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)
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).
- Inventory Turnover
- The inventory turnover ratio shows a declining trend from 4.02 in 2020 to 2.39 in 2023, with a slight recovery to 2.51 in 2024. This indicates that the company is turning over its inventory less frequently over time, suggesting slower inventory movement or increased stock levels in the later years.
- Receivables Turnover
- The receivables turnover ratio exhibited fluctuations, rising from 7.93 in 2020 to a peak of 8.85 in 2021, then falling to 7.32 in 2022, increasing again in 2023 to 8.36, before declining to 6.82 in 2024. This variability suggests changes in credit policies or collection efficiency, with a general weakening in 2024.
- Payables Turnover
- Payables turnover has incomplete data but shows a ratio of 7.89 in 2022, dropping significantly to 4.77 in 2023, then sharply increasing to an unusually high value of 116.56 in 2024. The spike in 2024 may reflect changes in payment practices or a one-time adjustment, indicating much faster payment to suppliers.
- Working Capital Turnover
- The working capital turnover ratio was relatively stable around 4.0 in 2020 and 2021, surged to 9.92 in 2022 and increased further to 10.61 in 2023, before dropping sharply to 1.75 in 2024. The sharp decline in 2024 suggests a significant reduction in sales relative to working capital or a large increase in working capital that was not matched by sales growth.
- Average Inventory Processing Period
- This period lengthened from 91 days in 2020 to a peak of 152 days in 2023, then slightly decreased to 145 days in 2024. A longer inventory processing period indicates slower turnaround of stock, consistent with the decrease in inventory turnover ratios.
- Average Receivable Collection Period
- The receivable collection period decreased from 46 days in 2020 to 41 days in 2021, rose to 50 days in 2022, decreased again to 44 days in 2023, and increased to 54 days in 2024. This pattern reflects some variability in collection efficiency, with 2024 showing the slowest collection timeframe.
- Operating Cycle
- The operating cycle extended from 137 days in 2020 to 199 days in 2024, showing a general trend of lengthening. This indicates that the overall time to convert inventory into cash increased, which may impact liquidity and working capital management.
- Average Payables Payment Period
- With incomplete data before 2022, the payables payment period increased from 46 days in 2022 to 77 days in 2023, then dramatically dropped to 3 days in 2024. The sharp reduction in 2024 suggests a change in payment policy or cash management strategy, potentially paying suppliers much faster.
- Cash Conversion Cycle
- Data for the cash conversion cycle starts in 2022 with 130 days, decreases to 119 days in 2023, and then rises again sharply to 196 days in 2024. The increased cash conversion cycle in 2024 indicates a longer duration between cash outflows and inflows, which could strain liquidity.
Turnover Ratios
Average No. Days
Inventory Turnover
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in thousands) | ||||||
Cost of revenue | 647,502) | 435,041) | 371,623) | 307,006) | 305,498) | |
Inventories | 257,711) | 181,661) | 128,005) | 115,721) | 75,956) | |
Short-term Activity Ratio | ||||||
Inventory turnover1 | 2.51 | 2.39 | 2.90 | 2.65 | 4.02 | |
Benchmarks | ||||||
Inventory Turnover, Competitors2 | ||||||
International Business Machines Corp. | 21.10 | 23.74 | 17.94 | 15.68 | 20.69 | |
Microsoft Corp. | 59.48 | 26.35 | 16.74 | 19.81 | 24.32 | |
Oracle Corp. | 45.34 | 45.52 | 28.27 | 55.32 | 37.62 | |
Synopsys Inc. | 3.44 | 3.75 | 5.02 | 3.76 | 4.13 | |
Inventory Turnover, Sector | ||||||
Software & Services | 52.81 | 38.68 | 26.92 | 28.29 | 31.98 | |
Inventory Turnover, Industry | ||||||
Information Technology | 7.90 | 8.04 | 8.65 | 10.49 | 11.21 |
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
Inventory turnover = Cost of revenue ÷ Inventories
= 647,502 ÷ 257,711 = 2.51
2 Click competitor name to see calculations.
- Cost of Revenue
- The cost of revenue exhibits a consistent upward trend over the five-year period, increasing from approximately $305.5 million in 2020 to around $647.5 million in 2024. The most notable growth is observed between 2023 and 2024, where the cost rises substantially by nearly 49%, indicating increased expenses related to producing and delivering goods or services.
- Inventories
- Inventories have shown significant growth throughout the period, more than tripling from roughly $75.96 million in 2020 to $257.7 million in 2024. This steady increase suggests accumulation of stock, which may reflect higher production levels, anticipated demand, or potential challenges in inventory turnover.
- Inventory Turnover Ratio
- The inventory turnover ratio has declined overall, moving from 4.02 in 2020 down to 2.51 in 2024. This decline suggests that the company is turning over its inventory less frequently, which could indicate slower sales, increased inventory holding periods, or both. Despite minor fluctuations, the trend points to decreased efficiency in managing inventory relative to cost of goods sold.
Receivables Turnover
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in thousands) | ||||||
Revenue | 4,641,264) | 4,089,986) | 3,561,718) | 2,988,244) | 2,682,891) | |
Receivables, net | 680,460) | 489,224) | 486,710) | 337,596) | 338,487) | |
Short-term Activity Ratio | ||||||
Receivables turnover1 | 6.82 | 8.36 | 7.32 | 8.85 | 7.93 | |
Benchmarks | ||||||
Receivables Turnover, Competitors2 | ||||||
Accenture PLC | 5.47 | 6.00 | 5.87 | 5.74 | 6.16 | |
Adobe Inc. | 10.38 | 8.73 | 8.53 | 8.41 | 9.20 | |
CrowdStrike Holdings Inc. | 3.58 | 3.58 | 3.94 | 3.66 | 2.92 | |
Fair Isaac Corp. | 4.03 | 3.90 | 4.27 | 4.22 | 3.87 | |
International Business Machines Corp. | 9.22 | 8.57 | 9.25 | 8.49 | 10.32 | |
Intuit Inc. | 35.63 | 35.48 | 28.53 | 24.64 | 51.54 | |
Microsoft Corp. | 4.31 | 4.35 | 4.48 | 4.42 | 4.47 | |
Oracle Corp. | 6.73 | 7.22 | 7.13 | 7.48 | 7.04 | |
Palantir Technologies Inc. | 4.98 | 6.10 | 7.38 | 8.08 | 6.96 | |
Palo Alto Networks Inc. | 3.07 | 2.80 | 2.57 | 3.43 | 3.29 | |
Salesforce Inc. | 3.05 | 2.92 | 2.72 | 2.73 | 2.77 | |
ServiceNow Inc. | 4.90 | 4.41 | 4.20 | 4.24 | 4.48 | |
Synopsys Inc. | 6.56 | 6.17 | 6.38 | 7.40 | 4.72 | |
Workday Inc. | 4.43 | 3.96 | 4.14 | 4.18 | 4.13 | |
Receivables Turnover, Sector | ||||||
Software & Services | 5.06 | 5.13 | 5.19 | 5.22 | 5.57 | |
Receivables Turnover, Industry | ||||||
Information Technology | 6.97 | 7.45 | 7.42 | 7.52 | 7.91 |
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
Receivables turnover = Revenue ÷ Receivables, net
= 4,641,264 ÷ 680,460 = 6.82
2 Click competitor name to see calculations.
- Revenue
- The revenue demonstrates a consistent upward trend over the five-year period. Starting from approximately 2.68 billion US dollars in 2020, revenue increased steadily each year, reaching about 4.64 billion by 2024. The growth indicates a strong sales performance and expanding market presence.
- Receivables, net
- Net receivables have shown a rising trend as well, moving from around 338 million USD in 2020 to approximately 680 million USD in 2024. This notable increase suggests an accumulation of outstanding customer payments, which may be related to the overall increase in sales but also indicates a higher amount of capital tied up in accounts receivable.
- Receivables turnover ratio
- The receivables turnover ratio exhibits fluctuations throughout the period. After increasing from 7.93 in 2020 to a peak of 8.85 in 2021, it declined to 7.32 in 2022, rose again to 8.36 in 2023, and then dropped to 6.82 in 2024. The decreasing trend in the final year could reflect slower collections or more lenient credit terms, potentially impacting cash flow efficiency.
- Overall insights
- The data reveals steady revenue growth accompanied by an increase in net receivables, indicating expanding business activity. However, the declining receivables turnover ratio in the later years, especially in 2024, suggests a need for closer management of credit and collections to maintain liquidity and working capital effectiveness.
Payables Turnover
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in thousands) | ||||||
Cost of revenue | 647,502) | 435,041) | 371,623) | 307,006) | 305,498) | |
Trade accounts payable | 5,555) | 91,194) | 47,113) | —) | —) | |
Short-term Activity Ratio | ||||||
Payables turnover1 | 116.56 | 4.77 | 7.89 | — | — | |
Benchmarks | ||||||
Payables Turnover, Competitors2 | ||||||
Accenture PLC | 15.94 | 17.41 | 16.37 | 15.03 | 22.48 | |
Adobe Inc. | 6.53 | 7.50 | 5.71 | 5.98 | 5.63 | |
CrowdStrike Holdings Inc. | 26.82 | 13.25 | 8.05 | 19.03 | 105.30 | |
Fair Isaac Corp. | 15.49 | 16.36 | 17.49 | 16.02 | 15.68 | |
International Business Machines Corp. | 6.75 | 6.67 | 6.87 | 6.54 | 7.75 | |
Intuit Inc. | 4.81 | 4.93 | 3.26 | 2.70 | 4.52 | |
Microsoft Corp. | 3.37 | 3.64 | 3.30 | 3.44 | 3.68 | |
Oracle Corp. | 6.42 | 11.27 | 6.74 | 10.54 | 12.46 | |
Palantir Technologies Inc. | 5,495.05 | 35.56 | 9.12 | 4.53 | 21.55 | |
Palo Alto Networks Inc. | 17.71 | 14.43 | 13.43 | 22.41 | 15.72 | |
Salesforce Inc. | — | — | — | — | — | |
ServiceNow Inc. | 33.63 | 15.25 | 5.74 | 15.20 | 28.83 | |
Synopsys Inc. | 6.01 | 7.84 | 28.30 | 31.44 | 26.49 | |
Workday Inc. | 22.71 | 11.16 | 25.74 | 15.85 | 18.51 | |
Payables Turnover, Sector | ||||||
Software & Services | 5.63 | 6.26 | 5.58 | 5.76 | 6.65 | |
Payables Turnover, Industry | ||||||
Information Technology | 4.27 | 4.79 | 4.25 | 4.63 | 4.92 |
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
Payables turnover = Cost of revenue ÷ Trade accounts payable
= 647,502 ÷ 5,555 = 116.56
2 Click competitor name to see calculations.
- Cost of Revenue
- The cost of revenue exhibited a consistent upward trend over the five-year period. Beginning at approximately 305.5 million US dollars at the end of 2020, it remained relatively stable into 2021 with a slight increase to 307.0 million US dollars. However, starting in 2022, there was a more pronounced rise, reaching 371.6 million US dollars, followed by a continued increase to 435.0 million US dollars in 2023. The most significant jump occurred in 2024, with the cost of revenue escalating steeply to 647.5 million US dollars. This pattern suggests rising operational expenses or possibly increased production volume.
- Trade Accounts Payable
- Data for trade accounts payable is unavailable for the years 2020 and 2021. Beginning in 2022, trade accounts payable recorded 47.1 million US dollars, nearly doubling in 2023 to 91.2 million US dollars, indicating a growth in the company's short-term obligations to suppliers or vendors. However, in 2024 there was a sharp contraction to 5.6 million US dollars, representing a significant reduction in payables, which could indicate faster payment cycles or changes in supplier terms.
- Payables Turnover Ratio
- Payables turnover was first reported in 2022 at 7.89 times, implying nearly eight cycles of paying off trade payables within that year. In 2023, this ratio decreased to 4.77, suggesting a slower turnover of payables, possibly signaling extended payment terms or delayed payments. In 2024, the payables turnover ratio surged dramatically to 116.56 times, corresponding with the marked reduction in trade accounts payable. This high turnover indicates extremely rapid payment of obligations or a possible accounting anomaly in payables management for that year.
Working Capital Turnover
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in thousands) | ||||||
Current assets | 4,016,079) | 1,976,217) | 1,706,767) | 1,715,769) | 1,478,587) | |
Less: Current liabilities | 1,370,105) | 1,590,867) | 1,347,696) | 971,225) | 796,808) | |
Working capital | 2,645,974) | 385,350) | 359,071) | 744,544) | 681,779) | |
Revenue | 4,641,264) | 4,089,986) | 3,561,718) | 2,988,244) | 2,682,891) | |
Short-term Activity Ratio | ||||||
Working capital turnover1 | 1.75 | 10.61 | 9.92 | 4.01 | 3.94 | |
Benchmarks | ||||||
Working Capital Turnover, Competitors2 | ||||||
Accenture PLC | 34.49 | 11.93 | 15.07 | 12.77 | 8.71 | |
Adobe Inc. | 30.25 | 6.85 | 20.28 | 9.09 | 4.89 | |
CrowdStrike Holdings Inc. | 1.48 | 1.46 | 1.25 | 0.61 | 0.71 | |
Fair Isaac Corp. | 7.24 | 8.02 | 8.99 | — | 10.83 | |
International Business Machines Corp. | 46.83 | — | — | — | — | |
Intuit Inc. | 7.45 | 8.13 | 8.98 | 3.85 | 1.73 | |
Microsoft Corp. | 7.12 | 2.65 | 2.66 | 1.76 | 1.30 | |
Oracle Corp. | — | — | 3.50 | 1.29 | 1.12 | |
Palantir Technologies Inc. | 0.58 | 0.66 | 0.78 | 0.70 | 0.66 | |
Palo Alto Networks Inc. | — | — | — | — | 1.40 | |
Salesforce Inc. | 14.27 | 62.21 | 24.95 | 5.11 | 15.29 | |
ServiceNow Inc. | 13.25 | 21.77 | 11.16 | 21.76 | 5.76 | |
Synopsys Inc. | 1.60 | 13.12 | 21.34 | 10.65 | 9.00 | |
Workday Inc. | 1.49 | 1.79 | 35.15 | 8.31 | 28.97 | |
Working Capital Turnover, Sector | ||||||
Software & Services | 10.32 | 5.14 | 4.74 | 2.76 | 2.19 | |
Working Capital Turnover, Industry | ||||||
Information Technology | 8.99 | 5.81 | 6.50 | 4.35 | 3.31 |
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
Working capital turnover = Revenue ÷ Working capital
= 4,641,264 ÷ 2,645,974 = 1.75
2 Click competitor name to see calculations.
- Working Capital
- The working capital demonstrates a fluctuating pattern over the years analyzed. It increased from 681,779 thousand USD in 2020 to 744,544 thousand USD in 2021, indicating a slight improvement in short-term financial health. However, there was a substantial decline in 2022, reducing to 359,071 thousand USD, followed by a moderate recovery to 385,350 thousand USD in 2023. Notably, in 2024, working capital surged sharply to 2,645,974 thousand USD, suggesting a significant enhancement in the company's liquidity position during that year.
- Revenue
- Revenue consistently grew each year, reflecting steady business expansion. The company’s revenue rose from 2,682,891 thousand USD in 2020 to 4,641,264 thousand USD in 2024, marking an overall increase of approximately 73%. This positive trend denotes successful sales performance and market growth over the period under review.
- Working Capital Turnover
- The working capital turnover ratio exhibited notable volatility. From 3.94 in 2020 and a slight increase to 4.01 in 2021, the ratio then sharply increased to 9.92 in 2022 and further to 10.61 in 2023, indicating an acceleration in revenue generation relative to working capital during these years. However, in 2024, the ratio dropped significantly to 1.75, likely reflecting the substantial increase in working capital which outpaced revenue growth. This decrease in turnover ratio may suggest a shift in the company's operational efficiency or changes in working capital management strategies during that year.
Average Inventory Processing Period
Cadence Design Systems Inc., average inventory processing period calculation, comparison to benchmarks
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Inventory turnover | 2.51 | 2.39 | 2.90 | 2.65 | 4.02 | |
Short-term Activity Ratio (no. days) | ||||||
Average inventory processing period1 | 145 | 152 | 126 | 138 | 91 | |
Benchmarks (no. days) | ||||||
Average Inventory Processing Period, Competitors2 | ||||||
International Business Machines Corp. | 17 | 15 | 20 | 23 | 18 | |
Microsoft Corp. | 6 | 14 | 22 | 18 | 15 | |
Oracle Corp. | 8 | 8 | 13 | 7 | 10 | |
Synopsys Inc. | 106 | 97 | 73 | 97 | 88 | |
Average Inventory Processing Period, Sector | ||||||
Software & Services | 7 | 9 | 14 | 13 | 11 | |
Average Inventory Processing Period, Industry | ||||||
Information Technology | 46 | 45 | 42 | 35 | 33 |
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
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 2.51 = 145
2 Click competitor name to see calculations.
- Inventory Turnover
- The inventory turnover ratio exhibited a decreasing trend over the five-year period, starting at 4.02 in 2020 and declining to 2.51 by 2024. This downward movement suggests that the company is turning over its inventory less frequently each year, indicating potentially slower sales or increased inventory levels relative to cost of goods sold.
- Average Inventory Processing Period
- The average inventory processing period increased from 91 days in 2020 to a peak of 152 days in 2023, before slightly declining to 145 days in 2024. This rise indicates that inventory remains on hand for longer durations, reflecting slower inventory movement and possibly lower demand or overstocking.
- Overall Trends and Insights
- The inverse relationship between inventory turnover and the average inventory processing period is evident throughout the period analyzed. As the turnover ratio decreased, the number of days inventory remains in stock increased correspondingly. This pattern points to a weakening efficiency in inventory management and potentially challenges in matching supply with demand. The slight improvement observed in 2024 in both metrics may indicate initial efforts to enhance inventory control or slight market recovery, though overall efficiency remains well below the 2020 benchmark.
Average Receivable Collection Period
Cadence Design Systems Inc., average receivable collection period calculation, comparison to benchmarks
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Receivables turnover | 6.82 | 8.36 | 7.32 | 8.85 | 7.93 | |
Short-term Activity Ratio (no. days) | ||||||
Average receivable collection period1 | 54 | 44 | 50 | 41 | 46 | |
Benchmarks (no. days) | ||||||
Average Receivable Collection Period, Competitors2 | ||||||
Accenture PLC | 67 | 61 | 62 | 64 | 59 | |
Adobe Inc. | 35 | 42 | 43 | 43 | 40 | |
CrowdStrike Holdings Inc. | 102 | 102 | 93 | 100 | 125 | |
Fair Isaac Corp. | 91 | 94 | 85 | 87 | 94 | |
International Business Machines Corp. | 40 | 43 | 39 | 43 | 35 | |
Intuit Inc. | 10 | 10 | 13 | 15 | 7 | |
Microsoft Corp. | 85 | 84 | 81 | 83 | 82 | |
Oracle Corp. | 54 | 51 | 51 | 49 | 52 | |
Palantir Technologies Inc. | 73 | 60 | 49 | 45 | 52 | |
Palo Alto Networks Inc. | 119 | 130 | 142 | 106 | 111 | |
Salesforce Inc. | 120 | 125 | 134 | 134 | 132 | |
ServiceNow Inc. | 74 | 83 | 87 | 86 | 82 | |
Synopsys Inc. | 56 | 59 | 57 | 49 | 77 | |
Workday Inc. | 82 | 92 | 88 | 87 | 88 | |
Average Receivable Collection Period, Sector | ||||||
Software & Services | 72 | 71 | 70 | 70 | 65 | |
Average Receivable Collection Period, Industry | ||||||
Information Technology | 52 | 49 | 49 | 49 | 46 |
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
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 6.82 = 54
2 Click competitor name to see calculations.
- Receivables Turnover
- The receivables turnover ratio experienced fluctuations over the five-year period. It increased from 7.93 in 2020 to a peak of 8.85 in 2021, indicating improved efficiency in collecting receivables during that year. However, the ratio then decreased to 7.32 in 2022, suggesting a slowdown in collections. It rebounded to 8.36 in 2023 but declined again to the lowest point of 6.82 in 2024, which may reflect a further relaxation in collection efficiency or changes in credit policies.
- Average Receivable Collection Period
- The average collection period displayed an inverse relationship with the receivables turnover ratio, as expected. It improved from 46 days in 2020 to 41 days in 2021, signifying quicker collection of outstanding receivables. In 2022, the period extended to 50 days, indicating slower collections. This was followed by a reduction to 44 days in 2023, reflecting improved turnover. However, in 2024 the collection period lengthened significantly to 54 days, the highest in the observed timeframe, suggesting a further deterioration in receivables management or customer payment behavior.
- Summary of Trends
- Overall, the company's receivables management has shown variability with periods of both improvement and decline. The peak efficiency was noted in 2021 with the highest turnover and shortest collection period, while 2024 reflected the greatest challenges in collecting receivables promptly. These fluctuations may warrant closer examination of credit policies, customer relationships, or external economic factors affecting payment patterns.
Operating Cycle
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Average inventory processing period | 145 | 152 | 126 | 138 | 91 | |
Average receivable collection period | 54 | 44 | 50 | 41 | 46 | |
Short-term Activity Ratio | ||||||
Operating cycle1 | 199 | 196 | 176 | 179 | 137 | |
Benchmarks | ||||||
Operating Cycle, Competitors2 | ||||||
International Business Machines Corp. | 57 | 58 | 59 | 66 | 53 | |
Microsoft Corp. | 91 | 98 | 103 | 101 | 97 | |
Oracle Corp. | 62 | 59 | 64 | 56 | 62 | |
Synopsys Inc. | 162 | 156 | 130 | 146 | 165 | |
Operating Cycle, Sector | ||||||
Software & Services | 79 | 80 | 84 | 83 | 76 | |
Operating Cycle, Industry | ||||||
Information Technology | 98 | 94 | 91 | 84 | 79 |
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
Operating cycle = Average inventory processing period + Average receivable collection period
= 145 + 54 = 199
2 Click competitor name to see calculations.
- Inventory Processing Period
- The average inventory processing period demonstrates variability over the years. Beginning at 91 days in 2020, it increased sharply to 138 days in 2021. Although a slight decrease to 126 days in 2022 was observed, the period rose again to 152 days in 2023 and slightly declined to 145 days in 2024. This suggests fluctuations in inventory turnover efficiency, with the general trend indicating longer inventory holding times compared to the initial year.
- Receivable Collection Period
- The average receivable collection period shows moderate fluctuations. Starting at 46 days in 2020, it improved to 41 days in 2021, indicating faster collections. However, it lengthened to 50 days in 2022, then decreased again to 44 days in 2023, before increasing to the highest point of 54 days in 2024. This pattern reflects some inconsistency in the company's ability to collect receivables promptly, with a concerning increase in collection days in the latest year.
- Operating Cycle
- The operating cycle, which combines inventory processing and receivable collection periods, reveals a steady upward trend. It increased from 137 days in 2020 to 179 days in 2021, then remained relatively stable at 176 days in 2022. A further rise was noted to 196 days in 2023, followed by a marginal increase to 199 days in 2024. The lengthening operating cycle indicates that the company is taking more time to convert its inventory and receivables into cash, potentially impacting liquidity and operational efficiency.
- Overall Analysis
- The data indicate a general trend toward extended durations in inventory holding, receivables collection, and the overall operating cycle over the five-year period. This could suggest growing challenges in inventory management and credit operations, potentially leading to increased capital tied up in working capital components. Close monitoring and possible strategic improvements in inventory turnover and receivables management would be advisable to enhance cash flow and operational performance.
Average Payables Payment Period
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Payables turnover | 116.56 | 4.77 | 7.89 | — | — | |
Short-term Activity Ratio (no. days) | ||||||
Average payables payment period1 | 3 | 77 | 46 | — | — | |
Benchmarks (no. days) | ||||||
Average Payables Payment Period, Competitors2 | ||||||
Accenture PLC | 23 | 21 | 22 | 24 | 16 | |
Adobe Inc. | 56 | 49 | 64 | 61 | 65 | |
CrowdStrike Holdings Inc. | 14 | 28 | 45 | 19 | 3 | |
Fair Isaac Corp. | 24 | 22 | 21 | 23 | 23 | |
International Business Machines Corp. | 54 | 55 | 53 | 56 | 47 | |
Intuit Inc. | 76 | 74 | 112 | 135 | 81 | |
Microsoft Corp. | 108 | 100 | 111 | 106 | 99 | |
Oracle Corp. | 57 | 32 | 54 | 35 | 29 | |
Palantir Technologies Inc. | 0 | 10 | 40 | 81 | 17 | |
Palo Alto Networks Inc. | 21 | 25 | 27 | 16 | 23 | |
Salesforce Inc. | — | — | — | — | — | |
ServiceNow Inc. | 11 | 24 | 64 | 24 | 13 | |
Synopsys Inc. | 61 | 47 | 13 | 12 | 14 | |
Workday Inc. | 16 | 33 | 14 | 23 | 20 | |
Average Payables Payment Period, Sector | ||||||
Software & Services | 65 | 58 | 65 | 63 | 55 | |
Average Payables Payment Period, Industry | ||||||
Information Technology | 86 | 76 | 86 | 79 | 74 |
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
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 116.56 = 3
2 Click competitor name to see calculations.
- Payables Turnover
- The payables turnover ratio exhibits a significant fluctuation over the observed periods. It stood at 7.89 in 2022, decreased to 4.77 by the end of 2023, indicating a slower turnover of payables or a longer payment cycle within that year. However, in 2024, there is an abrupt increase to 116.56, suggesting an extremely rapid settlement of payables during this period. This sharp rise is unusual and may indicate a change in payment policies, accounting adjustments, or exceptional transactions affecting payables.
- Average Payables Payment Period
- The average payment period displayed an inverse trend to that of payables turnover, as expected. In 2022, the average payment period was 46 days, which increased substantially to 77 days in 2023. This indicates the company took longer to pay its suppliers in 2023 compared to the previous year. Then in 2024, the average payment period dramatically declined to 3 days, reflecting a rapid acceleration in paying off payables. This sudden reduction aligns with the sharp rise in payables turnover, confirming a significant change in payment behavior during that year.
- Overall Observations
- The data suggests stability or missing data prior to 2022 for payables management metrics. From 2022 through 2023, the company extended its payment period, slowing payables turnover, which may have been a strategy to manage cash flow. The striking reversal in 2024, with payables being settled at an exceptionally rapid pace, implies a strategic shift towards quicker payment of liabilities or an extraordinary event impacting accounts payable. These dramatic changes in 2024 merit further investigation to understand underlying causes, such as changes in supplier contracts, liquidity position, or accounting practices.
Cash Conversion Cycle
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Average inventory processing period | 145 | 152 | 126 | 138 | 91 | |
Average receivable collection period | 54 | 44 | 50 | 41 | 46 | |
Average payables payment period | 3 | 77 | 46 | — | — | |
Short-term Activity Ratio | ||||||
Cash conversion cycle1 | 196 | 119 | 130 | — | — | |
Benchmarks | ||||||
Cash Conversion Cycle, Competitors2 | ||||||
International Business Machines Corp. | 3 | 3 | 6 | 10 | 6 | |
Microsoft Corp. | -17 | -2 | -8 | -5 | -2 | |
Oracle Corp. | 5 | 27 | 10 | 21 | 33 | |
Synopsys Inc. | 101 | 109 | 117 | 134 | 151 | |
Cash Conversion Cycle, Sector | ||||||
Software & Services | 14 | 22 | 19 | 20 | 21 | |
Cash Conversion Cycle, Industry | ||||||
Information Technology | 12 | 18 | 5 | 5 | 5 |
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
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 145 + 54 – 3 = 196
2 Click competitor name to see calculations.
- Average Inventory Processing Period
- The average inventory processing period showed fluctuations over the years. It increased significantly from 91 days in 2020 to 138 days in 2021, indicating slower inventory turnover. The period then decreased slightly to 126 days in 2022 before rising again to 152 days in 2023. In 2024, there was a marginal decline to 145 days. Overall, the trend suggests some volatility with a general increase compared to the starting point, potentially reflecting changes in inventory management or supply chain conditions.
- Average Receivable Collection Period
- This metric fluctuated moderately over the period. It declined from 46 days in 2020 to 41 days in 2021, suggesting improved efficiency in collecting receivables. However, it increased to 50 days in 2022, fell back to 44 days in 2023, and then rose again to 54 days in 2024. The variations indicate inconsistent collection performance, with the latest increase possibly signaling some easing in credit control or customer payment delays.
- Average Payables Payment Period
- Data for this metric starts from 2022 with a value of 46 days, implying payment terms or practices at that time. It then increased sharply to 77 days in 2023, which could indicate extended payment terms or delayed payments to suppliers. In 2024, the period drastically shortened to 3 days, reflecting a significant change in payment policy or supplier relationship management. The variability here is noteworthy, possibly impacting cash flow and supplier trust.
- Cash Conversion Cycle
- The cash conversion cycle (CCC) was recorded from 2022 onward. It reduced from 130 days in 2022 to 119 days in 2023, showing an improvement in the company's efficiency by speeding up the cash conversion process. However, in 2024, the CCC increased substantially to 196 days, suggesting a major slowdown in converting investments in inventory and other resources into cash flow. This deterioration in the CCC could be driven by longer receivable collection periods and changes in payment terms, highlighting potential liquidity challenges.