Texas Instruments Incorporated (TXN)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Inventory turnover	1.45	1.63	2.27	3.12	2.66
Receivables turnover	—	—	—	—	—
Payables turnover	—	—	—	—	—
Working capital turnover	1.37	1.48	1.81	1.65	1.84

Texas Instruments Incorporated's activity ratios reveal key insights into the company's efficiency in managing its assets and liabilities.

1. Inventory Turnover: This ratio indicates how efficiently the company is managing its inventory. The trend shows an improvement from 2.66 in 2020 to 3.12 in 2021, indicating that Texas Instruments is selling its inventory at a faster rate. However, there was a decline in 2022 to 2.27, and further to 1.63 in 2023 and 1.45 in 2024, which could suggest potential issues with inventory management or slowing sales.

2. Receivables Turnover: The data provided shows that the receivables turnover ratio is not available for any of the years provided. This could imply that the company does not have significant accounts receivable, or the information was not disclosed.

3. Payables Turnover: Similarly, the payables turnover ratio is not available for any of the years provided. This may indicate that the company does not have significant accounts payable, or this information was not disclosed.

4. Working Capital Turnover: The working capital turnover ratio reflects how efficiently the company is utilizing its working capital to generate sales. The trend shows a slight fluctuation, with a decrease from 1.84 in 2020 to 1.65 in 2021, a subsequent increase to 1.81 in 2022, followed by a decrease to 1.48 in 2023 and 1.37 in 2024. This indicates that the company may be less efficient in generating sales from its working capital in the later years.

Overall, it is essential for Texas Instruments to closely monitor these activity ratios to ensure effective management of its resources and improve operational efficiency.

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	252.38	224.56	160.83	116.81	137.44
Days of sales outstanding (DSO)	days	—	—	—	—	—
Number of days of payables	days	—	—	—	—	—

Texas Instruments Incorporated's activity ratios provide insights into the efficiency of the company's operations and management of its assets.

1. Days of Inventory on Hand (DOH):
- The trend in DOH shows a fluctuation in the number of days it takes for Texas Instruments to sell its inventory.
- A decrease in DOH from 137.44 days in 2020 to 116.81 days in 2021 indicates faster inventory turnover, which could result from improved inventory management or stronger demand.
- However, the significant increase in DOH to 252.38 days by the end of 2024 raises concerns about inventory management efficiency and potential overstocking.

2. Days of Sales Outstanding (DSO):
- The absence of data for DSO indicates that information on how quickly Texas Instruments collects its accounts receivable is not available. Monitoring DSO is crucial for assessing the efficiency of the company's credit policies and collection processes.

3. Number of Days of Payables:
- The lack of data for the number of days of payables prevents an analysis of how long Texas Instruments takes to pay its suppliers.
- Information on payables days is essential for understanding the company's relationships with its suppliers and cash flow management.

In conclusion, while the inventory turnover improved in the short term, the lack of data on DSO and payables days limits a comprehensive assessment of Texas Instruments' overall liquidity and working capital management. Monitoring all three activity ratios is crucial for evaluating the company's operational efficiency and financial health.

Long-term

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Fixed asset turnover	—	—	2.91	3.57	4.42
Total asset turnover	0.44	0.54	0.74	0.74	0.75

The fixed asset turnover ratio measures how efficiently a company utilizes its fixed assets to generate sales. Texas Instruments Incorporated's fixed asset turnover has shown a declining trend over the years, decreasing from 4.42 in 2020 to 2.91 in 2022. This suggests that the company's fixed assets are being utilized less effectively to generate revenue.

Total asset turnover ratio indicates how well a company utilizes its total assets to generate sales. Texas Instruments' total asset turnover has also decreased over the years, from 0.75 in 2020 to 0.44 in 2024. This decline indicates that the company is becoming less efficient in generating sales relative to its total asset base.

Overall, the decreasing trend in both fixed asset turnover and total asset turnover ratios for Texas Instruments suggests a potential inefficiency in utilizing its assets to generate revenue. Further analysis and investigation into the company's asset management strategies may be warranted to improve its activity ratios and operational efficiency.