Wolfspeed Inc (WOLF)

Short-term

Turnover ratios

Activity ratios provide insight into how efficiently a company manages its assets and liabilities to generate revenue.

- Inventory turnover: The inventory turnover ratio for Wolfspeed Inc has been fluctuating over the past two years. The company's inventory turnover has decreased from its peak in March 2021 to the current level, indicating that the company is maintaining its inventory for a longer period compared to previous years.

- Receivables turnover: The receivables turnover ratio shows how quickly Wolfspeed Inc collects its accounts receivable. The ratio has shown some variability but has generally improved over the last two years, indicating that the company has been able to collect its receivables more efficiently.

- Payables turnover: The payables turnover ratio measures how quickly the company pays its suppliers. Wolfspeed Inc has shown some fluctuation in this ratio, but it has generally improved over the last two years, suggesting that the company is managing its payables more effectively.

- Working capital turnover: The working capital turnover ratio indicates how well Wolfspeed Inc is utilizing its working capital to generate revenue. The ratio has fluctuated over the past two years, but it has generally decreased, indicating that the company may not be efficiently using its working capital to generate sales.

Overall, while there have been fluctuations in the activity ratios of Wolfspeed Inc, the company has shown improvements in managing its receivables and payables turnover, which could lead to better cash flow management. However, the decreasing trend in inventory turnover and working capital turnover may indicate areas where the company can focus on improving efficiency in managing its assets.

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Average number of days

Wolfspeed Inc's activity ratios provide insights into how efficiently the company manages its inventory, collects its receivables, and pays its creditors.

1. Days of Inventory on Hand (DOH):
- The trend in Wolfspeed's DOH shows fluctuations, ranging from 56.13 days to 164.64 days over the past quarters.
- A higher number of days indicates that inventory is held for a longer period before being sold, potentially tying up capital and increasing carrying costs.
- The company should aim to optimize inventory management to reduce DOH and improve cash flow efficiency.

2. Days of Sales Outstanding (DSO):
- Wolfspeed's DSO fluctuates between 43.08 days and 151.29 days, indicating variability in its accounts receivable collection efficiency.
- A higher DSO suggests that the company is taking longer to collect payments from customers, potentially impacting cash flow.
- The company should focus on improving credit policies and collection procedures to shorten DSO and enhance liquidity.

3. Number of Days of Payables:
- Wolfspeed's days of payables range from 17.85 days to 59.93 days, showing variability in the time taken to pay its suppliers.
- Higher days of payables indicate that the company is taking longer to settle its obligations, which can be beneficial for cash flow management.
- However, excessively long payment periods may strain supplier relationships and affect future credit terms.

In conclusion, Wolfspeed should strive to optimize its inventory management, streamline accounts receivable collections, and maintain a balanced approach to payables to enhance operational efficiency and cash flow.

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Long-term

Wolfspeed Inc's fixed asset turnover ratio has exhibited fluctuations over the past few periods, ranging from 0.22 to 1.78. A declining trend can be observed since the ratio peaked at 1.78 in the third quarter of 2019. This suggests that the company may be less efficient in generating sales from its fixed assets compared to previous periods. Lower fixed asset turnover ratios could indicate underutilization of fixed assets or potential inefficiencies in production processes.

On the other hand, the total asset turnover ratio has also varied, ranging from 0.08 to 0.42. The trend in total asset turnover appears to be relatively stable, with some minor fluctuations. This ratio reflects how effectively Wolfspeed is utilizing all its assets to generate sales. A lower total asset turnover ratio compared to peers could indicate inefficiencies in managing inventory, accounts receivable, or overall asset utilization.

Overall, Wolfspeed Inc may benefit from closely monitoring and managing its asset turnover ratios to ensure optimal utilization of both fixed and total assets. Identifying and addressing any inefficiencies in asset management could help improve the company's operational performance and profitability in the long term.