Workday Inc. (NASDAQ:WDAY)

The analysis of the financial ratios over the periods provided reveals several notable trends in the efficiency and operational cycle of the company.

Receivables Turnover

The receivables turnover ratio displays a fluctuating pattern throughout the timeline. Initial periods show relatively lower values (around 4.13), followed by peaks reaching approximately 6.94. This ratio generally oscillates between values in the mid-4 to mid-6 range, indicating variations in the speed at which receivables are collected. The fluctuation suggests potential changes in credit policies or customer payment behaviors across different quarters.

Payables Turnover

The payables turnover ratio exhibits considerable volatility, with spikes as high as 31.83 and declines to around 11.16 in some quarters. The pattern indicates that the company’s rate of paying off suppliers varies significantly, alternating between faster and slower payment speeds. Such variability might point to strategic cash management or changes in supplier terms.

Working Capital Turnover

Working capital turnover shows a marked decline from initial high ratios such as 28.97 down to values close to 1.49–1.75 in later periods. This suggests that the efficiency of utilizing working capital to generate sales has decreased significantly over time. The early high values, followed by a steep drop and relatively stable low ratios, point to a fundamental shift in how working capital is managed or a change in sales volume relative to capital employed.

Average Receivable Collection Period

This metric inversely correlates with receivables turnover and therefore follows a complementary pattern. Collection periods vary between approximately 53 and 92 days, indicating fluctuating efficiency in collecting receivables. Longer collection periods in some quarters could reflect relaxed credit terms or delays in customer payments, impacting cash inflow timing.

Average Payables Payment Period

The average payables payment period ranges broadly from around 11 to 33 days. This variation aligns with the fluctuations observed in the payables turnover ratio, confirming that the company alternates between accelerating and extending payment terms to suppliers. Such adjustments may be tactical responses to cash flow needs or negotiation outcomes with suppliers.

Overall, the data depicts a company experiencing significant fluctuations in its operational cycles, particularly in receivables and payables management. The declining working capital turnover suggests a potential decrease in operational efficiency or a strategic shift in capital utilization. Management may benefit from investigating the causes of these fluctuations and evaluating their impact on liquidity and overall financial health.

Revenue Trends

Revenues display a consistent upward trajectory over the entire period. Starting at 825 million US dollars in April 2019, revenues increase steadily in most quarters, reaching 2240 million US dollars by April 2025. Growth appears relatively stable, with no significant declines or abrupt changes, indicating sustained business expansion.

Receivables Trends

The net amount of trade and other receivables shows substantial fluctuations during the periods. Initial values around 543 million US dollars in April 2019 rise to a peak of 1032 million US dollars by January 2021, followed by notable volatility. Periods of decline alternate with spikes, e.g., 1570 million in January 2023 and 1950 million in October 2024, then a drop to 1363 million by April 2025. This variability may indicate changes in credit policies, customer payment behavior, or sales mix.

Receivables Turnover Ratio Trends

The receivables turnover ratio reveals a cyclical pattern and fluctuates considerably across quarters. It ranges approximately between 3.96 and 6.94, indicating variability in how efficiently receivables are collected relative to revenue. Peaks in turnover (e.g., near 6.91 in April 2021 and 6.94 in April 2022) suggest periods of efficient collections, whereas troughs (e.g., around 3.96 in January 2023) point to slower collections. These fluctuations might correspond with the irregular pattern observed in the trade receivables balances.

Correlations and Observations

While revenues increase steadily, the erratic pattern in receivables and turnover ratios suggests that growth in sales is not uniformly matched by collections efficiency. Periods with higher receivables and lower turnover ratios suggest accumulation of outstanding customer balances, which could impact cash flow. The overall trend implies that while sales continue to grow, credit management and receivables collection efficiency vary over time, potentially requiring focus to maintain financial robustness.

The financial data reveals several notable trends over the observed periods. First, the costs of revenues exhibit a general upward trend from April 2019 through April 2025, with some fluctuations. Initially, costs increased steadily from 243 million USD in April 2019 to 306 million USD in April 2020. A brief decline followed around mid-2020 before a resumption of growth, peaking at 539 million USD in October 2024 and slightly decreasing to 537 million USD by April 2025. This overall increase suggests a rising scale of business operations, possibly reflecting expanded sales or increased production expenses.

Accounts payable figures show greater volatility in comparison. Starting at 35 million USD in April 2019, the metric fluctuates considerably throughout the periods. Periods of sharp increases are evident, such as in April 2022 (123 million USD) and January 2023 (154 million USD), followed by declines in subsequent quarters. The variability in accounts payable could indicate shifting payment terms, supplier negotiations, or operational dynamics affecting the timing and magnitude of liabilities.

The payables turnover ratio, which measures the frequency of paying off suppliers within a period, demonstrates corresponding fluctuations. High turnover ratios, such as 31.83 in July 2019 and 28.20 in October 2021, contrast with lower values like 11.16 in January 2023 and 12.14 in April 2022. This variability suggests changing efficiency or policies in managing payables. Lower turnover ratios in certain periods may reflect extended payment cycles or liquidity management strategies, whereas higher ratios might indicate faster payment to suppliers.

When integrating these observations, it appears that while costs of revenues generally increased, the management of accounts payable and related turnover ratios varied significantly, pointing to dynamic working capital management practices. The spikes in accounts payable and concurrent decreases in payables turnover in early 2022 and 2023 suggest deliberate extensions of payment terms or operational pressures during those times. Overall, the financial trends indicate growth in operational scale alongside adjustments in supplier payment management over the analyzed timeframe.

The analysis of the quarterly financial data reveals several notable trends concerning working capital, revenues, and working capital turnover ratios over the observed periods.

Working Capital

The working capital figures demonstrate significant volatility in the early periods, with values fluctuating between negative and positive amounts. Initially, working capital dropped sharply from 222 million USD in April 2019 to -645 million USD in July 2019 and then recovered to 464 million USD by October 2019. Following this fluctuation, there was a general upward trend with intermittent variability until April 2021, where a decline was observed again, falling to -305 million USD.

From April 2022 onwards, the working capital shows a strong and consistent positive growth trajectory, increasing from 2662 million USD and reaching a peak of 5142 million USD by April 2025. This indicates improved liquidity and operational efficiency in managing current assets and liabilities in the later periods.

Revenues

Revenues consistently increased throughout the entire timeframe without any notable decline. Starting from 825 million USD in April 2019, revenues steadily climbed each quarter, reaching 2240 million USD in April 2025. This persistent upward trend reflects strong sales growth and an expanding customer base or market presence.

Working Capital Turnover Ratio

The working capital turnover ratio, available from January 2020 onwards, initially shows highly elevated values, especially 28.97 and 24.99 in the earliest quarters, which may indicate anomalous or non-standard working capital amounts or timing differences in revenues relative to working capital.

Subsequently, the ratio declines sharply and stabilizes in a relatively narrow band between approximately 1.5 and 1.8 in the later periods, spanning from April 2021 to April 2025. This stabilization suggests a normalization of the relationship between revenues and working capital levels, positing a more balanced and sustainable operational efficiency in asset utilization over time.

In summary, the data suggests improvements in liquidity management, with working capital recovering from periods of deficit to substantial surpluses. Meanwhile, revenues show a steady and robust increase, contributing positively to company growth. The working capital turnover ratio corroborates these observations by demonstrating an initial period of irregular efficiency followed by a more stabilized and sustainable operating performance.

Receivables Turnover Ratio

The receivables turnover ratio displays a recurring cyclical pattern over the periods analyzed, fluctuating between higher and lower values roughly every other quarter. Generally, this ratio remains within a range of approximately 3.96 to 6.94. Notably, the ratio tends to peak in quarters such as Jul 2019, Apr 2021, Apr 2022, and Jul 2024, suggesting periods of more efficient collection of receivables. Conversely, dips are observed around Apr 2020, Apr 2023, and Apr 2025, indicating relatively slower turnover during these quarters. Despite the fluctuations, there is no clear upward or downward long-term trend, but rather a consistent alternating pattern of collection efficiency.

Average Receivable Collection Period

The average receivable collection period exhibits an inverse cyclical trend relative to the receivables turnover ratio, as expected. Periods of lower collection days correspond to quarters where the turnover ratio peaks, such as Jul 2019, Apr 2021, Apr 2022, and Jul 2024, where days range roughly from 53 to 56. Higher average collection days occur in quarters aligning with lower turnover ratios—for example, Apr 2020, Apr 2023, and Apr 2025—where collection periods extend to approximately 82 to 92 days. This cyclical behavior indicates recurring fluctuations in the speed at which receivables are collected, without a discernible long-term improvement or deterioration in collection efficiency.

Overall Insights

The interplay between the receivables turnover ratio and average collection period demonstrates a consistent pattern of seasonality or cyclical variation in receivables management. These recurrent oscillations suggest periodic changes in operational factors influencing collection cycles, such as billing practices or customer payment behavior. There is no evidence of sustained trends indicating a systematic improvement or decline in receivables performance over the full time horizon. The observed fluctuations imply that management may need to investigate underlying causes for the recurring periods of slower collection to optimize working capital management further.

The analysis of the payables turnover ratio and the average payables payment period over the observed quarters reveals noteworthy fluctuations and trends.

Payables Turnover Ratio

The payables turnover ratio exhibits considerable variability across the periods. It began at 18.51 and increased sharply to 31.83, followed by a decrease to 19.83. Subsequently, the ratio oscillated, reaching peaks around 28.2 and 25.95, and then dropping to lows approximately in the 11 to 15 range. In the latter periods, it generally trends upwards again, moving in the 19 to 26 range. This pattern indicates intermittent changes in the efficiency or speed at which payables are being settled, suggesting varying management strategies or operational conditions influencing payment practices.

Average Payables Payment Period (number of days)

The average payment period in days shows an inverse pattern relative to the turnover ratio, as expected. Initial values start around 20 days, decrease to a minimum near 11 days, and then exhibit rises to periods exceeding 30 days on some occasions. The data suggests that during some quarters, payments extended to longer durations, indicating possible delays or longer credit terms. More recently, the payment period stabilizes within the 14 to 19 days range, reflecting a moderate and consistent payment approach.

Relationship and Implications

The inverse correlation between payables turnover and payment periods aligns with standard financial principles. Higher turnover ratios correspond to shorter payment durations, implying quicker settlement of payables, whereas lower turnover values coincide with prolonged payment periods. The volatility in these metrics points to variable payment policies or external factors such as supplier negotiations, cash flow management, or market conditions that impact the company's accounts payable management over time.