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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- Income Statement
- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- Common-Size Income Statement
- Analysis of Profitability Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Selected Financial Data since 2015
- Total Asset Turnover since 2015
- Price to Book Value (P/BV) since 2015
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Short-term Activity Ratios (Summary)
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).
The financial ratios indicate notable trends in the company's operational efficiency and management of receivables, payables, and working capital over the five-year period.
- Receivables Turnover
- The receivables turnover ratio shows a continuous decline from 49.36 in 2018 to 28.58 in 2022. This descending trend suggests that the company is collecting its receivables more slowly each year. The average receivable collection period corroborates this observation, increasing steadily from 7 days in 2018 to 13 days in 2022. This indicates a lengthening of the time it takes for the company to convert its receivables into cash.
- Payables Turnover
- The payables turnover ratio exhibits a marked increase from 54.99 in 2018 to a significantly higher 218.4 in 2022. This increasing turnover indicates that the company is paying its suppliers more rapidly over time. This trend is also reflected in the average payables payment period, which has shortened substantially from 7 days in 2018 to just 2 days in 2022, implying an acceleration in payment cycles to vendors.
- Working Capital Turnover
- The working capital turnover ratio demonstrates variability but an overall upward movement, starting at 2.19 in 2018, dipping to 1.54 in 2019, then climbing to 2.66 in 2021, and settling at 2.22 in 2022. This suggests fluctuations in how efficiently the company is using its working capital to generate sales, with an improvement noted in the most recent years compared to the low point in 2019.
In summary, the data reflects a deceleration in receivables collection efficiency, paired with an acceleration in payables payment speed. While the management of working capital shows some inconsistency, there is a general improvement after an initial decline. These trends may reflect strategic decisions related to cash flow management, possibly aimed at optimizing supplier relationships while accepting longer customer payment terms.
Turnover Ratios
Average No. Days
Receivables Turnover
Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Net revenues | ||||||
Accounts receivable, net | ||||||
Short-term Activity Ratio | ||||||
Receivables turnover1 | ||||||
Benchmarks | ||||||
Receivables Turnover, Competitors2 | ||||||
Accenture PLC | ||||||
Adobe Inc. | ||||||
Cadence Design Systems Inc. | ||||||
CrowdStrike Holdings 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 = Net revenues ÷ Accounts receivable, net
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals notable trends over the five-year period ending in 2022. Net revenues demonstrate a consistent upward trajectory, increasing from $15,451 million in 2018 to $27,518 million in 2022. This reflects substantial growth, with an acceleration particularly evident between 2019 and 2021, indicating expanding business operations or market demand.
Accounts receivable, net, similarly exhibit a steady increase, growing from $313 million to $963 million over the same timeframe. The rising accounts receivable implies higher sales made on credit or extended payment terms, which could be associated with overall revenue growth. Nonetheless, this growth requires monitoring to ensure effective collections.
The receivables turnover ratio displays a clear declining trend, decreasing from 49.36 in 2018 to 28.58 in 2022. This ratio measures how many times, on average, the receivables are collected during the period. A downward trend suggests a slower collection process, indicating that accounts receivable are turning over less frequently. This may point to extended credit terms, slower customer payments, or potential collection inefficiencies.
In summary, while revenue and receivables values have exhibited healthy growth, the declining receivables turnover ratio warrants attention. The company may need to assess its credit policies and collection procedures to ensure that increasing receivables do not negatively impact liquidity or cash flow management.
Payables Turnover
Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Net revenues | ||||||
Accounts payable | ||||||
Short-term Activity Ratio | ||||||
Payables turnover1 | ||||||
Benchmarks | ||||||
Payables Turnover, Competitors2 | ||||||
Accenture PLC | ||||||
Adobe Inc. | ||||||
Cadence Design Systems Inc. | ||||||
CrowdStrike Holdings 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 = Net revenues ÷ Accounts payable
= ÷ =
2 Click competitor name to see calculations.
The annual financial data reveals several key trends concerning revenue, accounts payable, and payables turnover over the five-year period from 2018 to 2022.
- Net Revenues
- The net revenues exhibit a consistent upward trajectory throughout the period. Starting at $15,451 million in 2018, revenues increased steadily each year, reaching $27,518 million by the end of 2022. This represents a notable growth rate, with the most significant year-over-year increases observed between 2019 and 2020, and again between 2020 and 2021.
- Accounts Payable
- Accounts payable demonstrate a declining trend over the same timeframe. Beginning at $281 million in 2018, the value decreased gradually each year, reaching $126 million by 2022. This reduction indicates a steady decrease in the amount owed to suppliers or vendors, potentially reflecting improved payment practices or changes in procurement strategies.
- Payables Turnover Ratio
- The payables turnover ratio shows a marked increase, rising sharply from 54.99 in 2018 to 218.4 in 2022. This substantial increase suggests that the company is paying off its accounts payable more rapidly over time. The acceleration is especially pronounced after 2019, with the ratio nearly tripling between 2020 and 2022, indicating a significant improvement in the efficiency of payables management.
Overall, the data highlights strong revenue growth alongside a reduction in accounts payable balances and a considerable increase in the payables turnover ratio. These patterns suggest enhanced operational efficiency and potentially stronger liquidity management in relation to vendor payments. The combination of increasing revenues and faster payment cycles might imply an improved position for negotiating payment terms or maintaining supplier relationships.
Working Capital Turnover
Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Current assets | ||||||
Less: Current liabilities | ||||||
Working capital | ||||||
Net revenues | ||||||
Short-term Activity Ratio | ||||||
Working capital turnover1 | ||||||
Benchmarks | ||||||
Working Capital Turnover, Competitors2 | ||||||
Accenture PLC | ||||||
Adobe Inc. | ||||||
Cadence Design Systems Inc. | ||||||
CrowdStrike Holdings 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 = Net revenues ÷ Working capital
= ÷ =
2 Click competitor name to see calculations.
- Working Capital
- The working capital exhibited a generally increasing trend over the period analyzed. Starting at 7,059 million USD at the end of 2018, it rose significantly to 11,576 million USD in 2019, and further increased to 12,548 million USD in 2020. However, in 2021, there was a noticeable decrease to 9,545 million USD, after which it rebounded to 12,416 million USD by the end of 2022. This indicates fluctuations in liquidity management or operational needs, with a dip in 2021 followed by recovery.
- Net Revenues
- Net revenues demonstrated a consistent upward trajectory throughout the period. Revenues increased from 15,451 million USD in 2018 to 17,772 million USD in 2019, followed by substantial growth to 21,454 million USD in 2020. The upward trend continued with revenues reaching 25,371 million USD in 2021 and further to 27,518 million USD in 2022, reflecting strong revenue generation and business expansion over these years.
- Working Capital Turnover
- The working capital turnover ratio showed variability across the years. Beginning at 2.19 in 2018, it declined to 1.54 in 2019, suggesting a reduced efficiency in utilizing working capital to generate revenue. The ratio improved to 1.71 in 2020 and experienced a significant increase to 2.66 in 2021, indicating enhanced efficiency that year. In 2022, the ratio decreased again to 2.22, though it remained above the levels of 2018, 2019, and 2020. This pattern highlights fluctuations in the efficiency of working capital use relative to revenue generation.
Average Receivable Collection Period
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. | ||||||
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.
The analysis of the receivables turnover and average receivable collection period over the five-year period indicates a clear trend of declining efficiency in accounts receivable management.
- Receivables Turnover
- The receivables turnover ratio shows a consistent downward trend, decreasing from 49.36 in 2018 to 28.58 in 2022. This decline suggests that the company is collecting its receivables less frequently over time, which can imply slower cash collection and potentially higher credit risk.
- Average Receivable Collection Period
- The average collection period exhibits a corresponding upward trend, increasing from 7 days in 2018 to 13 days in 2022. This reflects that the company is taking longer to collect payments from customers, further reinforcing the inference that receivables are being converted to cash more slowly each year.
Overall, these trends indicate a worsening in the liquidity aspect related to receivables. The lengthening collection period combined with a decreasing turnover ratio suggests that credit and collection policies may require reassessment to improve cash flow and reduce potential risks associated with delayed payments.
Average Payables Payment Period
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. | ||||||
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 has exhibited a continuous and substantial increase over the five-year period. Starting at 54.99 in 2018, it rose to 76.6 in 2019, further increased to 85.13 in 2020, followed by a significant jump to 128.79 in 2021, and reached 218.4 by the end of 2022. This upward trend indicates progressively faster payment to suppliers, reflecting possibly improved cash management or stronger liquidity positions enabling quicker clearance of payables.
- Average Payables Payment Period
- Conversely, the average payables payment period measured in days has consistently decreased from 7 days in 2018 to 2 days in 2022. This reduction corresponds inversely with the rising payables turnover, confirming that the company is shortening the time taken to settle its accounts payable. The drop from a weekly payment period to just 2 days suggests an aggressive payment strategy or enhanced operational efficiency in managing vendor obligations.