Analysis of Long-term (Investment) Activity Ratios
Quarterly Data
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Long-term Activity Ratios (Summary)
ON Semiconductor Corp., long-term (investment) activity ratios (quarterly data)
Based on: 10-Q (reporting date: 2024-03-29), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-29), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-07-01), 10-Q (reporting date: 2022-04-01), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-10-01), 10-Q (reporting date: 2021-07-02), 10-Q (reporting date: 2021-04-02), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-10-02), 10-Q (reporting date: 2020-07-03), 10-Q (reporting date: 2020-04-03).
- Net Fixed Asset Turnover
- The net fixed asset turnover ratio exhibited a general upward trend from April 2020 through September 2022, increasing from 2.1 to a peak of 2.92. This indicates progressively improved efficiency in generating sales from fixed assets during this period. However, starting from the December 2022 quarter, the ratio declined noticeably each quarter, reaching 1.84 by March 2024. This downward movement suggests a decrease in the efficiency of using fixed assets to generate revenue in recent quarters.
- Total Asset Turnover
- Total asset turnover demonstrated a moderate improvement over the longer term from April 2020 to September 2022, rising from 0.57 to 0.73. This improvement points to better utilization of all assets in generating sales. After reaching the highest point at the end of the third quarter 2022, the ratio stabilized somewhat but then saw a gradual decline through March 2024, falling to 0.60. This indicates a slowdown in asset utilization efficiency in the most recent periods.
- Equity Turnover
- Equity turnover showed a declining pattern overall. Beginning at 1.68 in April 2020, the ratio steadily decreased over the quarters to reach 1.00 by March 2024. This consistent reduction suggests that the company is generating lower sales per unit of shareholders' equity over time. The downward trend appears persistent, reflecting potentially less efficient use of equity capital in generating revenue.
- Summary of Trends
- The asset-related turnover ratios (net fixed asset and total asset turnovers) improved significantly through mid-2022 before reversing into a declining trend. In contrast, equity turnover steadily decreased over the entire period, indicating a continuous drop in equity efficiency. The data suggest that while capital asset utilization saw a period of efficiency gains, recent quarters have experienced deterioration. Meanwhile, the capacity to leverage shareholders' equity to generate sales has diminished steadily.
Net Fixed Asset Turnover
ON Semiconductor Corp., net fixed asset turnover calculation (quarterly data)
| Mar 29, 2024 | Dec 31, 2023 | Sep 29, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jul 1, 2022 | Apr 1, 2022 | Dec 31, 2021 | Oct 1, 2021 | Jul 2, 2021 | Apr 2, 2021 | Dec 31, 2020 | Oct 2, 2020 | Jul 3, 2020 | Apr 3, 2020 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||
| Revenue | 1,862,700) | 2,018,100) | 2,180,800) | 2,094,400) | 1,959,700) | 2,103,600) | 2,192,600) | 2,085,000) | 1,945,000) | 1,846,100) | 1,742,100) | 1,669,900) | 1,481,700) | 1,446,300) | 1,317,300) | 1,213,500) | 1,277,900) | ||||||
| Property, plant and equipment and ROU financing lease assets, net | 4,426,100) | 4,443,900) | 4,357,500) | 4,036,000) | 3,738,100) | 3,496,500) | 2,762,100) | 2,709,800) | 2,559,400) | 2,524,300) | 2,427,800) | 2,457,800) | 2,489,400) | 2,512,300) | 2,511,800) | 2,566,500) | 2,579,900) | ||||||
| Long-term Activity Ratio | |||||||||||||||||||||||
| Net fixed asset turnover1 | 1.84 | 1.86 | 1.91 | 2.07 | 2.23 | 2.38 | 2.92 | 2.81 | 2.81 | 2.67 | 2.61 | 2.41 | 2.19 | 2.09 | 2.07 | 2.06 | 2.10 | ||||||
| Benchmarks | |||||||||||||||||||||||
| Net Fixed Asset Turnover, Competitors2 | |||||||||||||||||||||||
| Advanced Micro Devices Inc. | 14.04 | 14.27 | 14.12 | 14.20 | 15.38 | 15.60 | 15.36 | 14.97 | 13.43 | 23.41 | 20.71 | 19.88 | 16.77 | — | — | — | — | ||||||
| Analog Devices Inc. | 3.52 | 3.82 | 4.39 | 4.69 | 4.98 | 5.00 | 5.09 | 4.66 | 4.14 | 3.70 | 5.54 | 5.34 | 5.19 | — | — | — | — | ||||||
| Applied Materials Inc. | 9.37 | 9.74 | 10.19 | 10.41 | 10.53 | 11.18 | 11.47 | 11.99 | 12.25 | 11.93 | 11.92 | 11.21 | 11.11 | — | — | — | — | ||||||
| Broadcom Inc. | 14.60 | 16.63 | 16.26 | 15.86 | 15.63 | 14.94 | 14.08 | 13.26 | 12.38 | 11.69 | 11.19 | 10.58 | 9.89 | 9.52 | 9.04 | 8.74 | 8.66 | ||||||
| Intel Corp. | 0.55 | 0.56 | 0.57 | 0.59 | 0.66 | 0.78 | 0.92 | 1.02 | 1.16 | 1.25 | 1.31 | 1.33 | 1.36 | — | — | — | — | ||||||
| KLA Corp. | 9.59 | 10.17 | 10.80 | 10.87 | 10.79 | 10.84 | 10.69 | 11.39 | 10.68 | 10.44 | 10.27 | 10.22 | 10.56 | — | — | — | — | ||||||
| Lam Research Corp. | 7.50 | 9.39 | 10.16 | 10.22 | 10.47 | 10.46 | 10.72 | 10.99 | 11.48 | 11.22 | 10.37 | 9.87 | 9.75 | — | — | — | — | ||||||
| Micron Technology Inc. | 0.43 | 0.41 | 0.47 | 0.59 | 0.69 | 0.80 | 0.88 | 0.86 | 0.84 | 0.83 | 0.79 | 0.74 | 0.68 | — | — | — | — | ||||||
| NVIDIA Corp. | 6.92 | 7.09 | 7.57 | 9.20 | 10.13 | 9.69 | 9.67 | 9.26 | 8.49 | 7.76 | 7.18 | 6.65 | 6.87 | — | — | — | — | ||||||
| Qualcomm Inc. | 7.40 | 7.10 | 7.40 | 7.78 | 8.24 | 8.55 | 8.36 | 8.02 | 7.63 | 7.36 | 7.36 | 7.03 | 6.62 | — | — | — | — | ||||||
| Texas Instruments Inc. | 1.61 | 1.75 | 1.94 | 2.21 | 2.54 | 2.91 | 3.11 | 3.30 | 3.49 | 3.57 | 4.37 | 4.56 | 4.49 | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2024-03-29), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-29), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-07-01), 10-Q (reporting date: 2022-04-01), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-10-01), 10-Q (reporting date: 2021-07-02), 10-Q (reporting date: 2021-04-02), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-10-02), 10-Q (reporting date: 2020-07-03), 10-Q (reporting date: 2020-04-03).
1 Q1 2024 Calculation
Net fixed asset turnover
= (RevenueQ1 2024
+ RevenueQ4 2023
+ RevenueQ3 2023
+ RevenueQ2 2023)
÷ Property, plant and equipment and ROU financing lease assets, net
= (1,862,700 + 2,018,100 + 2,180,800 + 2,094,400)
÷ 4,426,100 = 1.84
2 Click competitor name to see calculations.
- Revenue Trends
- Revenue demonstrates a general upward trajectory from April 2020 to September 2022, peaking at approximately $2,192,600 thousand. This growth is characterized by steady quarterly increases, notably from mid-2020 through late 2021, reflecting consistent business expansion. However, starting in the final quarter of 2022, revenue begins to decline, with values decreasing each quarter, reaching around $1,862,700 thousand by March 2024. This downward trend indicates a reduction in sales or demand during the most recent periods.
- Property, Plant and Equipment (PPE) and ROU Financing Lease Assets
- The net value of property, plant, and equipment alongside right-of-use financing lease assets shows relative stability initially, fluctuating slightly around the $2.5 billion mark through 2021 and early 2022. Notably, there is a significant increase from the last quarter of 2022 onwards, rising from about $3.5 billion to approximately $4.4 billion by March 2024. This substantial asset growth suggests increased capital investment, potential expansion of operational capacity, or adoption of new leasing agreements in the recent periods.
- Net Fixed Asset Turnover Ratio
- The net fixed asset turnover ratio, which measures the efficiency of fixed asset use in generating revenue, initially increases from 2.1 in April 2020 to a peak of 2.92 in September 2022. This upward movement correlates with the revenue growth and stable asset base, indicating enhanced operational efficiency. However, following this peak, the ratio declines consistently to 1.84 by March 2024, signaling that despite the increase in fixed assets, revenue generation relative to these assets is weakening. This decline may be attributable to diminishing sales performance or less efficient asset utilization during the latest periods.
- Overall Insights
- The financial data reveals a phase of robust growth in revenue and efficiency through mid-2022, coupled with steady asset base management. Subsequently, although significant investments in fixed assets are evident, the diminished revenue and falling asset turnover ratio suggest challenges in maintaining previous operational efficiency and revenue momentum. The recent pattern highlights a potential need for strategic reassessment to address the reduced productivity of increased assets and to revitalize revenue growth.
Total Asset Turnover
ON Semiconductor Corp., total asset turnover calculation (quarterly data)
| Mar 29, 2024 | Dec 31, 2023 | Sep 29, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jul 1, 2022 | Apr 1, 2022 | Dec 31, 2021 | Oct 1, 2021 | Jul 2, 2021 | Apr 2, 2021 | Dec 31, 2020 | Oct 2, 2020 | Jul 3, 2020 | Apr 3, 2020 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||
| Revenue | 1,862,700) | 2,018,100) | 2,180,800) | 2,094,400) | 1,959,700) | 2,103,600) | 2,192,600) | 2,085,000) | 1,945,000) | 1,846,100) | 1,742,100) | 1,669,900) | 1,481,700) | 1,446,300) | 1,317,300) | 1,213,500) | 1,277,900) | ||||||
| Total assets | 13,482,900) | 13,215,200) | 13,281,300) | 12,762,700) | 12,274,300) | 11,978,500) | 11,100,700) | 10,788,700) | 10,212,400) | 9,626,000) | 8,940,700) | 8,594,400) | 8,630,400) | 8,668,000) | 9,254,000) | 9,527,800) | 9,420,800) | ||||||
| Long-term Activity Ratio | |||||||||||||||||||||||
| Total asset turnover1 | 0.60 | 0.62 | 0.63 | 0.65 | 0.68 | 0.70 | 0.73 | 0.71 | 0.71 | 0.70 | 0.71 | 0.69 | 0.63 | 0.61 | 0.56 | 0.55 | 0.57 | ||||||
| Benchmarks | |||||||||||||||||||||||
| Total Asset Turnover, Competitors2 | |||||||||||||||||||||||
| Advanced Micro Devices Inc. | 0.34 | 0.33 | 0.33 | 0.32 | 0.34 | 0.35 | 0.34 | 0.32 | 0.28 | 1.32 | 1.33 | 1.25 | 1.14 | — | — | — | — | ||||||
| Analog Devices Inc. | 0.24 | 0.25 | 0.26 | 0.26 | 0.25 | 0.24 | 0.22 | 0.19 | 0.16 | 0.14 | 0.30 | 0.29 | 0.27 | — | — | — | — | ||||||
| Applied Materials Inc. | 0.84 | 0.86 | 0.87 | 0.92 | 0.94 | 0.96 | 0.96 | 0.98 | 0.95 | 0.89 | 0.88 | 0.82 | 0.78 | — | — | — | — | ||||||
| Broadcom Inc. | 0.22 | 0.49 | 0.50 | 0.49 | 0.47 | 0.45 | 0.44 | 0.42 | 0.39 | 0.36 | 0.35 | 0.34 | 0.32 | 0.31 | 0.29 | 0.28 | 0.28 | ||||||
| Intel Corp. | 0.29 | 0.28 | 0.28 | 0.29 | 0.30 | 0.35 | 0.40 | 0.43 | 0.44 | 0.47 | 0.47 | 0.50 | 0.52 | — | — | — | — | ||||||
| KLA Corp. | 0.72 | 0.75 | 0.78 | 0.76 | 0.75 | 0.73 | 0.72 | 0.70 | 0.67 | 0.67 | 0.65 | 0.62 | 0.64 | — | — | — | — | ||||||
| Lam Research Corp. | 0.85 | 0.93 | 0.98 | 0.99 | 0.96 | 1.00 | 1.01 | 0.99 | 1.01 | 0.92 | 0.87 | 0.78 | 0.73 | — | — | — | — | ||||||
| Micron Technology Inc. | 0.25 | 0.24 | 0.28 | 0.35 | 0.40 | 0.46 | 0.50 | 0.49 | 0.48 | 0.47 | 0.46 | 0.43 | 0.41 | — | — | — | — | ||||||
| NVIDIA Corp. | 0.58 | 0.65 | 0.71 | 0.68 | 0.65 | 0.61 | 0.60 | 0.57 | 0.63 | 0.58 | 0.55 | 0.52 | 0.51 | — | — | — | — | ||||||
| Qualcomm Inc. | 0.70 | 0.70 | 0.79 | 0.85 | 0.86 | 0.90 | 0.90 | 0.89 | 0.84 | 0.81 | 0.84 | 0.79 | 0.71 | — | — | — | — | ||||||
| Texas Instruments Inc. | 0.48 | 0.54 | 0.57 | 0.61 | 0.67 | 0.74 | 0.77 | 0.79 | 0.75 | 0.74 | 0.76 | 0.81 | 0.79 | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2024-03-29), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-29), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-07-01), 10-Q (reporting date: 2022-04-01), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-10-01), 10-Q (reporting date: 2021-07-02), 10-Q (reporting date: 2021-04-02), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-10-02), 10-Q (reporting date: 2020-07-03), 10-Q (reporting date: 2020-04-03).
1 Q1 2024 Calculation
Total asset turnover
= (RevenueQ1 2024
+ RevenueQ4 2023
+ RevenueQ3 2023
+ RevenueQ2 2023)
÷ Total assets
= (1,862,700 + 2,018,100 + 2,180,800 + 2,094,400)
÷ 13,482,900 = 0.60
2 Click competitor name to see calculations.
- Revenue Trends
- Revenue exhibited an overall upward trend from April 2020 through September 2022, rising from approximately $1.28 billion to over $2.19 billion. This growth phase lasted about two and a half years, reflecting sustained expansion. However, starting December 2022, revenue declined notably across subsequent quarters through March 2024, falling from around $2.10 billion down to roughly $1.86 billion. This reversal suggests emerging challenges or cyclical impacts affecting sales.
- Total Assets Analysis
- Total assets showed a generally increasing trajectory over the entire period. Beginning near $9.42 billion in April 2020, assets dipped slightly toward the end of 2020 but then resumed growth, reaching approximately $13.48 billion by March 2024. The asset base expanded significantly in the latter part of the timeline, particularly from 2021 onward, indicating ongoing investments or asset accumulation despite revenue softness in the final quarters observed.
- Total Asset Turnover Examination
- The total asset turnover ratio, measuring revenue generated per unit of assets, started at 0.57 in April 2020 and increased steadily to peak around 0.73 in September 2022. Thereafter, the ratio declined to 0.60 by March 2024. This pattern reflects improving efficiency or utilization of assets up until late 2022, followed by a gradual reduction in asset productivity coinciding with the revenue decline noted.
- Overall Insights
- The financial data reveals a phase of growth in both revenue and asset size from 2020 through 2022, accompanied by enhanced asset efficiency as seen in increasing asset turnover. From late 2022 onward, the company experienced a downturn in revenue and asset turnover despite continued growth in the asset base, indicating potential operational inefficiencies or external factors impacting sales. Maintaining or improving asset utilization and addressing the causes of revenue decline may be critical areas for management focus going forward.
Equity Turnover
ON Semiconductor Corp., equity turnover calculation (quarterly data)
| Mar 29, 2024 | Dec 31, 2023 | Sep 29, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jul 1, 2022 | Apr 1, 2022 | Dec 31, 2021 | Oct 1, 2021 | Jul 2, 2021 | Apr 2, 2021 | Dec 31, 2020 | Oct 2, 2020 | Jul 3, 2020 | Apr 3, 2020 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||
| Revenue | 1,862,700) | 2,018,100) | 2,180,800) | 2,094,400) | 1,959,700) | 2,103,600) | 2,192,600) | 2,085,000) | 1,945,000) | 1,846,100) | 1,742,100) | 1,669,900) | 1,481,700) | 1,446,300) | 1,317,300) | 1,213,500) | 1,277,900) | ||||||
| Total ON Semiconductor Corporation stockholders’ equity | 8,123,900) | 7,782,600) | 7,484,300) | 6,984,100) | 6,448,000) | 6,188,500) | 5,656,000) | 5,389,500) | 4,998,200) | 4,585,400) | 4,123,700) | 3,784,400) | 3,629,600) | 3,538,500) | 3,423,400) | 3,236,100) | 3,214,900) | ||||||
| Long-term Activity Ratio | |||||||||||||||||||||||
| Equity turnover1 | 1.00 | 1.06 | 1.11 | 1.20 | 1.29 | 1.35 | 1.43 | 1.41 | 1.44 | 1.47 | 1.54 | 1.56 | 1.50 | 1.49 | 1.52 | 1.63 | 1.68 | ||||||
| Benchmarks | |||||||||||||||||||||||
| Equity Turnover, Competitors2 | |||||||||||||||||||||||
| Advanced Micro Devices Inc. | 0.41 | 0.41 | 0.40 | 0.40 | 0.42 | 0.43 | 0.42 | 0.39 | 0.34 | 2.19 | 2.08 | 1.89 | 1.76 | — | — | — | — | ||||||
| Analog Devices Inc. | 0.33 | 0.35 | 0.36 | 0.36 | 0.34 | 0.33 | 0.30 | 0.26 | 0.23 | 0.19 | 0.53 | 0.51 | 0.48 | — | — | — | — | ||||||
| Applied Materials Inc. | 1.52 | 1.62 | 1.76 | 1.89 | 1.96 | 2.11 | 2.08 | 2.14 | 2.03 | 1.88 | 1.79 | 1.65 | 1.59 | — | — | — | — | ||||||
| Broadcom Inc. | 0.55 | 1.49 | 1.61 | 1.59 | 1.48 | 1.46 | 1.52 | 1.43 | 1.24 | 1.10 | 1.09 | 1.07 | 1.03 | 1.00 | 0.98 | 0.96 | 0.93 | ||||||
| Intel Corp. | 0.52 | 0.51 | 0.52 | 0.53 | 0.58 | 0.62 | 0.70 | 0.73 | 0.75 | 0.83 | 0.87 | 0.91 | 0.97 | — | — | — | — | ||||||
| KLA Corp. | 3.40 | 3.59 | 3.96 | 4.03 | 4.69 | 6.57 | 2.12 | 2.02 | 1.93 | 2.05 | 2.07 | 2.07 | 2.16 | — | — | — | — | ||||||
| Lam Research Corp. | 1.97 | 2.12 | 2.24 | 2.29 | 2.43 | 2.74 | 2.78 | 2.55 | 2.71 | 2.43 | 2.47 | 2.17 | 2.04 | — | — | — | — | ||||||
| Micron Technology Inc. | 0.38 | 0.35 | 0.40 | 0.49 | 0.55 | 0.62 | 0.66 | 0.65 | 0.65 | 0.63 | 0.60 | 0.58 | 0.55 | — | — | — | — | ||||||
| NVIDIA Corp. | 1.06 | 1.22 | 1.34 | 1.25 | 1.12 | 1.01 | 1.02 | 1.04 | 1.03 | 0.99 | 0.96 | 0.94 | 0.90 | — | — | — | — | ||||||
| Qualcomm Inc. | 1.57 | 1.66 | 1.87 | 2.08 | 2.28 | 2.45 | 2.63 | 2.95 | 3.18 | 3.37 | 3.98 | 3.96 | 3.62 | — | — | — | — | ||||||
| Texas Instruments Inc. | 0.99 | 1.04 | 1.09 | 1.18 | 1.28 | 1.37 | 1.39 | 1.39 | 1.35 | 1.38 | 1.45 | 1.50 | 1.52 | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2024-03-29), 10-K (reporting date: 2023-12-31), 10-Q (reporting date: 2023-09-29), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-07-01), 10-Q (reporting date: 2022-04-01), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-10-01), 10-Q (reporting date: 2021-07-02), 10-Q (reporting date: 2021-04-02), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-10-02), 10-Q (reporting date: 2020-07-03), 10-Q (reporting date: 2020-04-03).
1 Q1 2024 Calculation
Equity turnover
= (RevenueQ1 2024
+ RevenueQ4 2023
+ RevenueQ3 2023
+ RevenueQ2 2023)
÷ Total ON Semiconductor Corporation stockholders’ equity
= (1,862,700 + 2,018,100 + 2,180,800 + 2,094,400)
÷ 8,123,900 = 1.00
2 Click competitor name to see calculations.
- Revenue Trends
- Revenue exhibited a general upward trend from April 2020 through September 2022, increasing from approximately $1.28 billion to a peak of about $2.19 billion. This steady growth suggests an expanding operational scale or increased market demand during this period. However, beginning in December 2022, revenue showed signs of contraction, decreasing noticeably through March 2024, where it reached approximately $1.86 billion. This downward trend in recent quarters may indicate emerging challenges, such as market saturation, increased competition, or macroeconomic pressures affecting sales.
- Stockholders’ Equity Development
- Stockholders’ equity showed consistent growth throughout the entire period, rising steadily from about $3.21 billion in April 2020 to over $8.12 billion by March 2024. This continuous increase reflects capitalization efforts, retained earnings accumulation, and potentially, additional equity raising activities. The steep ascent from 2021 onward highlights improving financial strength and a stronger equity base to support ongoing business operations and growth initiatives.
- Equity Turnover Ratio Dynamics
- The equity turnover ratio, defined as revenue divided by stockholders' equity, consistently declined from 1.68 in April 2020 to 1.00 by March 2024. This trend reveals that revenue growth has not kept pace with the significantly increasing equity base. Early in the period, the company generated roughly $1.68 in revenue per dollar of equity, but this efficiency declined steadily, indicating a shift towards lower asset or equity utilization in generating sales. This could suggest either more conservative capital investment or a lag in translating capital investments into proportional revenue gains.
- Overall Financial Observations
- The company demonstrated strong revenue growth and equity augmentation for several quarters but has recently encountered revenue contractions despite a continuously growing equity base. Declining equity turnover ratios highlight diminishing revenue generation relative to equity, which may warrant management attention to improve operational efficiency or reassess capital deployment strategies. The trends suggest a maturing business phase with potential challenges in maintaining historic revenue growth rates.