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Short-term (Operating) Activity Analysis
Quarterly Data
Difficulty: Beginner
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Ratios (Summary)
Alphabet Inc., short-term (operating) activity ratios (quarterly data)
| Ratio | Description | The company |
|---|---|---|
| Inventory turnover | An activity ratio calculated as cost of goods sold divided by inventory. | Alphabet Inc.'s inventory turnover improved from Q4 2017 to Q1 2018 but then slightly deteriorated from Q1 2018 to Q2 2018. |
| Receivables turnover | An activity ratio equal to revenue divided by receivables. | Alphabet Inc.'s receivables turnover improved from Q4 2017 to Q1 2018 and from Q1 2018 to Q2 2018. |
| Payables turnover | An activity ratio calculated as cost of goods sold divided by payables. | Alphabet Inc.'s payables turnover declined from Q4 2017 to Q1 2018 but then increased from Q1 2018 to Q2 2018 exceeding Q4 2017 level. |
| Working capital turnover | An activity ratio calculated as revenue divided by working capital. | Alphabet Inc.'s working capital turnover improved from Q4 2017 to Q1 2018 and from Q1 2018 to Q2 2018. |
| Average inventory processing period | An activity ratio equal to the number of days in the period divided by inventory turnover over the period. | |
| Average receivable collection period | An activity ratio equal to the number of days in the period divided by receivables turnover. | Alphabet Inc.'s average receivable collection period improved from Q4 2017 to Q1 2018 and from Q1 2018 to Q2 2018. |
| Operating cycle | Equal to average inventory processing period plus average receivables collection period. | Alphabet Inc.'s operating cycle improved from Q4 2017 to Q1 2018 and from Q1 2018 to Q2 2018. |
| Average payables payment period | An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. | Alphabet Inc.'s average payables payment period increased from Q4 2017 to Q1 2018 but then declined significantly from Q1 2018 to Q2 2018. |
| Cash conversion cycle | A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. | Alphabet Inc.'s cash conversion cycle improved from Q4 2017 to Q1 2018 but then slightly deteriorated from Q1 2018 to Q2 2018. |
Inventory Turnover
Alphabet Inc., inventory turnover calculation (quarterly data)
Q2 2018 Calculations
1 Inventory turnover
= (Cost of revenuesQ2 2018
+ Cost of revenuesQ1 2018
+ Cost of revenuesQ4 2017
+ Cost of revenuesQ3 2017)
÷ Inventory
= ( + + + )
÷ =
| Ratio | Description | The company |
|---|---|---|
| Inventory turnover | An activity ratio calculated as cost of goods sold divided by inventory. | Alphabet Inc.'s inventory turnover improved from Q4 2017 to Q1 2018 but then slightly deteriorated from Q1 2018 to Q2 2018. |
Receivables Turnover
Alphabet Inc., receivables turnover calculation (quarterly data)
Q2 2018 Calculations
1 Receivables turnover
= (RevenuesQ2 2018
+ RevenuesQ1 2018
+ RevenuesQ4 2017
+ RevenuesQ3 2017)
÷ Accounts receivable, net of allowance
= ( + + + )
÷ =
| Ratio | Description | The company |
|---|---|---|
| Receivables turnover | An activity ratio equal to revenue divided by receivables. | Alphabet Inc.'s receivables turnover improved from Q4 2017 to Q1 2018 and from Q1 2018 to Q2 2018. |
Payables Turnover
Alphabet Inc., payables turnover calculation (quarterly data)
Q2 2018 Calculations
1 Payables turnover
= (Cost of revenuesQ2 2018
+ Cost of revenuesQ1 2018
+ Cost of revenuesQ4 2017
+ Cost of revenuesQ3 2017)
÷ Accounts payable
= ( + + + )
÷ =
| Ratio | Description | The company |
|---|---|---|
| Payables turnover | An activity ratio calculated as cost of goods sold divided by payables. | Alphabet Inc.'s payables turnover declined from Q4 2017 to Q1 2018 but then increased from Q1 2018 to Q2 2018 exceeding Q4 2017 level. |
Working Capital Turnover
Alphabet Inc., working capital turnover calculation (quarterly data)
Q2 2018 Calculations
1 Working capital turnover
= (RevenuesQ2 2018
+ RevenuesQ1 2018
+ RevenuesQ4 2017
+ RevenuesQ3 2017)
÷ Working capital
= ( + + + )
÷ =
| Ratio | Description | The company |
|---|---|---|
| Working capital turnover | An activity ratio calculated as revenue divided by working capital. | Alphabet Inc.'s working capital turnover improved from Q4 2017 to Q1 2018 and from Q1 2018 to Q2 2018. |
Average Inventory Processing Period
Alphabet Inc., average inventory processing period calculation (quarterly data)
Q2 2018 Calculations
1 Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ =
| Ratio | Description | The company |
|---|---|---|
| Average inventory processing period | An activity ratio equal to the number of days in the period divided by inventory turnover over the period. |
Average Receivable Collection Period
Alphabet Inc., average receivable collection period calculation (quarterly data)
Q2 2018 Calculations
1 Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ =
| Ratio | Description | The company |
|---|---|---|
| Average receivable collection period | An activity ratio equal to the number of days in the period divided by receivables turnover. | Alphabet Inc.'s average receivable collection period improved from Q4 2017 to Q1 2018 and from Q1 2018 to Q2 2018. |
Operating Cycle
Alphabet Inc., operating cycle calculation (quarterly data)
No. of days
Q2 2018 Calculations
1 Operating cycle = Average inventory processing period + Average receivable collection period
= + =
| Ratio | Description | The company |
|---|---|---|
| Operating cycle | Equal to average inventory processing period plus average receivables collection period. | Alphabet Inc.'s operating cycle improved from Q4 2017 to Q1 2018 and from Q1 2018 to Q2 2018. |
Average Payables Payment Period
Alphabet Inc., average payables payment period calculation (quarterly data)
Q2 2018 Calculations
1 Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ =
| Ratio | Description | The company |
|---|---|---|
| Average payables payment period | An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. | Alphabet Inc.'s average payables payment period increased from Q4 2017 to Q1 2018 but then declined significantly from Q1 2018 to Q2 2018. |
Cash Conversion Cycle
Alphabet Inc., cash conversion cycle calculation (quarterly data)
No. of days
Q2 2018 Calculations
1 Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= + – =
| Ratio | Description | The company |
|---|---|---|
| Cash conversion cycle | A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. | Alphabet Inc.'s cash conversion cycle improved from Q4 2017 to Q1 2018 but then slightly deteriorated from Q1 2018 to Q2 2018. |
