
- The DSO indicates the average number of days it takes for a company to collect its accounts receivable.
- Synaptics' DSO has varied over the five-year period, with a peak of 68.58 days in 2022 and a low of 46.09 days in 2023.
- A high DSO may indicate inefficient collection practices or credit terms.
- The decreasing trend in DSO from 2022 to 2023 is a positive sign of more timely collections, but the increase in 2024 needs further monitoring.

3. Number of Days of Payables:
- This ratio measures how long a company takes to pay its suppliers.
- Synaptics' days of payables have shown significant variation over the years, with a peak of 51.38 days in 2022 and a low of 19.86 days in 2023.
- A longer payment period can improve cash flow but may strain supplier relationships.
- The increasing trend in payables days from 2022 to 2024 suggests a shift towards a longer payment cycle, which may have both positive and negative implications.

Overall, Synaptics should continually monitor and optimize its activity ratios to enhance operational efficiency, manage working capital effectively, and maintain healthy relationships with both customers and suppliers.

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Long-term

The long-term activity ratios of Synaptics Incorporated reflect the company's efficiency in utilizing its fixed assets and total assets to generate revenue over the past five years. The fixed asset turnover ratio has shown a declining trend, decreasing from 27.26 in 2022 to 11.84 in 2024. This suggests that the company's fixed assets are less productive in generating sales in recent years.

On the other hand, the total asset turnover ratio also experienced a decrease over the period, dropping from 0.84 in 2020 to 0.32 in 2024. This indicates that Synaptics is generating less revenue from its total assets compared to previous years.

Overall, the declining trend in both fixed asset turnover and total asset turnover ratios suggests that Synaptics may need to reassess its asset utilization strategies to improve efficiency and effectiveness in generating revenue from its assets. Further analysis and investigation into the reasons behind these decreases would be beneficial for the company's long-term financial performance.