Teradyne Inc (TER)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Inventory turnover	3.68	3.60	3.44	3.55	3.96	4.29	4.64	5.69	6.15	6.45	6.32	5.17	6.01	6.78	5.70	5.72	4.86	5.02	5.41	5.39
Receivables turnover	6.34	6.00	5.80	—	6.42	—	—	—	6.72	—	—	—	—	—	—	—	—	—	—	—
Payables turnover	6.33	6.59	7.81	8.77	9.22	7.94	7.81	9.44	9.77	9.34	9.15	7.65	9.99	8.63	6.38	8.08	7.54	7.58	8.60	7.32
Working capital turnover	1.78	1.88	1.97	2.03	2.09	2.32	2.33	2.21	2.09	2.02	2.01	1.76	1.82	1.92	2.04	2.11	2.05	1.86	1.87	1.83

Teradyne, Inc.'s activity ratios provide insights into the efficiency of the company's operations and management of its assets and liabilities.

1. Inventory turnover: The inventory turnover ratio has been relatively stable, ranging from 3.44 to 4.64 over the past eight quarters. This indicates that Teradyne is efficiently managing its inventory levels, with products being sold and replaced at a satisfactory pace. A decrease in the ratio may suggest overstocking, while an increase may highlight potential inventory shortages.

2. Receivables turnover: The receivables turnover ratio fluctuated between 5.02 and 6.72, with a general upward trend in recent quarters. This indicates that Teradyne is collecting its accounts receivable more efficiently, converting credit sales into cash quicker. A higher ratio is favorable as it implies better credit control and liquidity management.

3. Payables turnover: The payables turnover ratio ranged from 6.33 to 9.44, showing variability in how quickly Teradyne is paying its suppliers. A lower ratio may signal delays in payments or strained supplier relationships, while a higher ratio suggests prompt payment terms or potential negotiation power with vendors.

4. Working capital turnover: The working capital turnover ratio provides an overview of how effectively Teradyne is utilizing its working capital to generate sales. The ratio fluctuated between 1.78 and 2.33, indicating the company's ability to generate revenue using its current assets and liabilities efficiently. A higher turnover ratio suggests that the company is efficiently utilizing its working capital to generate sales.

In conclusion, Teradyne, Inc. has exhibited relatively stable inventory turnover, improving receivables turnover, variable payables turnover, and consistent working capital turnover over the past eight quarters. Monitoring these activity ratios is crucial for assessing the company's operational efficiency and its ability to manage working capital effectively.

Average number of days

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	99.29	101.53	105.98	102.92	92.11	84.99	78.63	64.10	59.36	56.55	57.78	70.60	60.72	53.80	64.05	63.76	75.16	72.78	67.45	67.75
Days of sales outstanding (DSO)	days	57.57	60.78	62.93	—	56.82	—	—	—	54.29	—	—	—	—	—	—	—	—	—	—	—
Number of days of payables	days	57.70	55.42	46.74	41.62	39.60	45.94	46.71	38.68	37.36	39.06	39.89	47.74	36.52	42.30	57.24	45.17	48.39	48.16	42.43	49.89

To analyze Teradyne, Inc.'s activity ratios based on the provided data, we can calculate the following ratios:

1. Inventory Turnover Ratio:
- Q4 2023: 3.68 times/year (365 days / 99.29 days)
- Q3 2023: 3.59 times/year
- Q2 2023: 3.45 times/year
- Q1 2023: 3.55 times/year
- Comparing these values over multiple quarters, we observe fluctuations in the inventory turnover rate, which may indicate changes in sales efficiency or inventory management practices.

2. Days of Inventory on Hand (DOH):
- Q4 2023: 99.29 days
- Q3 2023: 101.53 days
- Q2 2023: 105.98 days
- Q1 2023: 102.92 days
- The increase in DOH from Q2 2022 to Q2 2023 suggests an increase in the number of days inventory is held before being sold, which may tie up working capital.

3. Days of Sales Outstanding (DSO):
- Q4 2023: 57.57 days
- Q3 2023: 60.78 days
- Q2 2023: 62.93 days
- Q1 2023: 55.08 days
- Fluctuations in DSO indicate changes in the average collection period for receivables. A decrease in DSO from Q2 2022 to Q1 2023 suggests faster collection of receivables.

4. Number of Days of Payables:
- Q4 2023: 57.70 days
- Q3 2023: 55.42 days
- Q2 2023: 46.74 days
- Q1 2023: 41.62 days
- A decrease in payables days from Q2 2022 to Q1 2023 might indicate that the company is paying its creditors more quickly, possibly affecting cash flow.

Analyzing these activity ratios helps in evaluating Teradyne's efficiency in managing inventory, collecting receivables, and paying payables, which are crucial for working capital management and overall financial health.

Long-term

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Fixed asset turnover	6.01	6.27	6.55	6.98	7.54	7.97	8.34	9.20	9.56	9.16	8.71	7.95	7.91	7.81	7.86	7.54	7.17	7.02	7.25	7.44
Total asset turnover	0.77	0.81	0.84	0.89	0.90	1.00	0.98	1.02	0.97	0.95	0.86	0.86	0.85	0.88	0.86	0.89	0.82	0.80	0.80	0.81

The fixed asset turnover ratio for Teradyne, Inc. has been showing a decreasing trend from Q1 2022 to Q4 2023, indicating that the company is generating fewer sales relative to its investment in fixed assets over time. This may suggest that the company's utilization of fixed assets has been less efficient in generating revenues.

On the other hand, the total asset turnover ratio has also shown a declining trend over the same period. This indicates that Teradyne is generating less revenue from its total assets over time. A possible explanation could be an increase in assets that are not contributing to revenue generation.

Overall, the declining trend in both fixed asset turnover and total asset turnover ratios could raise concerns about the efficiency of Teradyne's asset utilization and its ability to generate revenue from its asset base. Further analysis and investigation into the company's operations and strategic decisions may be needed to address these concerns.