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.
Long-term Activity Ratios (Summary)
Etsy Inc., long-term (investment) activity ratios
Based on: 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), 10-K (reporting date: 2017-12-31).
The analysis of investment activity ratios indicates a period of significant fluctuation in asset utilization, characterized by a dramatic surge in efficiency during 2020 followed by a partial normalization. While fixed asset efficiency experienced extreme volatility, there was a consistent and sustained increase in the ability to generate revenue from shareholder equity.
- Net Fixed Asset Turnover
- A steady upward trend is observed from 2017 to 2019, with the ratio increasing from 3.75 to 5.65. An exceptional peak occurred in 2020, where the ratio reached 15.34, suggesting a period of disproportionately high revenue growth relative to fixed asset investment. This figure moderated to 8.47 in 2021, although it remained well above pre-2020 levels. When accounting for operating lease right-of-use assets, a similar pattern emerges, though the ratios are consistently lower from 2019 onward, reflecting the impact of lease obligations on the total asset base.
- Total Asset Turnover
- Total asset utilization exhibited a more volatile and less linear progression. The ratio declined from 0.73 in 2017 to a low of 0.53 in 2019. A sharp recovery was noted in 2020, returning to 0.72, before retreating to 0.61 in 2021. The divergence between the high fixed asset turnover and the lower total asset turnover suggests that non-fixed assets comprise a significant portion of the balance sheet and are utilized less aggressively.
- Equity Turnover
- A continuous and strong growth trajectory is evident in equity turnover, which rose from 1.11 in 2017 to 3.71 in 2021. This uninterrupted increase indicates a significant improvement in the efficiency of capital utilization, as the company successfully generated substantially more revenue per unit of equity over the observed five-year period.
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Net Fixed Asset Turnover
Etsy Inc., net fixed asset turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Revenue | 2,329,114) | 1,725,625) | 818,379) | 603,693) | 441,231) | |
| Property and equipment, net | 275,062) | 112,495) | 144,864) | 120,179) | 117,617) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | 8.47 | 15.34 | 5.65 | 5.02 | 3.75 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover, Competitors2 | ||||||
| Amazon.com Inc. | 2.93 | — | — | — | — | |
| Home Depot Inc. | 5.35 | — | — | — | — | |
| Lowe’s Cos. Inc. | 4.68 | — | — | — | — | |
| TJX Cos. Inc. | 6.38 | — | — | — | — | |
| Net Fixed Asset Turnover, Sector | ||||||
| Consumer Discretionary Distribution & Retail | 3.46 | — | — | — | — | |
| Net Fixed Asset Turnover, Industry | ||||||
| Consumer Discretionary | 3.32 | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Net fixed asset turnover = Revenue ÷ Property and equipment, net
= 2,329,114 ÷ 275,062 = 8.47
2 Click competitor name to see calculations.
The financial data reveals a period of substantial revenue expansion and significant volatility in asset utilization efficiency between 2017 and 2021. While revenue grew consistently throughout the period, the net fixed asset turnover ratio exhibited a non-linear trajectory, peaking sharply in 2020 before moderating in 2021.
- Revenue Growth Trajectory
- A consistent upward trend in revenue is observed, increasing from 441,231 thousand US dollars in 2017 to 2,329,114 thousand US dollars by 2021. The most pronounced acceleration occurred between 2019 and 2020, where revenue more than doubled, indicating a period of rapid scaling.
- Net Fixed Asset Turnover Analysis
- The net fixed asset turnover ratio improved steadily from 3.75 in 2017 to 5.65 in 2019, reflecting increased efficiency in generating sales per unit of net fixed assets. A significant spike to 15.34 occurred in 2020, driven by the combination of surging revenues and a simultaneous reduction in net property and equipment. By 2021, the ratio declined to 8.47, suggesting a normalization of asset efficiency following a period of aggressive capital expenditure.
- Fixed Asset Investment Patterns
- Net property and equipment remained relatively stable between 2017 and 2019, followed by a contraction to 112,495 thousand US dollars in 2020. However, a substantial investment phase is evident in 2021, with net property and equipment increasing to 275,062 thousand US dollars. This sharp increase in the asset base explains the reduction in the turnover ratio for the final year, as the company expanded its long-term infrastructure to support its grew revenue base.
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Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
Etsy Inc., net fixed asset turnover (including operating lease, right-of-use asset) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Revenue | 2,329,114) | 1,725,625) | 818,379) | 603,693) | 441,231) | |
| Property and equipment, net | 275,062) | 112,495) | 144,864) | 120,179) | 117,617) | |
| Operating lease right-of-use (ROU) assets (included in Other assets) | 45,951) | 19,563) | 24,362) | —) | —) | |
| Property and equipment, net (including operating lease, right-of-use asset) | 321,013) | 132,058) | 169,226) | 120,179) | 117,617) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset)1 | 7.26 | 13.07 | 4.84 | 5.02 | 3.75 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Competitors2 | ||||||
| Amazon.com Inc. | 2.17 | — | — | — | — | |
| Home Depot Inc. | 4.31 | — | — | — | — | |
| Lowe’s Cos. Inc. | 3.90 | — | — | — | — | |
| TJX Cos. Inc. | 2.29 | — | — | — | — | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Sector | ||||||
| Consumer Discretionary Distribution & Retail | 2.55 | — | — | — | — | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Industry | ||||||
| Consumer Discretionary | 2.52 | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Net fixed asset turnover (including operating lease, right-of-use asset) = Revenue ÷ Property and equipment, net (including operating lease, right-of-use asset)
= 2,329,114 ÷ 321,013 = 7.26
2 Click competitor name to see calculations.
Between 2017 and 2021, a significant upward trajectory in revenue was accompanied by a volatile trend in net fixed asset turnover. The company demonstrated an ability to scale its top-line growth substantially while maintaining a lean asset base for several years, followed by a period of significant capital investment.
- Revenue Trajectory
- Revenue exhibited continuous and accelerating growth over the five-year period. Starting at US$ 441.2 million in 2017, revenue increased to US$ 2.33 billion by 2021. The most pronounced growth occurred between 2019 and 2020, where revenue more than doubled from US$ 818.4 million to US$ 1.73 billion.
- Fixed Asset Utilization and Investment
- Net property and equipment, including right-of-use assets, remained relatively stable between 2017 and 2020, fluctuating between US$ 117.6 million and US$ 169.2 million. However, a substantial investment phase is evident in 2021, with net fixed assets increasing to US$ 321.0 million, representing a 143% increase over the prior year.
- Net Fixed Asset Turnover Analysis
- The net fixed asset turnover ratio experienced a dramatic peak in 2020, reaching 13.07. This spike indicates a period of extreme efficiency where revenue growth far outpaced asset accumulation, likely reflecting the scalability of the digital business model during a period of surge demand. In 2021, the ratio declined to 7.26. This reduction is attributable to the significant increase in the fixed asset base, which offset the continued growth in revenue.
- Overall Efficiency Trend
- Despite the decline from the 2020 peak, the turnover ratio in 2021 remained significantly higher than the 2017-2019 average (which ranged from 3.75 to 5.02). This suggests that the company has achieved a higher baseline of asset productivity compared to its pre-2020 operational state, even after accounting for the recent expansion of its asset base.
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Total Asset Turnover
Etsy Inc., total asset turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Revenue | 2,329,114) | 1,725,625) | 818,379) | 603,693) | 441,231) | |
| Total assets | 3,831,809) | 2,404,489) | 1,542,352) | 901,851) | 605,583) | |
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | 0.61 | 0.72 | 0.53 | 0.67 | 0.73 | |
| Benchmarks | ||||||
| Total Asset Turnover, Competitors2 | ||||||
| Amazon.com Inc. | 1.12 | — | — | — | — | |
| Home Depot Inc. | 1.87 | — | — | — | — | |
| Lowe’s Cos. Inc. | 1.92 | — | — | — | — | |
| TJX Cos. Inc. | 1.04 | — | — | — | — | |
| Total Asset Turnover, Sector | ||||||
| Consumer Discretionary Distribution & Retail | 1.27 | — | — | — | — | |
| Total Asset Turnover, Industry | ||||||
| Consumer Discretionary | 0.88 | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Total asset turnover = Revenue ÷ Total assets
= 2,329,114 ÷ 3,831,809 = 0.61
2 Click competitor name to see calculations.
An analysis of the financial period between 2017 and 2021 reveals a phase of aggressive scaling characterized by substantial growth in both revenue and the asset base, accompanied by fluctuating efficiency in asset utilization.
- Revenue Growth Trends
- A consistent and rapid upward trajectory in revenue is observed, increasing from 441,231 thousand US$ in 2017 to 2,329,114 thousand US$ by 2021. The most significant acceleration occurred between 2019 and 2020, where revenue more than doubled, indicating a period of intense commercial expansion.
- Asset Base Expansion
- Total assets grew steadily from 605,583 thousand US$ in 2017 to 3,831,809 thousand US$ in 2021. This expansion reflects a significant investment in the company's resource base, with total assets increasing more than sixfold over the five-year period.
- Total Asset Turnover Analysis
- The total asset turnover ratio exhibited volatility, failing to maintain a linear progression despite the growth in revenue. The ratio declined from 0.73 in 2017 to a low of 0.53 in 2019, suggesting that asset accumulation initially outpaced revenue generation. A sharp recovery to 0.72 occurred in 2020, coinciding with the peak revenue surge. However, by 2021, the ratio declined again to 0.61, as the growth in total assets (approximately 59% year-over-year) significantly exceeded the growth in revenue (approximately 34% year-over-year).
- Investment Efficiency Insights
- The lack of a stable or increasing asset turnover ratio indicates that the company's ability to generate sales from its investments has been inconsistent. While the 2020 spike demonstrated a high capacity for short-term revenue mobilization, the subsequent dip in 2021 suggests a lag between the deployment of new assets and the realization of corresponding revenue streams.
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Equity Turnover
Etsy Inc., equity turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Revenue | 2,329,114) | 1,725,625) | 818,379) | 603,693) | 441,231) | |
| Stockholders’ equity | 628,619) | 742,424) | 406,634) | 400,898) | 396,894) | |
| Long-term Activity Ratio | ||||||
| Equity turnover1 | 3.71 | 2.32 | 2.01 | 1.51 | 1.11 | |
| Benchmarks | ||||||
| Equity Turnover, Competitors2 | ||||||
| Amazon.com Inc. | 3.40 | — | — | — | — | |
| Home Depot Inc. | 40.05 | — | — | — | — | |
| Lowe’s Cos. Inc. | 62.35 | — | — | — | — | |
| TJX Cos. Inc. | 5.51 | — | — | — | — | |
| Equity Turnover, Sector | ||||||
| Consumer Discretionary Distribution & Retail | 4.86 | — | — | — | — | |
| Equity Turnover, Industry | ||||||
| Consumer Discretionary | 3.70 | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Equity turnover = Revenue ÷ Stockholders’ equity
= 2,329,114 ÷ 628,619 = 3.71
2 Click competitor name to see calculations.
Between 2017 and 2021, there is a consistent and accelerating increase in equity turnover, indicating a significant improvement in the capacity to generate revenue from the shareholders' investment.
- Revenue Growth Trends
- Revenue experienced sustained and accelerating growth over the five-year period, rising from 441,231 thousand US$ in 2017 to 2,329,114 thousand US$ in 2021. A notable surge occurred between 2019 and 2020, where revenue more than doubled, maintaining a strong upward trajectory through the end of the period.
- Stockholders' Equity Dynamics
- Stockholders' equity remained relatively stagnant from 2017 through 2019, staying within a narrow range around 400,000 thousand US$. A substantial increase was recorded in 2020, with equity peaking at 742,424 thousand US$, before decreasing to 628,619 thousand US$ in 2021.
- Equity Turnover Performance
- The equity turnover ratio demonstrates a continuous upward trend, increasing from 1.11 in 2017 to 3.71 in 2021. While the ratio grew steadily in the early years, the most aggressive expansion occurred between 2020 and 2021. This sharp increase is the result of continued revenue growth coupled with a reduction in the total equity base, signifying a heightened efficiency in utilizing equity to drive top-line performance.
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