Teradyne Inc (TER)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 3.92 | 3.68 | 3.96 | 6.15 | 6.01 |
| Receivables turnover | — | — | — | — | — |
| Payables turnover | — | — | — | — | — |
| Working capital turnover | 2.37 | 1.78 | 2.09 | 2.08 | 1.82 |
Teradyne Inc's inventory turnover ratio has shown a slight increase from 6.01 in 2020 to 6.15 in 2021, indicating that the company is selling its inventory more efficiently. However, there was a decline in inventory turnover in the following years, with ratios of 3.96 in 2022, 3.68 in 2023, and 3.92 in 2024. This downward trend suggests that the company may be facing challenges in managing its inventory levels effectively.
The receivables turnover ratio data is not available for any of the years provided, indicating that there is no information on how quickly the company is collecting its receivables from customers. This lack of data makes it difficult to assess Teradyne's efficiency in collecting outstanding customer payments.
Similarly, the payables turnover ratio data is also not provided for any of the years, making it challenging to evaluate how efficiently the company is managing its accounts payable.
The working capital turnover ratio has shown some fluctuation over the years, starting at 1.82 in 2020, reaching a peak of 2.08 in 2021, and then fluctuating between 1.78 and 2.37 in the subsequent years. This ratio indicates how effectively the company is utilizing its working capital to generate sales. The fluctuations in this ratio suggest variations in Teradyne's efficiency in utilizing its working capital to support its operations and generate revenue.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 93.04 | 99.29 | 92.11 | 59.36 | 60.72 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
Based on the provided data, let's analyze Teradyne Inc's activity ratios:
1. Days of Inventory on Hand (DOH):
- The DOH decreased from 60.72 days as of December 31, 2020, to 59.36 days as of December 31, 2021, indicating that the company managed its inventory more efficiently.
- However, there was a significant increase in DOH to 92.11 days as of December 31, 2022, followed by a further increase to 99.29 days as of December 31, 2023, and a slight decrease to 93.04 days as of December 31, 2024. These higher values suggest a buildup of inventory relative to sales, which may indicate potential inventory management challenges.
2. Days of Sales Outstanding (DSO):
- The data provided does not contain information on Days of Sales Outstanding (DSO), which measures the average number of days it takes for a company to collect revenue after a sale. As a result, we are unable to assess the efficiency of Teradyne Inc in collecting its receivables.
3. Number of Days of Payables:
- Similar to DSO, no data is available for the Number of Days of Payables, which would have indicated the average number of days a company takes to pay its suppliers. Without this information, it is challenging to evaluate Teradyne Inc's payment practices and relationships with suppliers.
In summary, while the company showed improvements in managing its inventory in the short term, the longer-term trend of increasing Days of Inventory on Hand raises concerns about potential inventory management issues. More information on Days of Sales Outstanding and Number of Days of Payables would have provided a more complete assessment of Teradyne Inc's overall activity ratios and working capital efficiency.
See also:
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | — | — | 7.54 | 8.12 | 7.91 |
| Total asset turnover | 0.76 | 0.77 | 0.90 | 0.97 | 0.85 |
The long-term activity ratios of Teradyne Inc provide insights into the efficiency of the company in utilizing its assets over an extended period.
1. Fixed Asset Turnover:
- In 2020, Teradyne's fixed asset turnover was 7.91, indicating that the company generated $7.91 in sales for every dollar invested in fixed assets.
- This ratio improved slightly in 2021 to 8.12, suggesting that Teradyne became more efficient in utilizing its fixed assets to generate revenue.
- However, there was a decrease in the fixed asset turnover in 2022 to 7.54, possibly indicating a decrease in the company's ability to generate sales from its fixed assets.
- The data for 2023 and 2024 is not available, limiting the ability to analyze the trend further.
2. Total Asset Turnover:
- Teradyne's total asset turnover ratio increased from 0.85 in 2020 to 0.97 in 2021, indicating that the company generated $0.97 in sales for every dollar of total assets.
- In 2022, the total asset turnover ratio decreased to 0.90, which is still higher than the ratio in 2020, implying that the company continues to improve its asset utilization efficiency.
- However, there was a notable decline in 2023 to 0.77, and a further drop in 2024 to 0.76, indicating a decrease in the company's ability to generate sales from its total assets over these years.
In conclusion, while Teradyne showed improvements in asset turnover ratios in the short term, the decline in the total asset turnover ratio in the later years may raise concerns about the company's efficiency in utilizing its assets effectively to generate sales. Further analysis of the reasons behind these fluctuations is necessary to assess the company's long-term operational performance.