Alphabet Inc. (NASDAQ:GOOG)

An examination of short-term operating activity ratios reveals several noteworthy trends over the observed period. Generally, the company demonstrates fluctuating, but overall increasing, efficiency in managing its working capital. However, collection of receivables appears to be slowing, while payment to suppliers is lengthening.

Receivables Turnover

The receivables turnover ratio exhibited initial stability between March 2022 and September 2022, averaging approximately 7.9. A decline was then observed through December 2023, reaching a low of 6.41. The ratio showed a slight recovery in the first half of 2024, but has generally trended downwards again, ending at 6.41 in December 2025. This suggests a decreasing efficiency in converting receivables into cash.

Payables Turnover

Payables turnover demonstrated significant volatility. It began at a high of 33.89 in March 2022, then decreased substantially, reaching a low of 17.79 in December 2022. A partial recovery occurred in the first half of 2023, followed by a continued decline to 13.32 by December 2025. This indicates the company is taking longer to pay its suppliers.

Working Capital Turnover

The working capital turnover ratio consistently increased throughout the period, rising from 2.33 in March 2022 to 3.90 in December 2024. While it decreased to 3.90 in December 2025, the overall trend indicates improved efficiency in utilizing working capital to generate sales. This suggests the company is becoming more effective at managing its current assets and liabilities in relation to revenue.

Average Receivable Collection Period

The average receivable collection period remained relatively stable at 47 days between March 2022 and June 2023. A gradual increase was then observed, reaching 57 days by December 2025. This lengthening collection period aligns with the declining receivables turnover and suggests the company is experiencing delays in collecting payments from its customers.

Average Payables Payment Period

The average payables payment period showed a clear upward trend. Starting at 11 days in March 2022, it increased to 27 days by December 2025. This lengthening payment period corresponds with the decreasing payables turnover and indicates the company is taking more time to settle its obligations to suppliers. This could be a strategic decision to manage cash flow, but also carries the risk of strained supplier relationships.

In summary, while the company demonstrates improving working capital efficiency, there are emerging concerns regarding the collection of receivables and the extension of payment terms to suppliers. These trends warrant further investigation to determine their underlying causes and potential implications for the company’s financial health.

The receivables turnover ratio exhibits fluctuations over the observed period, generally trending downwards before stabilizing and showing a slight increase in the most recent quarters. Initial values are relatively consistent, followed by a period of decline, and then a period of relative stability with a recent slight uptick.

Overall Trend

From March 31, 2022, through December 31, 2023, the receivables turnover ratio demonstrates a decreasing trend. The ratio begins at 7.79 and declines to a low of 6.41. Following this decline, the ratio stabilizes, fluctuating between 6.69 and 7.14 from March 31, 2024, through September 30, 2025. The most recent quarter, December 31, 2025, shows a return to the lower end of this range, at 6.41.

Initial Period (Mar 31, 2022 – Jun 30, 2022)

The receivables turnover ratio remains constant at 7.79 during this period. Revenues increased from US$68,011 million to US$69,685 million, while accounts receivable also increased, maintaining the ratio.

Decline (Sep 30, 2022 – Dec 31, 2023)

A noticeable decline in the receivables turnover ratio is observed. While revenues generally increased over this period, accounts receivable grew at a faster rate. Revenues increased from US$69,092 million to US$86,310 million, but accounts receivable increased from US$34,697 million to US$47,964 million. This suggests a lengthening of the collection period or a change in credit terms.

Stabilization and Recent Fluctuations (Mar 31, 2024 – Dec 31, 2025)

The ratio stabilizes in the 6.41 to 7.14 range. Revenues continue to increase, reaching US$113,828 million by December 31, 2025, while accounts receivable also increase, reaching US$62,886 million. The fluctuations within this range suggest some variability in collection efficiency, but the overall trend is one of relative consistency. The final reported value mirrors the lowest value observed during the analyzed period.

The observed trends suggest a potential shift in the company’s credit and collection policies or a change in customer payment behavior. Further investigation into the components of accounts receivable, such as aging schedules, would be beneficial to understand the underlying causes of these fluctuations.

The accounts payable turnover ratio exhibits considerable fluctuation throughout the observed period, spanning from March 31, 2022, to December 31, 2025. An initial decline is noted from the first quarter of 2022 through the third quarter of 2022, followed by a partial recovery in the fourth quarter. This pattern of variability continues into 2023 and 2024, with no clear, sustained directional trend. However, a more pronounced downward trend emerges in 2025.

Overall Trend

The ratio generally decreased over the entire period. Starting at 33.89 in March 2022, it concludes at 13.32 in December 2025. While interim increases occur, the overall trajectory points to a diminishing rate of payables turnover.

Initial Decline (2022)

A significant decrease in the ratio is observed from 33.89 in March 2022 to 19.65 in September 2022. This suggests a lengthening of the time it takes to pay suppliers during this period. The ratio partially recovers to 24.61 by December 2022, but remains below the initial value.

Fluctuations (2023-2024)

The years 2023 and 2024 demonstrate a more erratic pattern. The ratio fluctuates between approximately 17.79 and 30.41, indicating inconsistent payment practices or potentially changes in supplier relationships and credit terms. There is no consistent upward or downward movement during these two years.

Downward Trend Acceleration (2025)

The final year analyzed shows a clear acceleration of the downward trend. The ratio declines from 17.53 in March 2025 to 13.32 in December 2025. This suggests a consistent lengthening of the payables payment cycle, potentially indicating a deliberate strategy to manage cash flow or increasing difficulties in meeting payment obligations.

Relationship to Cost of Revenues

While the accounts payable turnover ratio fluctuates, the cost of revenues generally increases over the period. This suggests that the increase in purchasing activity is not necessarily translating into faster payments to suppliers. The divergence between these two metrics becomes more pronounced in the later periods, particularly in 2025.

In summary, the accounts payable turnover ratio demonstrates a long-term declining trend, punctuated by periods of fluctuation. The most significant decrease occurs in the final year of the analyzed period, warranting further investigation into the underlying causes of this trend.

The working capital turnover ratio exhibits a generally increasing trend over the observed period, indicating improving efficiency in utilizing working capital to generate revenue. However, the trend is not consistently upward, with some fluctuations observed.

Overall Trend

From March 31, 2022, to December 31, 2023, the ratio increased from 2.33 to 3.43, representing a substantial improvement in working capital efficiency. The ratio continued to climb, peaking at 4.69 in December 2024, before declining to 3.90 by December 31, 2025.

Initial Phase (Mar 31, 2022 – Dec 31, 2022)

The ratio demonstrated consistent growth during this period, moving from 2.33 to 2.96. This suggests a strengthening relationship between working capital and revenue generation in the initial part of the observed timeframe.

Acceleration (Mar 31, 2023 – Dec 31, 2024)

A more rapid increase in the ratio occurred between March 31, 2023, and December 31, 2024, rising from 3.06 to 4.69. This indicates a significant enhancement in the company’s ability to convert its working capital into sales during this period. This is the most pronounced period of improvement.

Recent Period (Mar 31, 2025 – Dec 31, 2025)

The ratio experienced a decrease from 5.11 to 3.90 in the final year of the observation period. This decline warrants further investigation to determine the underlying causes, such as potential increases in working capital without corresponding revenue growth, or a deliberate strategic shift.

Working Capital Context

While the turnover ratio increased significantly, the absolute level of working capital generally decreased over the period, from US$115,905 million in March 2022 to US$70,398 million in March 2025, before increasing to US$103,293 million in December 2025. The increasing ratio despite decreasing working capital suggests improved efficiency in managing existing resources. The subsequent increase in working capital in December 2025, coupled with a decrease in the turnover ratio, may indicate a need to monitor the effectiveness of the increased investment.

In conclusion, the working capital turnover ratio generally improved over the analyzed period, demonstrating increasing efficiency in utilizing working capital. However, the recent decline in the ratio requires attention and further analysis to understand its implications.

The average receivable collection period exhibited fluctuations over the observed period, spanning from March 31, 2022, to December 31, 2025. An initial period of stability is followed by a gradual increase, then a leveling off with some continued variability.

Overall Trend

From March 31, 2022, through September 30, 2022, the average collection period remained relatively stable at 47 days, decreasing slightly to 45 days. A noticeable increase began in December 31, 2022, reaching 57 days. Following this peak, the period decreased slightly to 51 days by March 31, 2023, before increasing again to 54 days by June 30, 2025, and concluding at 57 days on December 31, 2025.

Short-Term Fluctuations

The period experienced a peak of 57 days on two occasions: December 31, 2022, and December 31, 2025. The lowest observed collection period was 45 days, recorded on September 30, 2022. The period generally remained within a range of 45 to 57 days throughout the analyzed timeframe.

Recent Performance

The most recent quarters show a slight upward trend. The average collection period increased from 52 days on March 31, 2025, to 54 days on June 30, 2025, and then to 57 days on December 31, 2025. This suggests a potential lengthening in the time required to collect receivables towards the end of the period.

The observed changes in the average receivable collection period warrant further investigation to determine the underlying causes. Factors such as changes in credit policies, customer payment behavior, or the composition of outstanding receivables could contribute to these fluctuations.

The average payables payment period exhibited fluctuations over the observed period, spanning from March 31, 2022, to December 31, 2025. An initial increase is noted in the early part of the period, followed by periods of relative stability and subsequent increases towards the end of the observation window.

Overall Trend

The average payables payment period generally trended upwards over the analyzed timeframe. Starting at 11 days in March 2022, it increased to 27 days by December 2025. This suggests a lengthening in the time taken to settle outstanding obligations to suppliers.

Short-Term Fluctuations (2022-2023)

From March 2022 to June 2022, the period increased from 11 days to 13 days. A more substantial increase occurred between June 2022 and September 2022, rising to 19 days. A slight decrease was observed in December 2022, falling to 15 days. The period remained relatively stable in the first half of 2023, fluctuating between 12 and 15 days.

Mid-Term Stability and Increase (2023-2025)

The period remained relatively stable between 16 and 21 days throughout 2023 and the first three quarters of 2024. However, a consistent upward trend became apparent in 2024, culminating in a period of 20 days in December 2024. This trend continued into 2025, with the period reaching 24 days in September 2025 and 27 days in December 2025.

Potential Implications

The lengthening of the average payables payment period could indicate several factors. It may reflect a deliberate strategy to optimize cash flow by delaying payments to suppliers. Alternatively, it could suggest increasing difficulty in meeting payment obligations, potentially due to liquidity constraints or strained relationships with suppliers. Further investigation into the company’s cash flow management practices and supplier relationships would be necessary to determine the underlying cause.

The observed pattern suggests a shift in payment practices over time, warranting further scrutiny to understand the operational and financial implications.