Wolfspeed Inc (WOLF)

Fixed asset turnover

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Revenue	US$ in thousands	807,400	878,100	699,200	478,000	880,600
Property, plant and equipment	US$ in thousands	3,643,200	2,154,800	1,470,800	1,276,800	831,100
Fixed asset turnover		0.22	0.41	0.48	0.37	1.06

June 30, 2024 calculation

Fixed asset turnover = Revenue ÷ Property, plant and equipment
= $807,400K ÷ $3,643,200K
= 0.22

The fixed asset turnover ratio measures the efficiency with which Wolfspeed Inc generates sales revenue from its investment in fixed assets. A higher ratio indicates that the company is effectively utilizing its fixed assets to generate sales.

Looking at the trend over the past five years, we observe a fluctuating pattern in Wolfspeed Inc's fixed asset turnover ratio. In Jun 30, 2020, the ratio was notably high at 1.06, suggesting efficient utilization of fixed assets to generate sales revenue. However, in the subsequent years, there has been a downward trend in the ratio, with a decrease to 0.37 in Jun 30, 2021, followed by further declines to 0.48 in Jun 30, 2022, 0.41 in Jun 30, 2023, and 0.22 in Jun 30, 2024.

The significant drop in the fixed asset turnover ratio from 2020 to 2024 could indicate potential inefficiencies in utilizing fixed assets to generate sales. It may suggest that the company is not generating sufficient revenue relative to its investment in fixed assets. Wolfspeed Inc may need to evaluate its asset management strategies and consider ways to improve the productivity of its fixed assets to enhance profitability and operational efficiency.