Analysis of Short-term (Operating) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Short-term Activity Ratios (Summary)
ON Semiconductor Corp., short-term (operating) activity ratios
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
- Inventory Turnover
- The inventory turnover ratio shows a declining trend over the period, decreasing from 2.88 in 2019 to 2.07 in 2023. This suggests that the company is selling its inventory less frequently each year, indicating slower inventory movement and potentially increased inventory holding.
- Receivables Turnover
- Receivables turnover increased from 7.83 in 2019 to a peak of 9.89 in 2022, before slightly declining to 8.82 in 2023. This indicates an improvement in the efficiency of collections up to 2022, with a moderate reduction in 2023, meaning the company generally collects its receivables more quickly compared to 2019.
- Payables Turnover
- The payables turnover ratio decreased from 6.52 in 2019 to 4.99 in 2022, followed by a partial recovery to 6.02 in 2023. This pattern shows that the company extended its payment periods in 2022 but reduced those periods somewhat in 2023, balancing supplier payments between maintaining liquidity and supplier relations.
- Working Capital Turnover
- Working capital turnover declined steadily from 4.59 in 2019 to 2.21 in 2023, signifying reduced efficiency in using working capital to generate sales. This reduction implies that more working capital is tied up per unit of revenue, potentially affecting operational liquidity.
- Average Inventory Processing Period
- The number of days inventory remains on hand increased from 127 days in 2019 to 176 days in 2023, confirming the trend of slower inventory movement seen in turnover ratios.
- Average Receivable Collection Period
- The average collection period decreased from 47 days in 2019 to 37 days in 2022, indicating improved cash collection efficiency, but then increased to 41 days in 2023, suggesting some relaxing in collection practices or customer payment delays.
- Operating Cycle
- The operating cycle remained relatively stable around 174-176 days from 2019 to 2022, with a notable elongation to 217 days in 2023. This lengthening means that the overall time from inventory acquisition to cash collection increased substantially in the latest period.
- Average Payables Payment Period
- The payables payment period increased from 56 days in 2019 to 73 days in 2022, then reduced to 61 days in 2023. The extended payment period in 2022 suggests a strategy to conserve cash, partially moderated in 2023, perhaps to maintain supplier relationships.
- Cash Conversion Cycle
- The cash conversion cycle shortened gradually from 118 days in 2019 to 103 days in 2022 but then lengthened sharply to 156 days in 2023. The shorter cycle up to 2022 indicates improving efficiency in converting investments in inventory and receivables into cash, whereas the 2023 increase points to operational or working capital management challenges.
Turnover Ratios
Average No. Days
Inventory Turnover
ON Semiconductor Corp., inventory turnover calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cost of revenue | 4,369,500) | 4,249,000) | 4,025,500) | 3,539,200) | 3,544,300) | |
| Inventories | 2,111,800) | 1,616,800) | 1,379,500) | 1,251,400) | 1,232,400) | |
| Short-term Activity Ratio | ||||||
| Inventory turnover1 | 2.07 | 2.63 | 2.92 | 2.83 | 2.88 | |
| Benchmarks | ||||||
| Inventory Turnover, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 2.81 | 3.45 | 4.35 | 3.87 | — | |
| Analog Devices Inc. | 2.70 | 3.20 | 2.33 | 3.14 | 3.24 | |
| Applied Materials Inc. | 2.47 | 2.33 | 2.82 | 2.44 | 2.37 | |
| Broadcom Inc. | 5.86 | 5.77 | 8.18 | 10.34 | 11.57 | |
| Intel Corp. | 2.92 | 2.74 | 3.27 | 4.06 | — | |
| KLA Corp. | 1.47 | 1.67 | 1.76 | 1.87 | 1.48 | |
| Lam Research Corp. | 2.00 | 2.36 | 2.91 | 2.86 | 3.44 | |
| Micron Technology Inc. | 2.02 | 2.53 | 3.85 | 2.65 | 2.48 | |
| Monolithic Power Systems Inc. | 2.08 | 1.67 | 2.01 | 2.41 | — | |
| NVIDIA Corp. | 2.25 | 3.62 | 3.44 | 4.24 | — | |
| Qualcomm Inc. | 2.47 | 2.94 | 4.42 | 3.56 | 6.14 | |
| Texas Instruments Inc. | 1.63 | 2.27 | 3.12 | 2.66 | — | |
| Inventory Turnover, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 2.47 | 2.80 | 3.50 | 3.46 | — | |
| Inventory Turnover, Industry | ||||||
| Information Technology | 8.01 | 8.61 | 10.44 | 11.17 | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Inventory turnover = Cost of revenue ÷ Inventories
= 4,369,500 ÷ 2,111,800 = 2.07
2 Click competitor name to see calculations.
The financial data reveals several important trends regarding the cost of revenue, inventory levels, and inventory turnover ratios over the five-year period from the end of 2019 through to the end of 2023.
- Cost of Revenue
- There is a consistent increase in the cost of revenue over the years, rising from approximately 3.54 billion US dollars in 2019 to about 4.37 billion US dollars in 2023. The year-on-year growth appears steady, reflecting either growing sales volumes, increased production costs, or a combination of both factors.
- Inventories
- Inventory levels have shown a marked upward trend through the period. Starting at roughly 1.23 billion US dollars in 2019, inventories increased moderately until 2021 and then rose sharply in the last two years, reaching over 2.11 billion US dollars by the end of 2023. This significant increase suggests accumulation of stock, which could be due to increased production, potential overstocking, or anticipation of higher future demand.
- Inventory Turnover
- The inventory turnover ratio has declined over the observed period, dropping from 2.88 in 2019 to 2.07 by the end of 2023. This downward trend indicates that inventory is being converted into sales less frequently within the year, which, combined with the rising inventory levels, points to slower inventory movement. Such a decrease may signal potential inefficiencies or a shift in inventory management strategy.
Overall, the data suggests that while the company is experiencing growth in cost of revenue, inventory levels are rising disproportionately relative to cost of revenue increases. The decreasing inventory turnover ratio signals a slowing velocity of inventory utilization which may warrant closer examination of inventory management practices to ensure operational efficiency and liquidity.
Receivables Turnover
ON Semiconductor Corp., receivables turnover calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Revenue | 8,253,000) | 8,326,200) | 6,739,800) | 5,255,000) | 5,517,900) | |
| Receivables, net | 935,400) | 842,300) | 809,400) | 676,000) | 705,000) | |
| Short-term Activity Ratio | ||||||
| Receivables turnover1 | 8.82 | 9.89 | 8.33 | 7.77 | 7.83 | |
| Benchmarks | ||||||
| Receivables Turnover, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 5.25 | 5.72 | 6.07 | 4.73 | — | |
| Analog Devices Inc. | 8.37 | 6.67 | 5.02 | 7.60 | 9.43 | |
| Applied Materials Inc. | 5.13 | 4.25 | 4.66 | 5.81 | 5.77 | |
| Broadcom Inc. | 11.36 | 11.22 | 13.25 | 10.40 | 6.93 | |
| Intel Corp. | 15.94 | 15.26 | 8.36 | 11.48 | — | |
| KLA Corp. | 5.99 | 5.08 | 5.30 | 5.24 | 4.61 | |
| Lam Research Corp. | 6.17 | 3.99 | 4.83 | 4.79 | 6.63 | |
| Micron Technology Inc. | 7.59 | 6.45 | 5.63 | 6.13 | 8.43 | |
| Monolithic Power Systems Inc. | 10.13 | 9.82 | 11.52 | 12.63 | — | |
| NVIDIA Corp. | 7.05 | 5.79 | 6.86 | 6.59 | — | |
| Qualcomm Inc. | 18.63 | 10.59 | 15.16 | 8.76 | 23.21 | |
| Texas Instruments Inc. | 9.80 | 10.57 | 10.78 | 10.23 | — | |
| Receivables Turnover, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 8.70 | 7.53 | 7.49 | 8.09 | — | |
| Receivables Turnover, Industry | ||||||
| Information Technology | 7.46 | 7.43 | 7.53 | 7.92 | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Receivables turnover = Revenue ÷ Receivables, net
= 8,253,000 ÷ 935,400 = 8.82
2 Click competitor name to see calculations.
The financial data over the five-year period shows several key trends regarding revenue, accounts receivable, and receivables turnover.
- Revenue
- Revenue declined slightly from 5,517,900 thousand US dollars in 2019 to 5,255,000 thousand in 2020, likely reflecting market or economic challenges during that period. However, revenue rebounded strongly in the subsequent years, rising to 6,739,800 thousand in 2021 and further increasing to 8,326,200 thousand in 2022. In 2023, revenue experienced a minor decline to 8,253,000 thousand but remained significantly higher than pre-2021 levels, indicating robust growth overall in the medium term.
- Receivables, net
- The net receivables balance followed an upward trajectory through the period, increasing from 705,000 thousand in 2019 to 935,400 thousand in 2023. This steady rise suggests expanding credit sales or extended credit terms, reflecting increased business volume or changes in collection policies. The consistent increase in receivables is aligned with the general growth in revenue, albeit at a rate that merits attention for potential cash flow impacts.
- Receivables Turnover
- Receivables turnover initially dropped marginally from 7.83 in 2019 to 7.77 in 2020, signaling a slight slowdown in collection efficiency. Improvement occurred in 2021 with a turnover of 8.33, followed by a significant increase to 9.89 in 2022, indicating enhanced efficiency in converting receivables to cash. In 2023, turnover decreased to 8.82, suggesting a partial easing in collection effectiveness but still maintaining a performance notably better than the baseline in 2019 and 2020. This pattern suggests that while collection efficiency has generally improved, there remains variability that could be influenced by changing credit policies or customer payment behaviors.
Payables Turnover
ON Semiconductor Corp., payables turnover calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cost of revenue | 4,369,500) | 4,249,000) | 4,025,500) | 3,539,200) | 3,544,300) | |
| Accounts payable | 725,600) | 852,100) | 635,100) | 572,900) | 543,600) | |
| Short-term Activity Ratio | ||||||
| Payables turnover1 | 6.02 | 4.99 | 6.34 | 6.18 | 6.52 | |
| Benchmarks | ||||||
| Payables Turnover, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 5.95 | 5.21 | 6.44 | 11.57 | — | |
| Analog Devices Inc. | 8.98 | 7.70 | 6.30 | 8.42 | 8.78 | |
| Applied Materials Inc. | 9.56 | 7.86 | 8.25 | 8.46 | 8.58 | |
| Broadcom Inc. | 9.20 | 11.13 | 9.77 | 12.41 | 11.83 | |
| Intel Corp. | 3.79 | 3.77 | 6.13 | 6.14 | — | |
| KLA Corp. | 11.37 | 8.10 | 8.10 | 9.27 | 9.24 | |
| Lam Research Corp. | 20.50 | 9.25 | 9.43 | 9.18 | 14.06 | |
| Micron Technology Inc. | 9.83 | 7.87 | 9.91 | 6.79 | 7.58 | |
| Monolithic Power Systems Inc. | 12.71 | 12.13 | 6.29 | 9.92 | — | |
| NVIDIA Corp. | 9.74 | 5.29 | 5.23 | 6.04 | — | |
| Qualcomm Inc. | 8.30 | 4.91 | 5.19 | 4.12 | 6.29 | |
| Texas Instruments Inc. | 8.10 | 7.35 | 10.45 | 12.51 | — | |
| Payables Turnover, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 6.88 | 5.62 | 7.06 | 7.03 | — | |
| Payables Turnover, Industry | ||||||
| Information Technology | 4.79 | 4.25 | 4.63 | 4.91 | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Payables turnover = Cost of revenue ÷ Accounts payable
= 4,369,500 ÷ 725,600 = 6.02
2 Click competitor name to see calculations.
The analysis of the financial data reveals several notable trends in cost of revenue, accounts payable, and payables turnover over the five-year period from 2019 to 2023.
- Cost of Revenue
- The cost of revenue showed a generally increasing trend throughout the period. Starting at approximately $3.54 billion in 2019, it remained relatively stable into 2020. However, from 2021 onward, it experienced a steady rise, reaching nearly $4.37 billion by 2023. This upward trajectory suggests growing costs associated with production or service delivery, aligning with possible expansion or increased operational activity.
- Accounts Payable
- Accounts payable exhibited fluctuations with an overall upward movement. Beginning at about $544 million in 2019, it increased moderately in the following years, peaking at roughly $852 million in 2022. In 2023, accounts payable decreased to approximately $726 million. The peak in 2022 could indicate extended payment terms or accumulation of liabilities during that year, while the subsequent decline might reflect improved management of payables or changes in supplier arrangements.
- Payables Turnover Ratio
- The payables turnover ratio, which measures how quickly the company pays off its suppliers, demonstrated some volatility. The ratio declined from 6.52 in 2019 to a low of 4.99 in 2022, indicating a slower rate of payment. In 2023, the ratio recovered to 6.02, suggesting a return toward faster payment cycles. The dip in 2022 aligns with the spike in accounts payable during the same period, reinforcing the inference of delayed payments or extended credit terms in that year.
Working Capital Turnover
ON Semiconductor Corp., working capital turnover calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current assets | 5,912,300) | 5,729,400) | 3,781,600) | 3,184,100) | 3,020,000) | |
| Less: Current liabilities | 2,183,600) | 2,061,400) | 1,543,400) | 1,674,500) | 1,818,400) | |
| Working capital | 3,728,700) | 3,668,000) | 2,238,200) | 1,509,600) | 1,201,600) | |
| Revenue | 8,253,000) | 8,326,200) | 6,739,800) | 5,255,000) | 5,517,900) | |
| Short-term Activity Ratio | ||||||
| Working capital turnover1 | 2.21 | 2.27 | 3.01 | 3.48 | 4.59 | |
| Benchmarks | ||||||
| Working Capital Turnover, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 2.25 | 2.73 | 3.78 | 2.62 | — | |
| Analog Devices Inc. | 10.40 | 4.81 | 2.81 | 4.86 | 12.57 | |
| Applied Materials Inc. | 2.25 | 3.02 | 2.36 | 1.93 | 2.54 | |
| Broadcom Inc. | 2.66 | 2.90 | 2.66 | 4.32 | 7.49 | |
| Intel Corp. | 3.56 | 3.45 | 2.61 | 3.46 | — | |
| KLA Corp. | 2.27 | 2.14 | 1.93 | 1.92 | 1.79 | |
| Lam Research Corp. | 1.93 | 2.23 | 1.80 | 1.31 | 1.56 | |
| Micron Technology Inc. | 0.94 | 2.16 | 2.05 | 1.89 | 2.31 | |
| Monolithic Power Systems Inc. | 1.15 | 1.56 | 1.35 | 1.21 | — | |
| NVIDIA Corp. | 1.63 | 1.10 | 1.37 | 0.92 | — | |
| Qualcomm Inc. | 2.79 | 4.99 | 4.13 | 2.39 | 3.10 | |
| Texas Instruments Inc. | 1.48 | 1.81 | 1.65 | 1.84 | — | |
| Working Capital Turnover, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 2.22 | 2.54 | 2.37 | 2.35 | — | |
| Working Capital Turnover, Industry | ||||||
| Information Technology | 5.77 | 6.47 | 4.33 | 3.30 | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Working capital turnover = Revenue ÷ Working capital
= 8,253,000 ÷ 3,728,700 = 2.21
2 Click competitor name to see calculations.
- Working Capital
- The working capital has shown a consistent upward trend over the five-year period. Starting at $1,201,600 thousand in 2019, it increased steadily each year to reach $3,728,700 thousand by the end of 2023. This significant growth indicates enhanced short-term financial health and liquidity.
- Revenue
- Revenue exhibited some fluctuations during the period. Initially, it declined slightly from $5,517,900 thousand in 2019 to $5,255,000 thousand in 2020. However, it rebounded markedly to $6,739,800 thousand in 2021 and continued to rise to a peak of $8,326,200 thousand in 2022. There was a minor decrease in 2023, with revenue adjusting to $8,253,000 thousand. Overall, the revenue trend is positive despite the small dip in the final year.
- Working Capital Turnover
- The working capital turnover ratio consistently declined from 4.59 in 2019 to 2.21 in 2023. This reduction suggests the company is generating less revenue per unit of working capital over time, which could imply increasing investments in working capital or a slowdown in the efficiency of asset use relative to sales.
- Overall Insights
- The company has significantly increased its working capital, which may point to a strategy of strengthening liquidity or preparing for expansion. Despite strong revenue growth, the decreasing working capital turnover ratio indicates that the firm is utilizing its working capital less efficiently compared to earlier years. The slight decline in revenue in 2023 after a peak in 2022 warrants monitoring to understand underlying factors and potential impacts on operational efficiency and profitability.
Average Inventory Processing Period
ON Semiconductor Corp., average inventory processing period calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Inventory turnover | 2.07 | 2.63 | 2.92 | 2.83 | 2.88 | |
| Short-term Activity Ratio (no. days) | ||||||
| Average inventory processing period1 | 176 | 139 | 125 | 129 | 127 | |
| Benchmarks (no. days) | ||||||
| Average Inventory Processing Period, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 130 | 106 | 84 | 94 | — | |
| Analog Devices Inc. | 135 | 114 | 157 | 116 | 113 | |
| Applied Materials Inc. | 148 | 157 | 129 | 150 | 154 | |
| Broadcom Inc. | 62 | 63 | 45 | 35 | 32 | |
| Intel Corp. | 125 | 133 | 112 | 90 | — | |
| KLA Corp. | 249 | 218 | 207 | 195 | 247 | |
| Lam Research Corp. | 182 | 155 | 126 | 128 | 106 | |
| Micron Technology Inc. | 181 | 144 | 95 | 138 | 147 | |
| Monolithic Power Systems Inc. | 175 | 219 | 181 | 151 | — | |
| NVIDIA Corp. | 162 | 101 | 106 | 86 | — | |
| Qualcomm Inc. | 148 | 124 | 83 | 102 | 59 | |
| Texas Instruments Inc. | 225 | 161 | 117 | 137 | — | |
| Average Inventory Processing Period, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 148 | 130 | 104 | 106 | — | |
| Average Inventory Processing Period, Industry | ||||||
| Information Technology | 46 | 42 | 35 | 33 | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 2.07 = 176
2 Click competitor name to see calculations.
The financial data indicates a declining trend in inventory efficiency over the five-year period examined.
- Inventory Turnover Ratio
- The inventory turnover ratio exhibits a gradual decrease from 2.88 in 2019 to 2.07 in 2023. This decline suggests the company is turning over its inventory less frequently year over year, which may point to slowing sales or accumulation of inventory.
- Average Inventory Processing Period
- The average number of days inventory is held before it is sold has increased from 127 days in 2019 to 176 days in 2023. This lengthening period reinforces the observation from the inventory turnover ratio, indicating that inventory remains on hand longer, potentially affecting liquidity and operational efficiency.
Together, these trends imply that the company may need to reassess its inventory management practices to improve turnover rates and reduce holding periods, which could positively impact cash flow and reduce holding costs.
Average Receivable Collection Period
ON Semiconductor Corp., average receivable collection period calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Receivables turnover | 8.82 | 9.89 | 8.33 | 7.77 | 7.83 | |
| Short-term Activity Ratio (no. days) | ||||||
| Average receivable collection period1 | 41 | 37 | 44 | 47 | 47 | |
| Benchmarks (no. days) | ||||||
| Average Receivable Collection Period, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 70 | 64 | 60 | 77 | — | |
| Analog Devices Inc. | 44 | 55 | 73 | 48 | 39 | |
| Applied Materials Inc. | 71 | 86 | 78 | 63 | 63 | |
| Broadcom Inc. | 32 | 33 | 28 | 35 | 53 | |
| Intel Corp. | 23 | 24 | 44 | 32 | — | |
| KLA Corp. | 61 | 72 | 69 | 70 | 79 | |
| Lam Research Corp. | 59 | 91 | 76 | 76 | 55 | |
| Micron Technology Inc. | 48 | 57 | 65 | 59 | 43 | |
| Monolithic Power Systems Inc. | 36 | 37 | 32 | 29 | — | |
| NVIDIA Corp. | 52 | 63 | 53 | 55 | — | |
| Qualcomm Inc. | 20 | 34 | 24 | 42 | 16 | |
| Texas Instruments Inc. | 37 | 35 | 34 | 36 | — | |
| Average Receivable Collection Period, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 42 | 48 | 49 | 45 | — | |
| Average Receivable Collection Period, Industry | ||||||
| Information Technology | 49 | 49 | 48 | 46 | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 8.82 = 41
2 Click competitor name to see calculations.
The financial data indicates developments in receivables management over a five-year period.
- Receivables Turnover Ratio
- The receivables turnover ratio shows an overall increasing trend from 7.83 in 2019 to a peak of 9.89 in 2022, followed by a decline to 8.82 in 2023. This suggests that the company improved its efficiency in collecting receivables through 2022, but experienced a slight slowdown in turnover during the last recorded year.
- Average Receivable Collection Period
- The average receivable collection period, expressed in days, declined steadily from 47 days in both 2019 and 2020 to a low of 37 days in 2022. This indicates quicker collection of receivables, enhancing cash flow efficiency. However, in 2023, the collection period increased slightly to 41 days, implying a modest lengthening in the time taken to collect receivables compared to the prior year.
In summary, the company demonstrated significant improvement in collecting receivables more rapidly between 2019 and 2022, as evident from the rising turnover ratio and decreasing days to collect. The slight reversal in 2023, with a decreased turnover ratio and longer collection period, may warrant further monitoring to determine if this represents a transient change or the start of a new trend.
Operating Cycle
ON Semiconductor Corp., operating cycle calculation, comparison to benchmarks
No. days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Average inventory processing period | 176 | 139 | 125 | 129 | 127 | |
| Average receivable collection period | 41 | 37 | 44 | 47 | 47 | |
| Short-term Activity Ratio | ||||||
| Operating cycle1 | 217 | 176 | 169 | 176 | 174 | |
| Benchmarks | ||||||
| Operating Cycle, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 200 | 170 | 144 | 171 | — | |
| Analog Devices Inc. | 179 | 169 | 230 | 164 | 152 | |
| Applied Materials Inc. | 219 | 243 | 207 | 213 | 217 | |
| Broadcom Inc. | 94 | 96 | 73 | 70 | 85 | |
| Intel Corp. | 148 | 157 | 156 | 122 | — | |
| KLA Corp. | 310 | 290 | 276 | 265 | 326 | |
| Lam Research Corp. | 241 | 246 | 202 | 204 | 161 | |
| Micron Technology Inc. | 229 | 201 | 160 | 197 | 190 | |
| Monolithic Power Systems Inc. | 211 | 256 | 213 | 180 | — | |
| NVIDIA Corp. | 214 | 164 | 159 | 141 | — | |
| Qualcomm Inc. | 168 | 158 | 107 | 144 | 75 | |
| Texas Instruments Inc. | 262 | 196 | 151 | 173 | — | |
| Operating Cycle, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 190 | 178 | 153 | 151 | — | |
| Operating Cycle, Industry | ||||||
| Information Technology | 95 | 91 | 83 | 79 | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= 176 + 41 = 217
2 Click competitor name to see calculations.
- Average Inventory Processing Period
- The average inventory processing period exhibited a fluctuating upward trend during the analyzed timeframe. It initially increased slightly from 127 days at the end of 2019 to 129 days at the end of 2020, then decreased to 125 days in 2021. Following this, there was a more pronounced increase to 139 days in 2022 and a substantial rise to 176 days by the end of 2023. This indicates a growing duration for inventory turnover, potentially reflecting slower inventory movement or changes in inventory management practices.
- Average Receivable Collection Period
- The average receivable collection period demonstrated a general decline from 47 days in both 2019 and 2020 to 44 days in 2021, reaching its lowest point at 37 days in 2022. However, there was a modest increase to 41 days by the end of 2023. Overall, this suggests improved efficiency in collecting receivables up to 2022, followed by a slight easing in credit collection efforts in 2023.
- Operating Cycle
- The operating cycle, representing the combined duration of inventory processing and receivable collection, remained somewhat stable from 2019 (174 days) through 2020 and 2021, fluctuating between 169 and 176 days. Notably, it increased significantly in 2023 to 217 days, reflecting the pronounced rise in the inventory processing period despite the moderate recovery in the receivable collection period. This elongation of the operating cycle could result in higher capital requirements and reduced liquidity efficiency.
Average Payables Payment Period
ON Semiconductor Corp., average payables payment period calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Payables turnover | 6.02 | 4.99 | 6.34 | 6.18 | 6.52 | |
| Short-term Activity Ratio (no. days) | ||||||
| Average payables payment period1 | 61 | 73 | 58 | 59 | 56 | |
| Benchmarks (no. days) | ||||||
| Average Payables Payment Period, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 61 | 70 | 57 | 32 | — | |
| Analog Devices Inc. | 41 | 47 | 58 | 43 | 42 | |
| Applied Materials Inc. | 38 | 46 | 44 | 43 | 43 | |
| Broadcom Inc. | 40 | 33 | 37 | 29 | 31 | |
| Intel Corp. | 96 | 97 | 60 | 59 | — | |
| KLA Corp. | 32 | 45 | 45 | 39 | 40 | |
| Lam Research Corp. | 18 | 39 | 39 | 40 | 26 | |
| Micron Technology Inc. | 37 | 46 | 37 | 54 | 48 | |
| Monolithic Power Systems Inc. | 29 | 30 | 58 | 37 | — | |
| NVIDIA Corp. | 37 | 69 | 70 | 60 | — | |
| Qualcomm Inc. | 44 | 74 | 70 | 89 | 58 | |
| Texas Instruments Inc. | 45 | 50 | 35 | 29 | — | |
| Average Payables Payment Period, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 53 | 65 | 52 | 52 | — | |
| Average Payables Payment Period, Industry | ||||||
| Information Technology | 76 | 86 | 79 | 74 | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 6.02 = 61
2 Click competitor name to see calculations.
The data indicates variability in the company's payables turnover ratio over the examined five-year period. The ratio started at 6.52 in 2019, slightly declined to 6.18 in 2020, and then increased marginally to 6.34 in 2021. There was a notable decrease to 4.99 in 2022, followed by a partial recovery to 6.02 in 2023. This pattern suggests fluctuations in how efficiently the company settled its payables, with a significant slowdown in 2022 that improved the following year, though not fully reaching earlier levels.
Correspondingly, the average payables payment period, measured in days, shows an inverse trend to the payables turnover ratio as expected. The period lengthened from 56 days in 2019 to 59 days in 2020, then slightly shortened to 58 days in 2021. A marked increase to 73 days occurred in 2022, indicating slower payment to suppliers during this period, which aligns with the decreased payables turnover ratio. In 2023, the payment period reduced to 61 days, reflecting an improvement in payment speed but still longer than in the initial years.
- Payables Turnover Ratio Trend
- The ratio demonstrates relative stability with fluctuations, showing a peak in 2019, a drop in 2022, and partial recovery in 2023.
- Average Payables Payment Period Trend
- The payment period generally increased over the years, peaking in 2022 before decreasing in 2023, indicating variability in payment practices.
- Insights
- The inverse relationship between the two metrics is consistent, evidencing that longer payment periods correspond to lower payables turnover ratios. The significant changes in 2022 suggest operational or strategic factors that impacted payment policies or cash management during that year. The improvement in 2023 points to a possible adjustment to prior conditions.
Cash Conversion Cycle
ON Semiconductor Corp., cash conversion cycle calculation, comparison to benchmarks
No. days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Average inventory processing period | 176 | 139 | 125 | 129 | 127 | |
| Average receivable collection period | 41 | 37 | 44 | 47 | 47 | |
| Average payables payment period | 61 | 73 | 58 | 59 | 56 | |
| Short-term Activity Ratio | ||||||
| Cash conversion cycle1 | 156 | 103 | 111 | 117 | 118 | |
| Benchmarks | ||||||
| Cash Conversion Cycle, Competitors2 | ||||||
| Advanced Micro Devices Inc. | 139 | 100 | 87 | 139 | — | |
| Analog Devices Inc. | 138 | 122 | 172 | 121 | 110 | |
| Applied Materials Inc. | 181 | 197 | 163 | 170 | 174 | |
| Broadcom Inc. | 54 | 63 | 36 | 41 | 54 | |
| Intel Corp. | 52 | 60 | 96 | 63 | — | |
| KLA Corp. | 278 | 245 | 231 | 226 | 286 | |
| Lam Research Corp. | 223 | 207 | 163 | 164 | 135 | |
| Micron Technology Inc. | 192 | 155 | 123 | 143 | 142 | |
| Monolithic Power Systems Inc. | 182 | 226 | 155 | 143 | — | |
| NVIDIA Corp. | 177 | 95 | 89 | 81 | — | |
| Qualcomm Inc. | 124 | 84 | 37 | 55 | 17 | |
| Texas Instruments Inc. | 217 | 146 | 116 | 144 | — | |
| Cash Conversion Cycle, Sector | ||||||
| Semiconductors & Semiconductor Equipment | 137 | 113 | 101 | 99 | — | |
| Cash Conversion Cycle, Industry | ||||||
| Information Technology | 19 | 5 | 4 | 5 | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 176 + 41 – 61 = 156
2 Click competitor name to see calculations.
- Average inventory processing period
- The average inventory processing period showed a generally increasing trend over the observed years. It started at 127 days in 2019 and experienced slight fluctuations in 2020 and 2021, with values of 129 and 125 days respectively. However, from 2021 onwards, there was a notable rise, reaching 139 days in 2022 and further increasing significantly to 176 days in 2023. This suggests that inventory turnover slowed down, potentially indicating longer holding times for inventory.
- Average receivable collection period
- The average receivable collection period exhibited a decreasing trend from 2019 to 2022, moving from 47 days in 2019 and 2020, to 44 days in 2021, and reaching a low of 37 days in 2022. In 2023, however, this period increased slightly to 41 days. Overall, the shorter receivable collection period up to 2022 indicates improved efficiency in collecting receivables, although the slight increase in 2023 may point to some slowing in this aspect.
- Average payables payment period
- The average payables payment period increased from 56 days in 2019 to 59 days in 2020 and remained relatively stable in 2021 at 58 days. There was a sharp rise to 73 days in 2022, followed by a decrease to 61 days in 2023. The elevated payment period in 2022 suggests a longer time taken to pay suppliers during that year, potentially reflecting strategic payment management or liquidity considerations, with a partial reversal to a shorter period in 2023.
- Cash conversion cycle
- The cash conversion cycle (CCC) initially decreased from 118 days in 2019 to 117 days in 2020 and further to 111 days in 2021. It continued declining to 103 days in 2022. However, in 2023, the CCC rose sharply to 156 days. The initial decline indicates improving cash flow efficiency through better management of inventory, receivables, and payables. The substantial increase in 2023 primarily reflects the significant rise in inventory processing period, which overshadowed the other components and led to an overall extension in the time required to convert investments back into cash.