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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- Income Statement
- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Enterprise Value to EBITDA (EV/EBITDA)
- Price to FCFE (P/FCFE)
- Net Profit Margin since 2005
- Return on Assets (ROA) since 2005
- Price to Operating Profit (P/OP) since 2005
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Long-term Activity Ratios (Summary)
CoStar Group Inc., long-term (investment) activity ratios
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| 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: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The analysis of the financial ratios over the five-year period reveals notable trends in asset utilization efficiency and turnover metrics.
- Net Fixed Asset Turnover
- This ratio demonstrates a declining trend from 14.31 in 2018 to 6.79 in 2022. The most significant drop occurred between 2020 and 2021, where the ratio fell sharply from 13.13 to 7.16, indicating a reduced efficiency in generating revenue from net fixed assets over time.
- Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)
- When considering operating leases and right-of-use assets, the turnover ratio begins at the same value as the standard net fixed asset turnover in 2018 (14.31), but then declines more steeply to 5.43 by 2022. This suggests that including leased assets presents an even lower efficiency in asset utilization, particularly between 2018 and 2019, where the ratio halved from 14.31 to 6.29.
- Total Asset Turnover
- The total asset turnover ratio remains relatively stable but low, ranging from 0.36 in 2018 and 2019 to a slight decrease in 2020 at 0.24, followed by minor recoveries to 0.27 in 2021 and 0.26 in 2022. This pattern indicates consistent, yet modest, efficiency in utilizing total assets to generate sales, with a noticeable dip in 2020.
- Equity Turnover
- Equity turnover follows a similar trend to total asset turnover, starting at 0.39 in 2018, increasing slightly to 0.41 in 2019, then declining to 0.31 in 2020. Subsequent years show a mild improvement to 0.34 in 2021 and a slight decline to 0.32 in 2022. This indicates fluctuating but generally subdued efficiency in generating revenue from shareholders' equity.
Overall, the data reflects a general decline in fixed asset turnover ratios, suggesting decreased efficiency in the use of fixed assets and leased assets to generate sales over time. Total asset and equity turnover ratios show relatively stable but low levels of turnover, with some fluctuations aligned with the mid-period downturn, possibly indicating broader operational challenges affecting asset utilization across the observed periods.
Net Fixed Asset Turnover
CoStar Group Inc., net fixed asset turnover calculation, comparison to benchmarks
Based on: 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), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Net fixed asset turnover = Revenues ÷ Property and equipment, net
= ÷ =
- Revenues
- The revenues have shown a consistent upward trend over the five-year period. Starting from approximately 1.19 billion USD in 2018, revenues increased each year, reaching about 2.18 billion USD in 2022. This represents an overall growth of roughly 83% from 2018 to 2022, indicating strong and sustained business expansion.
- Property and equipment, net
- The net value of property and equipment expanded steadily from 83.3 million USD in 2018 to 321.3 million USD in 2022. Notably, the increase accelerated significantly after 2020, nearly doubling from 126.3 million USD in 2020 to 271.4 million USD in 2021, and continuing to grow into 2022. This suggests substantial capital investments or acquisitions related to fixed assets in the latter part of the period under review.
- Net fixed asset turnover
- The net fixed asset turnover ratio, measuring revenue generated per dollar of net fixed assets, declined consistently over the period. It decreased from 14.31 in 2018 to 6.79 in 2022. This trend implies that while revenues increased, the growth in net fixed assets outpaced revenue growth, resulting in lower efficiency in asset utilization over time. The sharp drop after 2020 aligns with the marked increase in property and equipment, highlighting that asset expansion may have outstripped immediate revenue gains.
Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
CoStar Group Inc., net fixed asset turnover (including operating lease, right-of-use asset) calculation, comparison to benchmarks
Based on: 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), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Net fixed asset turnover (including operating lease, right-of-use asset) = Revenues ÷ Property and equipment, net (including operating lease, right-of-use asset)
= ÷ =
Over the examined period from 2018 to 2022, the revenue figures demonstrate a consistent upward trajectory, indicating strong growth. Revenues increased from approximately 1.19 billion US dollars in 2018 to over 2.18 billion US dollars in 2022, reflecting a more than 80% growth in five years. This steady increase highlights effective expansion and potentially growing market demand or improved sales performance.
Regarding property and equipment (including operating lease, right-of-use assets), there is a pronounced increase in the asset base. Starting from 83.3 million US dollars in 2018, these assets nearly quintupled to just over 401.6 million US dollars by 2022. Such growth suggests significant capital investments or acquisitions in fixed assets, which may support operational scaling or modernization efforts.
Despite the robust increase in property and equipment, the net fixed asset turnover ratio has experienced a declining trend over the same period. The ratio decreased from 14.31 in 2018 to a low point of 5.22 in 2021 before showing a slight improvement to 5.43 in 2022. This decline indicates that revenues are growing at a slower pace compared to the increase in net fixed assets, suggesting reduced efficiency in asset utilization. The modest rebound in 2022 might hint at an initial effort to improve this efficiency, though the ratio remains substantially below the 2018 level.
- Revenue Trend
- Consistent annual growth with a cumulative increase of over 80% over five years, indicating strong business expansion.
- Property and Equipment Investment
- Marked increase in asset base, implying significant capital expenditures to support growth or operational enhancements.
- Net Fixed Asset Turnover
- Declined sharply from 2018 to 2021, signaling decreasing asset efficiency, with a slight improvement in 2022 but still below earlier levels.
Total Asset Turnover
CoStar Group Inc., total asset turnover calculation, comparison to benchmarks
Based on: 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), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Total asset turnover = Revenues ÷ Total assets
= ÷ =
- Revenues
- Revenues demonstrate a consistent upward trend across the five-year period. Starting at approximately $1.19 billion in 2018, revenues increased annually, reaching about $2.18 billion in 2022. This indicates sustained growth in the company's sales or service income, with a compound growth pattern that suggests a robust expansion trajectory.
- Total Assets
- Total assets show a significant increase over the period, more than doubling from roughly $3.31 billion in 2018 to approximately $8.40 billion in 2022. The rise includes a notable acceleration between 2019 and 2020, where assets jumped from $3.85 billion to about $6.92 billion. This suggests substantial investment or acquisition activity, as well as possible capital inflows or asset revaluation.
- Total Asset Turnover
- The total asset turnover ratio, which measures how effectively assets generate revenue, declined from 0.36 in 2018 and 2019 to a lower range between 0.24 and 0.27 during 2020 to 2022. This decrease indicates that although both revenues and assets increased, asset growth outpaced revenue growth, resulting in less efficient use of assets in terms of revenue production. The ratio’s reduction suggests the company is either investing in long-term assets that have not yet fully contributed to revenue generation, or that there are operational inefficiencies in utilizing its asset base.
- Overall Observations
- The company shows strong revenue growth accompanied by aggressive asset accumulation. However, the declining asset turnover ratio points to a potential challenge in maintaining asset efficiency. The diverging trends between asset growth and revenue growth warrant further investigation into asset deployment and return on investment strategies to ensure that asset expansion translates into proportional revenue gains over time.
Equity Turnover
CoStar Group Inc., equity turnover calculation, comparison to benchmarks
Based on: 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), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Equity turnover = Revenues ÷ Stockholders’ equity
= ÷ =
- Revenues
- Revenues exhibit a consistent upward trend from 2018 to 2022. Starting at approximately 1.19 billion US dollars in 2018, revenues increased steadily each year, reaching about 2.18 billion US dollars in 2022. This represents a growth of approximately 83% over the five-year period, indicating robust sales expansion.
- Stockholders’ Equity
- Stockholders’ equity shows significant growth throughout the same period. Beginning at roughly 3.02 billion US dollars in 2018, it rose steadily to approximately 6.87 billion US dollars by the end of 2022. The increase between 2019 and 2020 is particularly notable, with over 50% growth from approximately 3.41 billion to 5.38 billion US dollars. This trend suggests strengthened ownership value and accumulated retained earnings or additional equity injections.
- Equity Turnover Ratio
- The equity turnover ratio, which measures how efficiently a company generates revenues from its equity, presents a fluctuating but generally declining pattern. It started at 0.39 in 2018, rising slightly to 0.41 in 2019, then declining to 0.31 in 2020. It marginally increased to 0.34 in 2021, before decreasing again to 0.32 in 2022. This downward trend post-2019 indicates that revenue growth has not kept pace proportionally with the growth in stockholders’ equity, suggesting reduced operational efficiency in utilizing equity for generating revenues over the period examined.