Teradyne Inc (TER)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 3.68 | 3.96 | 6.15 | 6.01 | 4.86 |
| Receivables turnover | 6.34 | 6.42 | 6.72 | 6.27 | 6.33 |
| Payables turnover | 6.33 | 9.22 | 9.77 | 9.99 | 7.54 |
| Working capital turnover | 1.78 | 2.09 | 2.09 | 1.82 | 2.05 |
Teradyne, Inc.'s activity ratios provide insights into the efficiency of its operations related to managing inventory, receivables, payables, and working capital.
1. Inventory turnover:
- Teradyne's inventory turnover has decreased from 6.15 in 2021 to 3.68 in 2023. This suggests that the company's inventory is turning over more slowly, indicating potential inventory management issues or a shift in sales patterns.
2. Receivables turnover:
- The receivables turnover for Teradyne has remained relatively stable over the years, ranging from 6.27 in 2020 to 6.42 in 2022. This indicates that the company has been effective in collecting payments from customers within a reasonable timeframe.
3. Payables turnover:
- Teradyne experienced a significant decrease in payables turnover from 9.99 in 2020 to 6.33 in 2023. A lower payables turnover may suggest that the company is taking longer to pay its suppliers, which could impact its relationships with vendors.
4. Working capital turnover:
- The working capital turnover ratio has fluctuated over the years for Teradyne, with a peak of 2.09 in 2021 and a low of 1.78 in 2023. This ratio indicates how efficiently the company is using its working capital to generate revenue. The declining trend may suggest potential inefficiencies in capital management or changes in business operations.
In summary, Teradyne's activity ratios reflect changes in inventory management efficiency, consistency in receivables turnover, a decline in payables turnover, and fluctuations in working capital turnover. Further analysis and investigation into the underlying reasons for these trends would be necessary to assess their impact on the company's overall financial health and performance.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 99.29 | 92.11 | 59.36 | 60.72 | 75.16 |
| Days of sales outstanding (DSO) | days | 57.57 | 56.82 | 54.29 | 58.17 | 57.63 |
| Number of days of payables | days | 57.70 | 39.60 | 37.36 | 36.52 | 48.39 |
To analyze Teradyne, Inc.'s activity ratios, we will focus on the days of inventory on hand (DOH), days of sales outstanding (DSO), and number of days of payables.
1. Days of Inventory on Hand (DOH):
- The DOH ratio measures how many days it takes for a company to turn its inventory into sales. A lower DOH is generally preferred as it indicates efficient inventory management.
- Teradyne's DOH has been increasing over the last five years, from 75.16 days in 2019 to 99.29 days in 2023. This trend suggests that the company has more inventory on hand compared to previous years, which can tie up working capital and increase carrying costs.
2. Days of Sales Outstanding (DSO):
- The DSO ratio reveals the average number of days it takes a company to collect its accounts receivable. A lower DSO indicates a faster collection process and better liquidity management.
- Teradyne's DSO has fluctuated slightly over the past five years, ranging from 54.29 days in 2021 to 57.57 days in 2023. This indicates that the company's collection process has been relatively stable, requiring about 57 to 58 days on average to collect receivables.
3. Number of Days of Payables:
- The number of days of payables shows how long a company takes to pay its suppliers. A higher number of days indicates that the company is taking longer to pay its bills, potentially benefiting from favorable credit terms.
- Teradyne's number of days of payables has shown an increasing trend, from 48.39 days in 2019 to 57.70 days in 2023. This suggests that the company is taking more time to settle its payables, which may indicate delayed payments to suppliers.
In summary, Teradyne's activity ratios reflect mixed performance. While the company has seen an increase in days of inventory on hand and number of days of payables, its days of sales outstanding have remained relatively stable. This analysis suggests that Teradyne may need to focus on optimizing its inventory management and payables process to improve working capital efficiency and overall financial performance.
See also:
Teradyne Inc Short-term (Operating) Activity Ratios
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 6.01 | 7.54 | 9.56 | 7.91 | 7.17 |
| Total asset turnover | 0.77 | 0.90 | 0.97 | 0.85 | 0.82 |
The fixed asset turnover ratio measures how efficiently a company utilizes its fixed assets to generate revenue. Teradyne, Inc.'s fixed asset turnover has been fluctuating over the past five years, ranging from 6.01 in 2023 to 9.56 in 2021. This indicates that in 2021, the company generated $9.56 in sales for every dollar invested in fixed assets.
On the other hand, the total asset turnover ratio reflects how well a company utilizes all its assets to generate sales. Teradyne's total asset turnover ratio has also shown variability, with values between 0.77 in 2023 and 0.97 in 2021. This implies that in 2021, the company generated $0.97 in sales for every dollar invested in total assets.
Overall, the trend in both ratios indicates that Teradyne has been effectively utilizing its assets to generate revenue, with some fluctuations in efficiency over the years. A higher fixed asset turnover ratio suggests efficient utilization of fixed assets, while a higher total asset turnover ratio indicates effective use of all assets to drive sales.