Paramount Global (NASDAQ:PARA)

The analysis of the financial ratios over the five-year period reflects notable trends in the operational efficiency and working capital management.

Receivables Turnover

The receivables turnover ratio exhibited moderate fluctuations, beginning at 3.59 in 2018, increasing slightly to 3.86 in 2019, and then dipping to 3.6 in 2020. It subsequently rose to a peak of 4.09 in 2021, before marginally declining to 4.07 in 2022. This overall pattern suggests a relatively stable ability to collect receivables, with a general improvement in efficiency by 2021.

Payables Turnover

A pronounced downward trend is observed in payables turnover, which decreased significantly from an exceptionally high 45.33 in 2018 to 14.14 by 2022. This sharp decline indicates a lengthening of the payment cycle, implying the company took increasingly longer to pay its suppliers over time.

Working Capital Turnover

The working capital turnover ratio displays volatility. It peaked at 9.74 in 2019, declined sharply to 4.61 in 2020, further dropped to 3.97 in 2021, and then surged to a high value of 11.86 in 2022. The substantial increase in 2022 signifies improved turnover of working capital relative to sales, possibly due to better asset utilization or changes in current liabilities.

Average Receivable Collection Period

The average receivable collection period generally trended downwards, starting from 102 days in 2018 and declining to 90 days in 2022, with a small increase in 2020. This trend correlates with the relatively stable receivables turnover and suggests enhanced efficiency in collecting receivables over the period.

Average Payables Payment Period

The payable payment period increased consistently from 8 days in 2018 to 26 days in 2022. This elongation is consistent with the decreasing payables turnover ratio and implies that the company extended its payment terms, possibly as a measure to conserve cash or optimize working capital.

In summary, the data indicates that while receivables management improved moderately, the company increasingly delayed payment to suppliers, as reflected by the longer payable periods and reduced payables turnover. Working capital turnover showed instability but improved markedly in the final year, which may result from strategic adjustments in operational efficiency or working capital policies.

Revenues

Revenues displayed a significant increase from 2018 to 2019, nearly doubling from approximately 14.5 billion USD to 27.8 billion USD. Following this sharp rise, revenues slightly decreased in 2020 to around 25.3 billion USD. Subsequently, a recovery trend is observed with revenues increasing to about 28.6 billion USD in 2021 and continuing to grow modestly to roughly 30.2 billion USD in 2022. Overall, the revenue trend indicates fluctuating but generally upward movement over the five-year period.

Receivables, net

Net receivables increased significantly from 4.0 billion USD in 2018 to 7.2 billion USD in 2019. From 2019 onwards, receivables stabilized somewhat, slightly decreasing to approximately 7.0 billion USD in 2020 and remaining nearly flat at 7.0 billion in 2021. A minor increase occurred in 2022, reaching about 7.4 billion USD. This suggests that the company maintained a relatively consistent level of outstanding receivables after the initial jump in 2019.

Receivables turnover ratio

The receivables turnover ratio improved from 3.59 in 2018 to 3.86 in 2019, indicating enhanced efficiency in collecting receivables despite the increased receivable amounts. The ratio then declined slightly to 3.6 in 2020, suggesting a minor weakening in collection efficiency during that year. The ratio rebounded strongly in 2021 to 4.09 and remained relatively stable at 4.07 in 2022, indicating improved and sustained efficiency in the management of receivables in the more recent periods.

Summary

The overall financial data reveals a dynamic revenue pattern with a significant jump in 2019, followed by a slight dip and subsequent gradual recovery. Net receivables increased sharply in 2019 but have since stabilized at a high level. The receivables turnover ratio demonstrates enhanced collection efficiency in general, improving notably after 2020 and remaining steady. The trends suggest robust operational scale expansion around 2019 with effective receivables management maintaining liquidity and cash flow efficiency in subsequent years.

Operating costs and expenses

The operating costs and expenses exhibited a significant increase over the analyzed period. Beginning at 9,111 million US dollars in 2018, the amount nearly doubled by 2019 to 17,223 million US dollars. After a slight reduction in 2020 to 14,992 million US dollars, costs rose again sharply to 17,744 million US dollars in 2021, subsequently increasing further to 19,845 million US dollars by the end of 2022. This overall upward trend suggests escalating operational expenditures, which may indicate expansion, inflationary pressures, or increased cost of goods and services over these years.

Accounts payable

There is a clear upward trajectory in accounts payable from 2018 through 2022. Starting at 201 million US dollars in 2018, accounts payable more than tripled to 667 million US dollars in 2019. A slight decline occurred in 2020 to 571 million US dollars, but this was followed by consistent growth to 800 million US dollars in 2021 and then a substantial increase to 1,403 million US dollars in 2022. This pattern demonstrates an increasing reliance on credit from suppliers or a lengthening of payment terms.

Payables turnover ratio

The payables turnover ratio consistently declined throughout the period examined. From a high of 45.33 in 2018, the ratio dropped sharply to 25.82 in 2019 and remained relatively stable around 26.26 in 2020. It further decreased to 22.18 in 2021 and then dropped significantly to 14.14 in 2022. This downward trend indicates a slower rate of payment to suppliers, implying either extended payment terms or delays in settling payables compared to the earlier years.

Overall insights

The combination of rising operating costs and expenses with an increasing accounts payable balance, alongside a declining payables turnover ratio, suggests that the company may be experiencing higher operational expenditures and is taking longer to pay its suppliers. This could reflect efforts to manage cash flow in response to cost pressures or market conditions. The declining payables turnover ratio warrants further investigation to understand supplier relationships and potential impacts on credit terms or supplier negotiations.

Working Capital

The working capital shows a general upward trend from 2018 to 2021, increasing from 2,179 million US dollars to 7,197 million US dollars. However, in 2022, there is a significant decline to 2,543 million US dollars, which represents a sharp reduction compared to the previous year.

Revenues

Revenues have exhibited overall growth over the period. Starting at 14,514 million US dollars in 2018, there is a substantial increase to 27,812 million US dollars in 2019. This is followed by a slight decline in 2020 to 25,285 million US dollars. Revenues then recover and rise steadily through 2021 and 2022, reaching 30,154 million US dollars in the latest period.

Working Capital Turnover Ratio

The working capital turnover ratio fluctuates considerably. It rises from 6.66 in 2018 to 9.74 in 2019, indicating more efficient use of working capital relative to revenue. In 2020 and 2021, the ratio decreases to 4.61 and 3.97 respectively, reflecting less efficiency or higher working capital relative to revenues. In 2022, the ratio spikes to 11.86, which is the highest observed value, suggesting an improved efficiency or a reduction in working capital contrasting with the increase in revenues.

Overall Insights

Over the examined period, the company demonstrates a capacity for revenue growth despite certain volatility, particularly a dip in 2020. Working capital generally increased until 2021 but dropped significantly in 2022. The working capital turnover ratio mirrors these trends, with efficiency peaking in 2019, declining in the subsequent two years, and then rising sharply in 2022. The pronounced drop in working capital in 2022 alongside the highest turnover ratio suggests changes in asset management or liquidity strategy, potentially aimed at optimizing capital usage amid growing revenues.

Receivables Turnover

The receivables turnover ratio demonstrates a general upward trend from 2018 to 2022, increasing from 3.59 in 2018 to 4.07 in 2022. There is some fluctuation within this period, with a slight dip in 2020 to 3.6 after rising to 3.86 in 2019, followed by a more significant increase to 4.09 in 2021 before a minor decrease in 2022. Overall, the ratio's growth suggests improved efficiency in collecting receivables over the years, indicating that the company was able to convert its receivables into cash more times annually as time progressed.

Average Receivable Collection Period

The average collection period shows a declining trend from 2018 through 2021, moving from 102 days in 2018 down to 89 days in 2021, indicating faster collection of receivables. This trend goes hand in hand with the increasing receivables turnover ratio. In 2022, there is a slight increase in the collection period to 90 days, which is marginal but denotes a small slowdown in receivable collections compared to 2021. However, the 2022 figure still represents an improvement over the earlier years of 2018 and 2020, where collection periods exceeded 100 days.

Overall Insights

The data reveals that from 2018 to 2022, the company generally improved its receivables management efficiency. The increase in receivables turnover ratio coupled with the decrease in the average collection period suggests quicker cash conversion cycles, which can positively impact liquidity and working capital management. The small reversal in 2022's collection days paired with the slight decrease in turnover ratio may warrant monitoring to ensure that receivables collection does not deteriorate in future periods.

The financial data reveal significant trends regarding the payables management over the five-year period ending December 31, 2022.

Payables Turnover

The payables turnover ratio experienced a sharp decline from 45.33 in 2018 to 14.14 in 2022. This represents a considerable reduction in the frequency with which payables are paid during the year, indicating that the company is taking longer to settle its payables or that purchases on credit have increased relative to payables payments.

Average Payables Payment Period

The average payables payment period correspondingly increased from 8 days in 2018 to 26 days in 2022. This elongation in the payment period aligns with the decline in payables turnover, confirming that the company extends the time it takes to pay its suppliers over time.

Overall, the data suggests a clear trend toward slower payables settlement. The extended payment period may be part of a strategic approach to manage cash flows more efficiently, but it could also affect supplier relationships. The changes are gradual but consistent, with the payment period more than tripling and the payables turnover declining by approximately two-thirds over the observed timeframe.