Ultra Clean Holdings Inc (UCTT)

Short-term

Turnover ratios

Ultra Clean Holdings Inc's inventory turnover has shown a decreasing trend over the past five years, indicating that the company is selling its inventory at a slower pace. This could be a sign of overstocking or potentially inefficiencies in managing inventory levels.

The receivables turnover ratio has also been decreasing over the years, suggesting that the company is taking longer to collect payments from its customers. This could indicate issues with credit policies or the creditworthiness of customers.

In contrast, the payables turnover ratio has been fluctuating but generally trending upwards, which indicates that the company is taking longer to pay its suppliers. This may be a deliberate strategy to manage cash flow or negotiate more favorable payment terms with vendors.

The working capital turnover ratio has shown fluctuations but has not displayed a clear trend over the years. This ratio indicates how efficiently the company is using its working capital to generate sales. The decreasing trend in recent years could suggest a less efficient utilization of working capital in driving revenue.

Overall, a detailed analysis of Ultra Clean Holdings Inc's activity ratios indicates mixed efficiency levels in managing its inventory, receivables, payables, and working capital. Further investigation into the underlying reasons for these trends would be necessary to provide more insights into the company's operating performance and potential areas for improvement.

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Average number of days

Ultra Clean Holdings Inc's Days of Inventory on Hand (DOH) has shown an increasing trend from 59.49 days in 2020 to 79.86 days by the end of 2024. This indicates that the company is holding onto its inventory for a longer period over the years, which may suggest inefficiencies in inventory management or potential issues with demand forecasting.

Days of Sales Outstanding (DSO) has fluctuated slightly over the years, with a peak of 43.44 days in 2021 and a low of 37.97 days in 2020. This metric measures how quickly the company collects its outstanding receivables. Despite the fluctuations, the DSO values are within a reasonable range, suggesting that Ultra Clean Holdings has been able to effectively manage its accounts receivable turnover.

The Number of Days of Payables indicates the average number of days the company takes to pay its suppliers. Notably, from 2020 to 2021, there was a significant increase in the number of days of payables from 40.00 days to 72.69 days, which could indicate a change in payment terms with suppliers. Subsequently, the metric decreased to 44.54 days by the end of 2024, implying that the company is paying its suppliers more promptly compared to the peak in 2021.

Overall, the analysis of Ultra Clean Holdings Inc's activity ratios suggests that while there are certain fluctuations, the company has managed its inventory, accounts receivable, and accounts payable effectively over the years. Proper management of these ratios is crucial for maintaining liquidity, optimizing working capital, and sustaining operational efficiency.

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Long-term

Ultra Clean Holdings Inc's fixed asset turnover ratio has maintained a relatively stable trend over the past five years, ranging from 8.49 to 8.79. This indicates that the company generated between $8.49 and $8.79 in revenue for every dollar invested in fixed assets during these years.

However, there is a noticeable decline in the fixed asset turnover ratio in 2023 to 5.28, which suggests a lower level of efficiency in utilizing fixed assets to generate revenue in that particular year. The ratio improved in 2024 to 6.44, but it is still below the levels seen in the earlier years.

In contrast, Ultra Clean Holdings Inc's total asset turnover ratio has shown more variability during the same period. The ratio ranged from 0.93 to 1.27, indicating that the company generated between $0.93 and $1.27 in revenue for every dollar invested in total assets.

The total asset turnover ratio was at its highest in 2020 at 1.27, suggesting strong efficiency in generating revenue from total assets. However, there was a significant decline in 2021 to 1.04, indicating a decrease in the company's ability to generate revenue from its assets efficiently. The ratio recovered in 2022 to 1.21 but dropped again in 2023 to 0.93 before improving in 2024 to 1.09.

Overall, the analysis of Ultra Clean Holdings Inc's long-term activity ratios reveals fluctuations in the efficiency of utilizing both fixed and total assets to generate revenue over the past five years. These trends can provide insights into the company's asset management effectiveness and operational performance over time.