Analysis of Short-term (Operating) 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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Short-term Activity Ratios (Summary)
Fortinet Inc., short-term (operating) activity ratios
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).
- Inventory Turnover
- The inventory turnover ratio shows a declining trend from 5 in 2018 to 4.1 in 2022, with a slight increase in 2021 to 4.45. This indicates a gradual reduction in the efficiency of inventory management, as the company is turning over its inventory less frequently over time.
- Receivables Turnover
- The receivables turnover ratio decreased overall from 4.05 in 2018 to 3.5 in 2022, reaching its lowest point in 2022 after a peak at 4.14 in 2021. This suggests slower collection of receivables, implying a lengthening in the time customers take to pay their dues.
- Payables Turnover
- The payables turnover ratio exhibits fluctuations, starting at 5.21 in 2018, decreasing to a low of 4.03 in 2020, increasing again to 5.28 in 2021, and then declining to 4.46 in 2022. This variation indicates inconsistency in the company's payment pace to suppliers.
- Working Capital Turnover
- The working capital turnover ratio shows significant variation, dropping from 1.87 in 2018 to 1.66 in 2019, then rising sharply to 2.85 in 2020, slightly decreasing to 2.61 in 2021, and then dramatically increasing to 6.03 in 2022. The steep rise in 2022 may indicate improved efficiency in using working capital to generate revenue, or a reduction in working capital levels.
- Average Inventory Processing Period
- The average inventory processing period increased from 73 days in 2018 to a peak of 90 days in 2020, followed by a decrease to 82 days in 2021, and then rose again to 89 days in 2022. This pattern implies a general elongation of the time inventory is held before sale, with some fluctuations.
- Average Receivable Collection Period
- The average receivable collection period lengthened from 90 days in 2018 to 104 days in 2022, albeit with a dip to 88 days in 2021. The overall increase signals slower cash inflows from customers, which could affect liquidity.
- Operating Cycle
- The operating cycle, representing the total number of days from inventory acquisition to cash collection, shows an upward trend from 163 days in 2018 to 193 days in 2022, with a slight decline in 2021. This increase points to a longer duration between the expenditure on inventory and receipt of cash from sales.
- Average Payables Payment Period
- The average payables payment period is mostly stable around 69-70 days from 2018 to 2021 but rises to 82 days in 2022, indicating the company took longer to pay its suppliers in the most recent year, which may reflect liquidity management strategies or payment delays.
- Cash Conversion Cycle
- The cash conversion cycle increased from 93 days in 2018 to 111 days in 2022, with a peak of 107 days in 2019 and relative stability around 100-101 days in 2020 and 2021. This overall rising trend suggests that the company requires more time to convert its investments in inventory and receivables into cash.
Turnover Ratios
Average No. Days
Inventory Turnover
Fortinet Inc., inventory turnover calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cost of revenue | ||||||
| Inventory | ||||||
| Short-term Activity Ratio | ||||||
| Inventory turnover1 | ||||||
| Benchmarks | ||||||
| Inventory Turnover, Competitors2 | ||||||
| Cadence Design Systems Inc. | ||||||
| International Business Machines Corp. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Synopsys Inc. | ||||||
| Inventory Turnover, Sector | ||||||
| Software & Services | ||||||
| Inventory Turnover, Industry | ||||||
| Information Technology | ||||||
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
Inventory turnover = Cost of revenue ÷ Inventory
= ÷ =
2 Click competitor name to see calculations.
- Cost of Revenue
- The cost of revenue exhibited a continuous upward trend throughout the period. Starting at 450,400 thousand USD in 2018, it increased consistently each year, reaching 1,084,900 thousand USD by the end of 2022. This represents a significant rise, more than doubling the initial amount over five years, indicating increased expenses related to producing or acquiring goods sold.
- Inventory
- Inventory levels also showed a steady increase over the years. Beginning at 90,000 thousand USD in 2018, inventory expanded each year, culminating at 264,600 thousand USD by the end of 2022. This nearly threefold growth suggests greater stock accumulation, which may reflect expanding operations or changes in supply chain strategies.
- Inventory Turnover Ratio
- The inventory turnover ratio displayed some variability but generally remained around a similar range. It started at 5.0 in 2018, declined to a low of 4.08 in 2020, slightly recovered to 4.45 in 2021, and settled at 4.1 in 2022. This ratio indicates the frequency at which inventory is sold and replaced; the decrease suggests a slower inventory movement over time despite the increased inventory levels.
Receivables Turnover
Fortinet Inc., receivables turnover calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Revenue | ||||||
| Accounts receivable, net of allowance for credit losses | ||||||
| Short-term Activity Ratio | ||||||
| Receivables turnover1 | ||||||
| Benchmarks | ||||||
| Receivables Turnover, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Datadog Inc. | ||||||
| Fair Isaac Corp. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| ServiceNow Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
| Receivables Turnover, Sector | ||||||
| Software & Services | ||||||
| Receivables Turnover, Industry | ||||||
| Information Technology | ||||||
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
Receivables turnover = Revenue ÷ Accounts receivable, net of allowance for credit losses
= ÷ =
2 Click competitor name to see calculations.
- Revenue Trend
- Revenue demonstrated a consistent upward trajectory over the five-year period. Beginning at approximately 1.8 billion US dollars in 2018, it increased steadily each year, reaching about 4.4 billion US dollars by the end of 2022. This represents a more than doubling of revenue, indicating robust growth and expanding business operations.
- Accounts Receivable Trend
- The net accounts receivable figures also showed a marked increase, rising from around 444.5 million US dollars in 2018 to approximately 1.26 billion US dollars by 2022. The growth in accounts receivable outpaced revenue growth, increasing nearly threefold over the period. This sharp rise signals an expansion in credit extended to customers or possible lengthening of collection periods.
- Receivables Turnover Ratio
- The receivables turnover ratio experienced fluctuations across the years, starting at 4.05 in 2018 and ending at a lower 3.5 in 2022. The ratio decreased from 2018 through 2020, hitting a low of 3.6, recovered somewhat in 2021 to 4.14, before declining again in 2022. A decreasing receivables turnover ratio indicates a slower collection cycle, implying that the company is taking longer to collect on its outstanding receivables, which may have implications for cash flow management.
- Overall Analysis
- The overall pattern suggests strong revenue growth accompanied by a disproportionately higher increase in accounts receivable. Coupled with the decline in receivables turnover ratio, this trend may warrant closer attention to credit policies and collection efficiency. While revenue expansion is positive, the slower turnover of receivables could impact liquidity and working capital management if not addressed.
Payables Turnover
Fortinet Inc., payables turnover calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cost of revenue | ||||||
| Accounts payable | ||||||
| Short-term Activity Ratio | ||||||
| Payables turnover1 | ||||||
| Benchmarks | ||||||
| Payables Turnover, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Datadog Inc. | ||||||
| Fair Isaac Corp. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| ServiceNow Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
| Payables Turnover, Sector | ||||||
| Software & Services | ||||||
| Payables Turnover, Industry | ||||||
| Information Technology | ||||||
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
Payables turnover = Cost of revenue ÷ Accounts payable
= ÷ =
2 Click competitor name to see calculations.
- Cost of revenue
- The cost of revenue has demonstrated a consistent upward trend over the five-year period. Starting at 450,400 thousand US dollars in 2018, it rose steadily each year to reach 1,084,900 thousand US dollars by the end of 2022. The most notable increase occurred between 2021 and 2022, indicating a significant rise in costs associated with the company’s revenue generation.
- Accounts payable
- Accounts payable also showed an increasing trend, growing from 86,400 thousand US dollars in 2018 to 243,400 thousand US dollars in 2022. The growth, however, was not uniform across all years; a substantial jump occurred between 2021 and 2022. This rise suggests an increasing level of short-term obligations to suppliers or creditors over time.
- Payables turnover
- The payables turnover ratio fluctuated during the period, starting at 5.21 in 2018 and ending at 4.46 in 2022. It declined notably in 2020 to 4.03, then recovered somewhat in 2021 to 5.28 before decreasing again in 2022. These variations suggest changes in the efficiency of the company in managing its payments to creditors, with a general indication of slightly slower payment cycles toward the end of the period relative to the beginning.
Working Capital Turnover
Fortinet Inc., working capital turnover calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current assets | ||||||
| Less: Current liabilities | ||||||
| Working capital | ||||||
| Revenue | ||||||
| Short-term Activity Ratio | ||||||
| Working capital turnover1 | ||||||
| Benchmarks | ||||||
| Working Capital Turnover, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Datadog Inc. | ||||||
| Fair Isaac Corp. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| ServiceNow Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
| Working Capital Turnover, Sector | ||||||
| Software & Services | ||||||
| Working Capital Turnover, Industry | ||||||
| Information Technology | ||||||
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
Working capital turnover = Revenue ÷ Working capital
= ÷ =
2 Click competitor name to see calculations.
- Working Capital
- The working capital exhibited fluctuations over the examined periods. It increased from 964,500 thousand USD in 2018 to 1,295,400 thousand USD in 2019, indicating an improvement in short-term financial health. However, it declined sharply to 910,900 thousand USD in 2020, before rebounding to 1,282,500 thousand USD in 2021. In 2022, the working capital decreased significantly to 732,000 thousand USD, representing the lowest level in the period, which may suggest changes in liquidity management or operational demands.
- Revenue
- The revenue demonstrated consistent and substantial growth throughout the entire period. Starting at 1,801,200 thousand USD in 2018, it increased steadily each year, reaching 2,156,200 thousand USD in 2019 and 2,594,400 thousand USD in 2020. The upward trend continued with 3,342,200 thousand USD reported in 2021 and further growth to 4,417,400 thousand USD in 2022. This pattern indicates strong sales expansion and positive market acceptance.
- Working Capital Turnover Ratio
- The working capital turnover ratio, which measures how efficiently working capital is used to generate sales, revealed varying trends. It decreased from 1.87 in 2018 to 1.66 in 2019, suggesting less efficiency despite higher working capital. In 2020, the ratio rose sharply to 2.85, indicating improved utilization of working capital amid lower working capital levels. It slightly dipped to 2.61 in 2021, still reflecting efficient capital use compared to initial years. The most notable change occurred in 2022 with an increase to 6.03, a substantial rise indicating highly efficient use of working capital to generate revenue despite the reduced working capital balance.
Average Inventory Processing Period
Fortinet Inc., average inventory processing period calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Inventory turnover | ||||||
| Short-term Activity Ratio (no. days) | ||||||
| Average inventory processing period1 | ||||||
| Benchmarks (no. days) | ||||||
| Average Inventory Processing Period, Competitors2 | ||||||
| Cadence Design Systems Inc. | ||||||
| International Business Machines Corp. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Synopsys Inc. | ||||||
| Average Inventory Processing Period, Sector | ||||||
| Software & Services | ||||||
| Average Inventory Processing Period, Industry | ||||||
| Information Technology | ||||||
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
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ =
2 Click competitor name to see calculations.
- Inventory Turnover
- The inventory turnover ratio declined from 5 in 2018 to 4.29 in 2019, followed by a continued decrease to 4.08 in 2020. There was a slight improvement to 4.45 in 2021; however, the ratio dropped again to 4.1 in 2022. Overall, this indicates a trend of decreasing efficiency in inventory management, with a minor temporary recovery in 2021.
- Average Inventory Processing Period
- The average inventory processing period increased from 73 days in 2018 to 85 days in 2019, continuing to lengthen to 90 days in 2020. There was a reduction to 82 days in 2021, followed by another increase to 89 days in 2022. This trend reflects the inverse pattern to inventory turnover, suggesting that products are staying longer in inventory, with occasional slight improvements.
Average Receivable Collection Period
Fortinet Inc., average receivable collection period calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Receivables turnover | ||||||
| Short-term Activity Ratio (no. days) | ||||||
| Average receivable collection period1 | ||||||
| Benchmarks (no. days) | ||||||
| Average Receivable Collection Period, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Datadog Inc. | ||||||
| Fair Isaac Corp. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| ServiceNow Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
| Average Receivable Collection Period, Sector | ||||||
| Software & Services | ||||||
| Average Receivable Collection Period, Industry | ||||||
| Information Technology | ||||||
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
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
- Receivables Turnover
- The receivables turnover ratio exhibited some fluctuation over the analyzed period. It started at 4.05 in 2018 and declined to 3.96 in 2019. This downward trend continued in 2020, reaching 3.6. However, in 2021, the ratio improved to 4.14, before dropping again to 3.5 in 2022. Overall, the ratio reflects variability in the company's effectiveness in collecting receivables, with the highest efficiency observed in 2021 and the lowest in 2022.
- Average Receivable Collection Period
- The average receivable collection period, which represents the average number of days to collect receivables, generally trended upward, indicating a lengthening collection cycle. It increased from 90 days in 2018 to 92 days in 2019, then rose more sharply to 101 days in 2020. A temporary improvement occurred in 2021 with a reduction to 88 days, but the period extended again in 2022 to 104 days, the highest level in the period. This suggests a recent deterioration in collection efficiency.
- Summary
- Analysis of the receivables turnover and average collection period reveals inverse movements consistent with their mathematical relationship. The fluctuation in turnover and the general increase in collection period imply challenges in maintaining consistent receivables management. The improvement observed in 2021 indicates a temporary enhancement in operational efficiency related to collections, whereas the data for 2022 suggests a reversal, pointing to potential issues in receivables management or customer payment behavior toward the end of the period.
Operating Cycle
Fortinet Inc., operating cycle calculation, comparison to benchmarks
No. days
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Average inventory processing period | ||||||
| Average receivable collection period | ||||||
| Short-term Activity Ratio | ||||||
| Operating cycle1 | ||||||
| Benchmarks | ||||||
| Operating Cycle, Competitors2 | ||||||
| Cadence Design Systems Inc. | ||||||
| International Business Machines Corp. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Synopsys Inc. | ||||||
| Operating Cycle, Sector | ||||||
| Software & Services | ||||||
| Operating Cycle, Industry | ||||||
| Information Technology | ||||||
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
Operating cycle = Average inventory processing period + Average receivable collection period
= + =
2 Click competitor name to see calculations.
- Inventory Processing Period
- The average inventory processing period showed an overall increasing trend from 73 days in 2018 to 89 days in 2022. Despite a slight decrease in 2021 to 82 days, the period generally lengthened, indicating that the company took more time to turn its inventory over the years.
- Receivable Collection Period
- The average receivable collection period fluctuated but demonstrated an overall upward trend. It increased from 90 days in 2018 to a peak of 104 days in 2022, with a temporary decline in 2021 to 88 days. This suggests that the company faced increasing delays in collecting payments from customers towards the end of the observed period.
- Operating Cycle
- The operating cycle, defined as the sum of the inventory processing and receivable collection periods, increased from 163 days in 2018 to 193 days in 2022. There was a notable dip in 2021 to 170 days, but the upward trend resumed in 2022. This indicates a lengthening overall time to convert inventory and receivables into cash, potentially affecting working capital management.
Average Payables Payment Period
Fortinet Inc., average payables payment period calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Payables turnover | ||||||
| Short-term Activity Ratio (no. days) | ||||||
| Average payables payment period1 | ||||||
| Benchmarks (no. days) | ||||||
| Average Payables Payment Period, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Datadog Inc. | ||||||
| Fair Isaac Corp. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| ServiceNow Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
| Average Payables Payment Period, Sector | ||||||
| Software & Services | ||||||
| Average Payables Payment Period, Industry | ||||||
| Information Technology | ||||||
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
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
- Payables Turnover
- The payables turnover ratio exhibited some fluctuations over the five-year period. It started at 5.21 in 2018, increased slightly to 5.25 in 2019, then dropped significantly to 4.03 in 2020. Following that decline, it rebounded to 5.28 in 2021 before decreasing again to 4.46 in 2022. This indicates variability in how quickly the company settled its payables, with notable decreases in turnover in 2020 and 2022 suggesting longer payment durations relative to purchases during those years.
- Average Payables Payment Period
- The average payables payment period mirrored the inverse pattern of the payables turnover ratio. It remained stable at 70 days in both 2018 and 2019, then increased sharply to 91 days in 2020, indicating that the company took longer to pay its suppliers that year. In 2021, the period decreased to 69 days, showing a quicker payment process, but it lengthened again to 82 days in 2022. These variations point to fluctuating cash management and credit terms with suppliers over the period analyzed.
Cash Conversion Cycle
Fortinet Inc., cash conversion cycle calculation, comparison to benchmarks
No. days
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Average inventory processing period | ||||||
| Average receivable collection period | ||||||
| Average payables payment period | ||||||
| Short-term Activity Ratio | ||||||
| Cash conversion cycle1 | ||||||
| Benchmarks | ||||||
| Cash Conversion Cycle, Competitors2 | ||||||
| Cadence Design Systems Inc. | ||||||
| International Business Machines Corp. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Synopsys Inc. | ||||||
| Cash Conversion Cycle, Sector | ||||||
| Software & Services | ||||||
| Cash Conversion Cycle, Industry | ||||||
| Information Technology | ||||||
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
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= + – =
2 Click competitor name to see calculations.
- Average inventory processing period
- The average inventory processing period shows some fluctuations over the analyzed timeframe. It increased from 73 days in 2018 to a peak of 90 days in 2020, indicating slower inventory turnover during that period. Afterwards, it improved slightly to 82 days in 2021, before rising again to 89 days in 2022. Overall, this suggests some instability in inventory management efficiency.
- Average receivable collection period
- The average receivable collection period generally exhibited an upward trend, increasing from 90 days in 2018 to 104 days in 2022. After rising steadily to 101 days in 2020, it temporarily declined to 88 days in 2021 but then increased again the following year. This pattern indicates some challenges in collecting receivables promptly, potentially impacting liquidity.
- Average payables payment period
- The average payables payment period was relatively stable at 70 days in 2018 and 2019 but spiked to 91 days in 2020. It then decreased to 69 days in 2021 before increasing once more to 82 days in 2022. This suggests variability in the timing of payments to suppliers, possibly reflecting changes in cash management strategies or supplier negotiations.
- Cash conversion cycle
- The cash conversion cycle exhibited fluctuations within a moderate range, beginning at 93 days in 2018 and increasing to 107 days in 2019. It then declined to 100 days in 2020, remained relatively stable at 101 days in 2021, and rose again to 111 days in 2022. These variations imply changes in overall operational efficiency and cash flow management, with the latest figure indicating a longer duration to convert investments in working capital back into cash.