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)
Meta Platforms Inc., short-term (operating) activity ratios
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).
The financial data indicates several notable trends in turnover and payment periods over the five-year span.
- Receivables Turnover
- The receivables turnover ratio shows a general upward trend, increasing from 7.58 in 2020 to 9.68 in 2024. This suggests improved efficiency in collecting receivables over time, with a slight dip in 2023 before rising again in 2024.
- Payables Turnover
- The payables turnover ratio experienced a sharp decline from 12.54 in 2020 to 3.92 in 2024. The steepest drops occurred between 2020 and 2021, followed by smaller decreases and fluctuations in subsequent years. This indicates a lengthening in the time taken to pay suppliers.
- Working Capital Turnover
- Working capital turnover improved significantly from 1.42 in 2020 to a peak of 3.59 in 2022, before falling to around 2.48 by 2024. The initial rise suggests enhanced efficiency in utilizing working capital, but the subsequent decline may point to some easing in operational efficiency or changes in asset management.
- Average Receivable Collection Period
- Consistent with the receivables turnover trend, the average days to collect receivables decreased from 48 days in 2020 to 38 days in 2024. This decline demonstrates faster collection cycles and potentially better credit management practices.
- Average Payables Payment Period
- The average payables payment period expanded notably from 29 days in 2020 to 93 days in 2024, reflecting the reduced payables turnover ratio. This implies the company is taking longer to pay its creditors, which could be a strategic move to optimize cash flow or indicate stretched supplier terms.
In summary, the data reveals improved efficiency in receivables management and collection speed, contrasted by increasingly extended payment terms to suppliers. Working capital utilization showed a period of strong improvement followed by some moderation. The company's financial operations reflect a focus on accelerating cash inflows while stretching cash outflows over a longer period.
Turnover Ratios
Average No. Days
Receivables Turnover
Meta Platforms Inc., receivables turnover calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenue | ||||||
| Accounts receivable, net | ||||||
| Short-term Activity Ratio | ||||||
| Receivables turnover1 | ||||||
| Benchmarks | ||||||
| Receivables Turnover, Competitors2 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Netflix Inc. | ||||||
| Take-Two Interactive Software Inc. | ||||||
| Walt Disney Co. | ||||||
| Receivables Turnover, Sector | ||||||
| Media & Entertainment | ||||||
| Receivables Turnover, Industry | ||||||
| Communication Services | ||||||
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 ÷ Accounts receivable, net
= ÷ =
2 Click competitor name to see calculations.
The annual financial data reveals several notable trends regarding revenue, accounts receivable, and receivables turnover over the five-year period.
- Revenue
- Revenue demonstrated a generally upward trajectory from 2020 to 2024. Starting at $85.965 billion in 2020, it increased significantly to $117.929 billion in 2021, marking an impressive growth. However, in 2022, revenue slightly declined to $116.609 billion, indicating a minor setback or plateau. Subsequently, revenue rebounded strongly in 2023 and 2024, reaching $134.902 billion and $164.501 billion, respectively. The overall pattern suggests robust revenue growth with a brief dip in 2022 before recovering and accelerating in the following years.
- Accounts Receivable, Net
- The net accounts receivable balance increased steadily across the entire period. Starting at $11.335 billion in 2020, it rose to $14.039 billion in 2021. There was a slight decrease in 2022 to $13.466 billion, followed by notable growth to $16.169 billion in 2023 and further to $16.994 billion in 2024. This upward trend implies increasing credit sales or longer collection periods overall, with a minor dip suggesting some improvement in collections or write-offs in 2022.
- Receivables Turnover Ratio
- The receivables turnover ratio, indicative of how efficiently the company collects its receivables, showed some fluctuations. It improved from 7.58 in 2020 to 8.40 in 2021, and further to 8.66 in 2022, reflecting enhanced collection efficiency during these years. However, in 2023, the ratio declined to 8.34, suggesting a slight slowdown in collection velocity. By 2024, the ratio increased considerably to 9.68, indicating a strong improvement in receivables management and faster collection of outstanding amounts.
In summary, the company exhibited strong revenue growth over the five-year period, with a brief stagnation in 2022. Accounts receivable followed a general upward trend, aligned with growing revenue but tempered by fluctuations possibly related to collection effectiveness. The receivables turnover ratio demonstrated overall improvement with some volatility, culminating in notable enhancement by 2024, which may reflect better credit controls or collection processes implemented in the latter period.
Payables Turnover
Meta Platforms Inc., payables turnover calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cost of revenue | ||||||
| Accounts payable | ||||||
| Short-term Activity Ratio | ||||||
| Payables turnover1 | ||||||
| Benchmarks | ||||||
| Payables Turnover, Competitors2 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Netflix Inc. | ||||||
| Take-Two Interactive Software Inc. | ||||||
| Walt Disney Co. | ||||||
| Payables Turnover, Sector | ||||||
| Media & Entertainment | ||||||
| Payables Turnover, Industry | ||||||
| Communication Services | ||||||
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 ÷ Accounts payable
= ÷ =
2 Click competitor name to see calculations.
- Cost of Revenue
- The cost of revenue exhibited a continuous upward trend over the analyzed periods. Starting at 16,692 million US dollars in 2020, it increased significantly to 22,649 million in 2021, then to 25,249 million in 2022. The upward trend continued albeit at a slower pace in 2023 with a value of 25,959 million, followed by a notable increase to 30,161 million in 2024. This indicates rising expenses associated with generating revenue over the years.
- Accounts Payable
- Accounts payable showed considerable growth during the timeframe. Beginning at 1,331 million US dollars in 2020, the amount tripled in 2021 to 4,083 million. It further climbed to 4,990 million in 2022, slightly decreased to 4,849 million in 2023, and then rose sharply to 7,687 million in 2024. This pattern suggests an increasing reliance on supplier credit or delayed payments to vendors.
- Payables Turnover Ratio
- The payables turnover ratio declined significantly from 12.54 in 2020 to 5.55 in 2021, reflecting slower payment cycles or extended credit terms. This decreasing trend continued with minor fluctuations, registering values of 5.06 in 2022, a slight increase to 5.35 in 2023, and then dropping further to 3.92 in 2024. The overall decline signals that the company is taking longer to pay its suppliers over time, which may impact supplier relationships or reflect strategic cash flow management.
Working Capital Turnover
Meta Platforms Inc., working capital turnover calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current assets | ||||||
| Less: Current liabilities | ||||||
| Working capital | ||||||
| Revenue | ||||||
| Short-term Activity Ratio | ||||||
| Working capital turnover1 | ||||||
| Benchmarks | ||||||
| Working Capital Turnover, Competitors2 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Netflix Inc. | ||||||
| Take-Two Interactive Software Inc. | ||||||
| Walt Disney Co. | ||||||
| Working Capital Turnover, Sector | ||||||
| Media & Entertainment | ||||||
| Working Capital Turnover, Industry | ||||||
| Communication Services | ||||||
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
= ÷ =
2 Click competitor name to see calculations.
- Working Capital
- The working capital demonstrated a fluctuating trend over the five-year period. It started at 60,689 million USD in 2020, then declined significantly to 45,531 million USD in 2021 and further to 32,523 million USD in 2022. However, working capital rebounded in 2023 to 53,405 million USD and continued to increase, reaching 66,449 million USD by 2024.
- Revenue
- Revenue showed a generally upward trajectory, beginning at 85,965 million USD in 2020 and rising sharply to 117,929 million USD in 2021. It dipped slightly to 116,609 million USD in 2022 but then increased substantially in subsequent years, reaching 134,902 million USD in 2023 and 164,501 million USD in 2024.
- Working Capital Turnover
- The working capital turnover ratio, calculated as revenue divided by working capital, increased significantly from 1.42 in 2020 to 3.59 in 2022. This upward trend indicates an improvement in the utilization efficiency of working capital during this period. Following 2022, the ratio decreased moderately to 2.53 in 2023 and remained fairly stable at 2.48 in 2024.
- Overall Analysis
- The data reflects a period of initial contraction in working capital coupled with strong revenue growth, leading to improved working capital turnover through 2022. The subsequent recovery in working capital in 2023 and 2024, alongside continuing revenue growth, resulted in a decrease in turnover ratio to a more moderate but steady level. This suggests a strategic balance being achieved between maintaining ample working capital and supporting substantial revenue expansion.
Average Receivable Collection Period
Meta Platforms 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 | ||||||
| Short-term Activity Ratio (no. days) | ||||||
| Average receivable collection period1 | ||||||
| Benchmarks (no. days) | ||||||
| Average Receivable Collection Period, Competitors2 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Netflix Inc. | ||||||
| Take-Two Interactive Software Inc. | ||||||
| Walt Disney Co. | ||||||
| Average Receivable Collection Period, Sector | ||||||
| Media & Entertainment | ||||||
| Average Receivable Collection Period, Industry | ||||||
| Communication Services | ||||||
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 ÷ =
2 Click competitor name to see calculations.
- Receivables Turnover
- The receivables turnover ratio displays an overall increasing trend from 7.58 in 2020 to 9.68 in 2024, indicating an improvement in the efficiency of collecting receivables over the analyzed period. Notably, the ratio peaked in 2022 at 8.66 before experiencing a slight dip to 8.34 in 2023, followed by a significant increase in 2024. This pattern suggests generally enhanced collection practices, with a brief period of lower efficiency in 2023 that was subsequently corrected.
- Average Receivable Collection Period
- The average collection period, expressed in days, has decreased consistently from 48 days in 2020 to 38 days in 2024. This trend mirrors the improvement indicated by the receivables turnover ratio and implies that receivables are being collected more quickly as time progresses. A minor increase is observed in 2023 (44 days), likely corresponding to the slight decline in turnover ratio in the same year, but the subsequent decrease to 38 days in 2024 confirms strong recovery and enhanced collection efficiency.
- Summary of Receivables Management Trends
- Analysis of both metrics indicates a positive overall trend toward more efficient management of receivables. The company has demonstrated a capacity to reduce the time customers take to pay, which is beneficial for cash flow management. The short-term anomaly observed in 2023 is minimal and promptly corrected by 2024. This performance suggests effective credit and collection policies during the period under review.
Average Payables Payment Period
Meta Platforms Inc., average payables payment period calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Payables turnover | ||||||
| Short-term Activity Ratio (no. days) | ||||||
| Average payables payment period1 | ||||||
| Benchmarks (no. days) | ||||||
| Average Payables Payment Period, Competitors2 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Netflix Inc. | ||||||
| Take-Two Interactive Software Inc. | ||||||
| Walt Disney Co. | ||||||
| Average Payables Payment Period, Sector | ||||||
| Media & Entertainment | ||||||
| Average Payables Payment Period, Industry | ||||||
| Communication Services | ||||||
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 ÷ =
2 Click competitor name to see calculations.
- Payables Turnover
- The payables turnover ratio exhibits a declining trend over the five-year period. Starting at a relatively high level of 12.54 in 2020, the ratio sharply decreased to 5.55 in 2021 and further declined to 3.92 by 2024. This decline suggests that the company is taking progressively longer to pay off its suppliers or creditors, as a lower turnover ratio indicates slower payment cycles.
- Average Payables Payment Period
- Corresponding to the decrease in the payables turnover ratio, the average payables payment period shows an increasing trend. Beginning with 29 days in 2020, the payment period lengthened significantly to 66 days by 2021 and continued to increase moderately, reaching 93 days in 2024. This trend implies that the company has been extending its payment terms or taking longer to settle payables, which may impact supplier relationships or cash flow management.
- Overall Analysis
- The inverse relationship between payables turnover and the payment period is consistent and pronounced across the five years. The company appears to be strategically or operationally managing its payables with longer payment durations. While this could improve immediate liquidity by retaining cash longer, it may also raise concerns regarding supplier credit terms and the company's payment discipline. Monitoring these metrics in conjunction with other liquidity and operational indicators would be advisable to fully understand the implications on financial health and supplier dynamics.