TE Connectivity Ltd (TEL)

Short-term

Turnover ratios

TE Connectivity Ltd's activity ratios reflect the efficiency of the company in managing its operational resources.

1. Inventory turnover has shown a fluctuating trend over the last five years, ranging from 4.76 to 5.98 times. This ratio indicates the number of times inventory is sold and replaced during the year. In general, a higher inventory turnover ratio suggests efficient inventory management.

2. Receivables turnover has also varied over the years, ranging from 5.08 to 5.77 times. This ratio reflects how quickly the company collects cash from its credit sales. A higher receivables turnover ratio indicates effective credit management and timely collection of receivables.

3. Payables turnover has increased over the years, reaching 8.38 times in 2023. This ratio illustrates the speed at which the company pays its suppliers. A higher payables turnover ratio may indicate the company is efficiently managing its payable obligations and possibly taking advantage of trade credit terms from suppliers.

4. Working capital turnover shows a declining trend from 6.64 in 2019 to 4.65 in 2023. This ratio measures how efficiently the company is using its working capital to generate sales. A decreasing trend in working capital turnover may indicate a lower level of sales generated per unit of working capital, which could suggest inefficiencies in working capital management.

Overall, while TE Connectivity Ltd's activity ratios have shown some variability over the years, the company appears to be effectively managing its inventory turnover, receivables turnover, and payables turnover. However, the declining trend in working capital turnover may warrant further examination of the company's working capital management strategies.

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Average number of days

TE Connectivity Ltd's activity ratios have seen fluctuations over the past five years.

1. Days of Inventory on Hand (DOH):
- The DOH has been varying, with a decrease from 75.42 days in 2022 to 71.13 days in 2023.
- The decrease indicates that the company is selling its inventory at a faster pace in 2023 compared to the previous year, possibly due to improved inventory management or increased demand for its products.

2. Days of Sales Outstanding (DSO):
- The DSO has been inconsistent, with a decrease from 64.49 days in 2022 to 67.88 days in 2023.
- The increase in DSO in 2023 suggests that the company takes longer to collect its accounts receivable, which can impact cash flow and working capital management.

3. Number of Days of Payables:
- The number of days of payables has also shown variability, with an increase from 44.9 days in 2022 to 43.56 days in 2023.
- The decrease in days of payables indicates that the company is taking fewer days to pay its suppliers in 2023 compared to the previous year, which may impact cash flow and supplier relationships.

In conclusion, TE Connectivity Ltd's activity ratios reflect changes in its inventory management, accounts receivable collection, and accounts payable practices over the years, which could affect the company's overall working capital efficiency and cash flow management.

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Long-term

TE Connectivity Ltd's long-term activity ratios indicate the efficiency with which the company utilizes its assets to generate sales. The fixed asset turnover has been relatively stable over the past five years, ranging from 3.32 to 4.55. This ratio measures how effectively the company generates revenue from its fixed assets, with a higher ratio indicating more efficient utilization of these assets. In this case, TE Connectivity Ltd has shown a consistent performance in generating sales relative to its fixed assets.

On the other hand, the total asset turnover ratio, which measures the company's ability to generate sales from all its assets, has also remained relatively stable but at a lower level compared to the fixed asset turnover. The total asset turnover ratio ranges from 0.63 to 0.78 over the five-year period, indicating that the company generates lower sales relative to its total assets compared to its fixed assets.

Overall, TE Connectivity Ltd has maintained steady efficiency in utilizing its fixed assets to generate sales, while the total asset turnover ratio suggests room for improvement in optimizing the use of all assets to increase sales. Analyzing these long-term activity ratios provides insights into the company's asset management efficiency and its ability to generate revenue from its asset base.