TE Connectivity Ltd (TEL)
Activity ratios
Short-term
Turnover ratios
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.94 | 5.13 | 4.84 | 4.76 | 5.73 |
| Receivables turnover | 5.19 | 5.38 | 5.66 | 5.08 | 5.10 |
| Payables turnover | 7.19 | 8.38 | 8.13 | 6.25 | 8.75 |
| Working capital turnover | 5.49 | 4.65 | 6.15 | 5.70 | 5.79 |
TE Connectivity Ltd's activity ratios provide insights into how efficiently the company is managing its assets and liabilities during the specified periods.
1. Inventory Turnover:
- The inventory turnover ratio measures how many times a company's inventory is sold and replaced over a period. TE Connectivity's inventory turnover has slightly fluctuated over the past five years, ranging from 4.76 to 5.73. This indicates that the company is effectively managing its inventory levels to maximize sales.
2. Receivables Turnover:
- The receivables turnover ratio shows how efficiently the company is collecting its accounts receivable. TE Connectivity's receivables turnover has ranged from 5.08 to 5.66, indicating consistent collection practices and the ability to convert credit sales into cash.
3. Payables Turnover:
- The payables turnover ratio reflects how quickly the company pays its suppliers. TE Connectivity's payables turnover has varied between 6.25 and 8.75, suggesting that the company is managing its trade payables effectively and maintaining good relationships with its suppliers.
4. Working Capital Turnover:
- The working capital turnover ratio measures the efficiency of a company in generating revenue relative to its working capital. TE Connectivity's working capital turnover has fluctuated between 4.65 and 6.15, indicating that the company is effectively utilizing its working capital to generate sales revenue.
Overall, TE Connectivity Ltd's activity ratios demonstrate a consistent level of efficiency in managing its inventory, accounts receivable, accounts payable, and working capital over the specified periods, reflecting good operational performance and financial management.
Average number of days
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 73.90 | 71.13 | 75.42 | 76.70 | 63.73 |
| Days of sales outstanding (DSO) | days | 70.37 | 67.88 | 64.49 | 71.89 | 71.56 |
| Number of days of payables | days | 50.74 | 43.56 | 44.90 | 58.37 | 41.70 |
TE Connectivity Ltd's activity ratios provide insight into the efficiency of the company's operations in managing inventory, collecting receivables, and paying its suppliers.
1. Days of Inventory on Hand (DOH):
- The trend in DOH indicates how efficiently TE Connectivity is managing its inventory. A higher DOH suggests that the company may be holding excess inventory, tying up capital and potentially incurring storage costs.
- Over the five-year period, there has been variability in TE Connectivity's inventory management, with DOH ranging from 63.73 days to 76.70 days. In 2024, the DOH increased slightly to 73.90 days compared to the previous year.
2. Days of Sales Outstanding (DSO):
- DSO reflects the average number of days it takes for the company to collect payment from its customers. A lower DSO is generally favorable as it indicates faster cash conversion and improved liquidity.
- TE Connectivity has shown some improvement in its receivables management over the past five years, with DSO decreasing from 71.56 days in 2020 to 70.37 days in 2024. This trend suggests that the company is collecting payments more efficiently.
3. Number of Days of Payables:
- Days of payables indicates the average number of days it takes for the company to pay its suppliers. A longer payment period may indicate a more lenient credit policy or potential cash flow issues.
- TE Connectivity's days of payables have fluctuated over the period, with the number of days ranging from 41.70 days in 2020 to 58.37 days in 2021. In 2024, the days of payables increased to 50.74 days compared to the previous year, indicating a longer payment period to suppliers.
Overall, TE Connectivity Ltd's activity ratios show a mix of efficiency in managing inventory and receivables, while the payment period to suppliers has been more variable. Monitoring these ratios will be crucial for the company to maintain a balance between liquidity, operational efficiency, and supplier relationships.
Long-term
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 4.06 | 4.25 | 4.55 | 3.94 | 3.32 |
| Total asset turnover | 0.69 | 0.73 | 0.78 | 0.69 | 0.63 |
TE Connectivity Ltd's fixed asset turnover has shown a decreasing trend over the past five years, indicating that the company is generating slightly less revenue for each dollar invested in fixed assets. However, the current ratio of 4.06 is still relatively high, suggesting efficient utilization of fixed assets to generate sales.
On the other hand, the total asset turnover ratio has also experienced a slight decline over the same period, indicating a decrease in the company's ability to generate sales from its total assets. With a ratio of 0.69 in 2024, there has been a lower turnover compared to previous years.
Overall, TE Connectivity Ltd's long-term activity ratios suggest that while the company is efficiently utilizing its fixed assets to generate revenue, there may be room for improvement in optimizing the utilization of total assets to enhance overall operational efficiency and profitability.