Fiserv Inc. (NASDAQ:FISV)

The analysis of the financial ratios over the reported periods reveals several noteworthy trends and fluctuations in the company's operational efficiency metrics.

Receivables Turnover Ratio

The receivables turnover ratio demonstrates a general pattern of stability with some fluctuations. Beginning from a reported value of 5.71 in March 2017, it increased and peaked at 6.54 by June 2017, followed by a moderate decline and slight variations around a range of approximately 5.5 to 6.5 through to March 2022. Notably, there was a significant drop to 2.9 in December 2019, which quickly corrected in the following quarters. This indicates a temporary decrease in the efficiency of collecting receivables during that period, with a return to prior levels thereafter.

Working Capital Turnover Ratio

The working capital turnover ratio exhibits pronounced volatility and irregularity over the timeline. This ratio starts at a notably high value of 153.95 in March 2017, sharply declines over subsequent quarters to as low as 0.73 in September 2019, and then fluctuates with significant increases and decreases throughout 2020 and 2021. Peaks such as 321.56 in December 2017 and 32.4 in September 2021 suggest periods of very high efficiency in utilizing working capital to generate sales or revenue. However, the extreme variability points to inconsistent working capital management or possibly external factors impacting capital usage during these quarters.

Average Receivable Collection Period

This metric inversely correlates with the receivables turnover ratio and shows moderate fluctuations in the number of days required to collect receivables. Starting around 64 days in March 2017, the collection period decreased to as low as 56 days mid-2017, indicating improved collection efficiency. However, it increased to a peak of 126 days in December 2019, consistent with the drop in receivables turnover in the same quarter, reflecting a challenging period for receivables collection. Subsequently, the collection period improves again and stabilizes between 60 to 65 days up to March 2022, suggesting a return to typical collection performance levels.

In summary, while the receivables turnover and average collection period show relatively stable trends aside from a significant disruption around late 2019, the working capital turnover ratio reflects substantial volatility throughout the periods. This inconsistency may warrant investigation into working capital management practices or the influence of market conditions during those years. Overall, the data suggest the company experienced episodic challenges in maintaining steady operational efficiency but managed to restore normalcy in receivables management by early 2020 onwards.

The data reveals several notable trends in the financial performance and operational efficiency over the observed quarters.

Revenue

The revenue exhibited moderate fluctuations from 2017 through early 2019, generally ranging between 1,386 million and 1,551 million US dollars. A significant increase occurred in the quarter ending September 30, 2019, where revenue more than doubled compared to previous quarters, reaching 3,128 million US dollars, followed by another substantial rise to 4,045 million US dollars in December 2019. After this peak, a decline ensued through 2020, hitting a low of 3,465 million in September 2020. However, revenue partially recovered in subsequent quarters, stabilizing around 4,000 million US dollars through 2021. By March 2022, revenue slightly decreased to approximately 4,138 million US dollars, still remaining close to the elevated levels achieved since late 2019.

Trade Accounts Receivable, net of allowance for doubtful accounts

The trade accounts receivable followed a generally upward trajectory across the dataset. Starting at 861 million US dollars in March 2017, there was a gradual increase through 2018, with a marked jump in September 2019 to 2,653 million US dollars, consistent with the spike in revenue observed. This elevated level of receivables was maintained with some fluctuations, reaching a peak of 2,911 million US dollars by March 2022. This suggests growing sales on credit, in line with revenue growth, but also indicates the need for effective credit management to ensure collections remain timely.

Receivables Turnover Ratio

The receivables turnover ratio, which measures the efficiency of collecting outstanding receivables, was only available from the quarter ended March 31, 2018. Initially, the turnover ratio displayed moderate variation, reaching a low point of 2.9 in September 2019, coinciding with the surge in both revenue and receivables. This suggests slower collections relative to sales during that period. Subsequently, the turnover improved steadily, reaching around 6.49 in June 2020. Thereafter, the ratio stabilized between approximately 5.6 and 5.8, indicating relatively consistent and efficient collection practices over the later periods.

In summary, the substantial increase in revenue beginning in late 2019 was accompanied by a corresponding rise in accounts receivable, which temporarily affected collection efficiency as indicated by a lower turnover ratio. The company subsequently improved collection rates, returning turnover to historical levels despite the ongoing elevated receivable balances. This pattern reflects adaptive credit and collections management in response to changing business volumes and economic conditions.

The financial data reveals notable fluctuations and trends in working capital, revenue, and working capital turnover over the examined periods.

Working Capital

Working capital exhibits significant volatility throughout the periods. Initially, it moves from a negative position in early 2017 (-175 million USD) to positive territory by late 2017 (37 million USD), indicating an improvement in short-term liquidity. This positive trend continues with intermittent fluctuations, peaking substantially at 8155 million USD in June 2019, an exceptional value relative to other periods. After this peak, working capital fluctuates but maintains positive values, ranging generally between the mid-hundreds to low thousands in million USD. Toward early 2022, working capital settles around 713 million USD, suggesting a stabilization after the extreme spike in mid-2019.

Revenue

Revenue maintains a relatively stable upward trajectory from 2017 through early 2022 with some variability. It starts at approximately 1,394 million USD in March 2017, gradually increasing to a peak of 4,257 million USD by March 2022. Noteworthy is the substantial jump in reported revenue from June 2019 onward, which likely reflects either a change in accounting periods or reporting format, as values more than double compared to previous quarters. Despite some fluctuations within this higher range, the overall trend remains positive, indicating growing top-line performance over the timeframe.

Working Capital Turnover

Working capital turnover ratios exhibit high variability and occasional extreme values, complicating straightforward interpretation. The earliest data available show very high turnover ratios, such as 153.95 in March 2018 and 321.56 in December 2018, which suggest either very efficient use of working capital or possible distortions due to minimal working capital bases in those periods. Subsequently, turnover ratios stabilize at more moderate levels ranging generally between 5.78 and 32.4, with a gradual upward trend since 2020. This pattern indicates an improving ability to generate revenue from working capital, although the large early spikes merit cautious consideration.

Overall, the data imply enhanced operational efficiency and revenue growth over the timeline, despite fluctuations in working capital levels. The unusually large working capital figure in mid-2019 and subsequent quarters may warrant further investigation to clarify its nature and impact. The evolution of working capital turnover demonstrates improving capital management effectiveness in recent years.

Receivables Turnover Ratio

The receivables turnover ratio begins data reporting from March 31, 2017, showing a value of 5.71 which increases to a peak of 6.54 by June 30, 2017. Thereafter, the ratio experiences modest fluctuations, generally ranging between approximately 5.55 and 6.2 through December 31, 2018. In the subsequent year, a noticeable decline occurs by December 31, 2019, where the ratio drops sharply to 2.9, indicating a significant slowdown in receivables turnover. However, the ratio recovers progressively throughout 2020, reaching 6.49 by June 30, 2020, and stabilizes around 5.6 to 5.8 for the periods from March 31, 2021, through March 31, 2022. This pattern suggests periods of volatility with an overall tendency to maintain turnover levels near the mid-5s after a brief decline.

Average Receivable Collection Period (in days)

Corresponding to the turnover ratio, the average receivable collection period shows an inverse trend, with initial values around 64 days at March 31, 2017. The collection period decreases to 56 days by June 30, 2017, before fluctuating between 59 and 66 days up to December 31, 2018. A pronounced increase occurs by December 31, 2019, with the collection period reaching 126 days, signifying delayed collections and slower cash conversion. This elevated period then declines steadily from 2020 onwards, dropping to 56 days by June 30, 2020, and stabilizing near the mid-60 day range through March 31, 2022. The observed fluctuations align inversely with receivables turnover, reflecting shifts in the efficiency of the company’s collection processes over time.

Overall Insights

The data exhibits a cyclical pattern in receivables management efficiency, with some periods of operational strain evident, particularly around the end of 2019 where both a significant receivables turnover decrease and a collection period increase suggest liquidity and credit collection challenges. Recovery during 2020 indicates improved management or external conditions, bringing key ratios back to prior stable ranges. The consistency of these financial indicators in the most recent quarters implies a return to steady receivables performance, important for cash flow stability and working capital management.