Analysis of Long-term (Investment) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
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Long-term Activity Ratios (Summary)
Texas Instruments Inc., long-term (investment) activity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Net fixed asset turnover | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset) | ||||||
| Total asset turnover | ||||||
| Equity turnover |
Based on: 10-K (reporting date: 2024-12-31), 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).
The financial ratios indicate a consistent downward trend in asset utilization over the analyzed period. Both net fixed asset turnover and net fixed asset turnover including operating leases reveal a steady decline from 2020 through 2024. Specifically, net fixed asset turnover decreased from 4.42 in 2020 to 1.38 in 2024, demonstrating a significant reduction in the efficiency with which the company is generating revenue from its fixed assets. Similarly, the adjusted measure including operating leases followed a comparable trajectory, dropping from 4.03 to 1.29 over the same period.
Furthermore, total asset turnover has also declined progressively, albeit at a somewhat slower pace. The ratio decreased from 0.75 in 2020 to 0.44 in 2024, indicating a diminishing ability to generate sales from total assets. This trend is consistent with the net fixed asset turnover trend, suggesting an overall decline in asset productivity.
Equity turnover has experienced a decline as well, moving from 1.57 in 2020 to 0.93 in 2024. This reduction points to a decreasing efficiency in using shareholders' equity to drive revenue generation. The downward trend across all turnover ratios may reflect a combination of factors such as increased asset base, reduced sales growth, or shifts in business strategy affecting utilization rates.
- Net Fixed Asset Turnover
- Declined significantly from 4.42 to 1.38, indicating reduced efficiency in generating sales from fixed assets.
- Net Fixed Asset Turnover (including operating leases)
- Paralleled the net fixed asset turnover trend with a fall from 4.03 to 1.29, confirming that leased assets also contributed to lower turnover ratios.
- Total Asset Turnover
- Decreased from 0.75 to 0.44, signifying a gradual reduction in total asset productivity.
- Equity Turnover
- Fell from 1.57 to 0.93, reflecting diminished efficiency in leveraging equity to produce revenue.
Overall, the downward trends across all turnover metrics suggest a declining efficiency in asset and equity utilization over the five-year span. This pattern may warrant further investigation into underlying causes such as asset accumulation, sales performance, or operational changes to improve asset efficiency.
Net Fixed Asset Turnover
Texas Instruments Inc., net fixed asset turnover calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenue | ||||||
| Property, plant and equipment | ||||||
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | ||||||
| Benchmarks | ||||||
| Net Fixed Asset Turnover, Competitors2 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Net Fixed Asset Turnover, Sector | ||||||
| Semiconductors & Semiconductor Equipment | ||||||
| Net Fixed Asset Turnover, Industry | ||||||
| Information Technology | ||||||
Based on: 10-K (reporting date: 2024-12-31), 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).
1 2024 Calculation
Net fixed asset turnover = Revenue ÷ Property, plant and equipment
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals several key trends regarding the company's performance and asset utilization over the five-year period from 2020 to 2024.
- Revenue
- The revenue exhibited growth from 2020 to 2022, increasing from $14,461 million in 2020 to a peak of $20,028 million in 2022. However, the subsequent two years saw a decline in revenue, falling to $17,519 million in 2023 and further to $15,641 million in 2024. This indicates a downward trend in sales or income generation after 2022, suggesting potential challenges in market demand, competition, or other operational factors impacting revenue generation.
- Property, Plant and Equipment (PP&E)
- There was a consistent and significant increase in property, plant, and equipment over the entire period. The value rose from $3,269 million in 2020 to $11,347 million by 2024, showcasing a strong investment in fixed assets. This likely reflects capital expenditure aimed at capacity expansion, technological upgrades, or modernization efforts.
- Net Fixed Asset Turnover Ratio
- The net fixed asset turnover ratio declined steadily from 4.42 in 2020 to 1.38 in 2024. This ratio measures how efficiently the company generates revenue from its fixed assets. The downward trend indicates diminishing efficiency in utilizing the expanded asset base to produce sales. The ratio’s decline correlates with the significant increase in asset values combined with the decrease in revenue after 2022, pointing to potential underutilization of the newly acquired or upgraded assets.
In summary, while the company invested heavily in its fixed assets over the period, this was accompanied by a peak and subsequent decline in revenue, leading to reduced efficiency in asset utilization as reflected in the falling net fixed asset turnover ratio. The data suggests that recent investments have not yet fully translated into increased revenue, raising considerations about the operational effectiveness and timing of returns on capital expenditures.
Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
Texas Instruments Inc., net fixed asset turnover (including operating lease, right-of-use asset) calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenue | ||||||
| Property, plant and equipment | ||||||
| Operating lease right-of-use asset (included in Other long-term assets) | ||||||
| Property, plant and equipment (including operating lease, right-of-use asset) | ||||||
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset)1 | ||||||
| Benchmarks | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Competitors2 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Sector | ||||||
| Semiconductors & Semiconductor Equipment | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Industry | ||||||
| Information Technology | ||||||
Based on: 10-K (reporting date: 2024-12-31), 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).
1 2024 Calculation
Net fixed asset turnover (including operating lease, right-of-use asset) = Revenue ÷ Property, plant and equipment (including operating lease, right-of-use asset)
= ÷ =
2 Click competitor name to see calculations.
- Revenue Trends
- The revenue experienced a notable increase from 14,461 million US dollars in 2020 to a peak of 20,028 million US dollars in 2022. However, following this peak, revenue declined over the subsequent years, decreasing to 17,519 million US dollars in 2023 and further to 15,641 million US dollars in 2024. This pattern indicates a phase of growth followed by a period of contraction or reduced sales.
- Property, Plant, and Equipment (PPE) Trends
- There was a consistent and significant increase in the company's investment in property, plant, and equipment over the period. The value rose from 3,588 million US dollars in 2020 to 12,133 million US dollars in 2024. This steady upward trend suggests ongoing capital expenditure or asset expansion, potentially signaling capacity growth or modernization efforts.
- Net Fixed Asset Turnover Ratio Trends
- The net fixed asset turnover ratio, which measures how efficiently the company utilizes its fixed assets to generate revenue, showed a steady decline from 4.03 in 2020 to 1.29 in 2024. The decreasing ratio implies that the company is generating less revenue per unit of fixed asset value over time. This trend could indicate diminishing asset utilization efficiency, possibly due to the rapid increase in fixed asset base outpacing revenue growth or operational inefficiencies.
- Overall Observations
- The data reveals a period of revenue growth culminating in 2022, followed by a decline, while fixed assets continuously increased, leading to reduced asset turnover efficiency. This suggests the company may be in an investment or expansion phase but faces challenges in translating these investments into proportional revenue gains. The declining turnover ratio warrants closer examination of asset management and revenue-generating strategies.
Total Asset Turnover
Texas Instruments Inc., total asset turnover calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenue | ||||||
| Total assets | ||||||
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | ||||||
| Benchmarks | ||||||
| Total Asset Turnover, Competitors2 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Total Asset Turnover, Sector | ||||||
| Semiconductors & Semiconductor Equipment | ||||||
| Total Asset Turnover, Industry | ||||||
| Information Technology | ||||||
Based on: 10-K (reporting date: 2024-12-31), 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).
1 2024 Calculation
Total asset turnover = Revenue ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals several noteworthy trends over the five-year period under review. Revenue initially exhibited a steady increase from 14,461 million US dollars in 2020 to a peak of 20,028 million US dollars in 2022. However, revenue then declined significantly in the subsequent years, falling to 17,519 million US dollars in 2023 and further decreasing to 15,641 million US dollars by the end of 2024.
Total assets demonstrated consistent growth throughout the period, rising from 19,351 million US dollars in 2020 to 35,509 million US dollars in 2024. This steady increase suggests ongoing investment or asset accumulation despite the fluctuating revenue figures.
An important efficiency metric, the total asset turnover ratio, showed a declining trend across the years. Starting from 0.75 in 2020 and maintaining a similar level through 2021 and 2022, the ratio dropped markedly to 0.54 in 2023 and further to 0.44 in 2024. This decline indicates that the efficiency with which the company uses its assets to generate revenue has diminished over the period, particularly in the most recent years.
- Revenue Trend
- Growth until 2022 followed by a decline through 2024.
- Total Assets
- Consistent year-over-year increase, nearly doubling from 2020 to 2024.
- Total Asset Turnover Ratio
- Relatively stable at about 0.74-0.75 until 2022, then a significant decrease indicating reduced asset efficiency.
Overall, the data suggests that while the company has been successful in expanding its asset base, it has faced challenges in maintaining revenue growth and asset utilization efficiency in the latter part of the period. The reduction in total asset turnover underlines a potential concern regarding the effective deployment of assets to drive sales.
Equity Turnover
Texas Instruments Inc., equity turnover calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenue | ||||||
| Stockholders’ equity | ||||||
| Long-term Activity Ratio | ||||||
| Equity turnover1 | ||||||
| Benchmarks | ||||||
| Equity Turnover, Competitors2 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Equity Turnover, Sector | ||||||
| Semiconductors & Semiconductor Equipment | ||||||
| Equity Turnover, Industry | ||||||
| Information Technology | ||||||
Based on: 10-K (reporting date: 2024-12-31), 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).
1 2024 Calculation
Equity turnover = Revenue ÷ Stockholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The financial data indicates several noteworthy trends over the presented periods.
- Revenue
- The revenue experienced a significant increase from 14,461 million USD in 2020 to a peak of 20,028 million USD in 2022. However, in the subsequent years, a decline is observable, with revenues dropping to 17,519 million USD in 2023 and further down to 15,641 million USD in 2024. This pattern suggests a growth phase followed by a contraction period.
- Stockholders’ equity
- The stockholders’ equity has shown a consistent upward trajectory throughout the timeframe. Starting from 9,187 million USD in 2020, it increased steadily each year, reaching 16,903 million USD in 2024. This persistent growth implies strengthening financial stability and increased retained earnings or capital infusion over time.
- Equity turnover
- The equity turnover ratio, which measures the efficiency of equity usage to generate revenue, shows a declining trend. It decreased from 1.57 in 2020 to 0.93 in 2024. This decline indicates that the company’s revenue generation relative to its equity base has become less efficient across the years, possibly due to the slowing revenue growth coupled with increasing equity.
In summary, while equity growth reflects solid capital accumulation, the declining equity turnover and revenue reductions in later years might indicate challenges in maintaining sales momentum relative to the company’s equity size. This could warrant further examination into operational efficiency or market conditions impacting revenue generation.