Workday Inc. (NASDAQ:WDAY)

The analysis of the financial ratios over the observed periods reveals several noteworthy trends in the company's operational efficiency and liquidity management.

Receivables Turnover

The receivables turnover ratio exhibits a fluctuating pattern across the periods, generally oscillating between approximately 4.14 and 6.94. This variation indicates inconsistency in the company's effectiveness in collecting receivables. Notably, the ratio tends to dip every few quarters, suggesting periodic slowdowns in the collection process, which is corroborated by the corresponding changes in the average receivable collection period.

Average Receivable Collection Period

The average receivable collection period inversely corresponds with the receivables turnover, ranging roughly between 53 and 92 days. The periods of increase in collection days signal slower customer payments, which could affect cash flow. The data reflects a recurring pattern where collection days increase subsequent to lower turnover ratios, emphasizing the cyclicality in receivables management.

Payables Turnover

The payables turnover ratio shows more volatility, shifting between lows near 11.16 up to highs around 31.83. Sharp declines and subsequent recoveries suggest varying strategies or conditions influencing the rate at which payables are settled. A higher payables turnover ratio indicates quicker payments to suppliers, while lower ratios suggest extended payment periods.

Average Payables Payment Period

The average payables payment period varies in a range from approximately 11 to 33 days with noticeable spikes correlating with declines in the payables turnover ratio. This indicates that the company at times extends its payment terms, possibly to optimize cash flow, while in other periods it reduces payment delays. The inverse relationship between the payables turnover and payment period is consistent throughout the data.

Working Capital Turnover

The working capital turnover ratio presents significant fluctuations, with sporadic peaks reaching above 35 at certain points, followed by substantial drops to values near 1.5 to 2.2 in more recent intervals. The spikes early in the timeline could indicate periods of heightened efficiency in utilizing working capital for revenue generation or possibly anomalies due to missing data. The recent stabilization around low values suggests a consistent, albeit modest, utilization level of working capital.

Overall, the financial data reflects a dynamic environment with cyclical patterns in receivables and payables management, alongside a working capital utilization trend that moves towards steadiness after initial volatility. This variability highlights areas for potential focus to achieve more consistent operational efficiency and improved cash conversion cycles.

The financial data presents a series of trends for the company over multiple quarters from April 2020 through October 2025, with specific focus on revenues, trade and other receivables, and receivables turnover ratios.

Revenues

Revenues show a consistent upward trajectory throughout the timeline. Starting at approximately $1.02 billion in April 2020, revenues steadily increase quarter by quarter, reaching approximately $2.43 billion by October 2025. This represents a more than two-fold increase over the period, indicating sustained growth. The growth appears relatively smooth with no significant quarter-to-quarter declines, suggesting strong sales momentum and potentially effective market expansion or improved product/service offerings.

Trade and Other Receivables, Net

The trade and other receivables exhibit a more volatile pattern compared to revenues. Initial values start around $584 million in April 2020, with some sharp increases in certain quarters, for example, a rise to over $1.0 billion in January 2021 and again in January 2022 and January 2023. Periods of decline or reduction follow these spikes, indicating fluctuations in collections or possibly changes in credit policies or customer payment behavior. Overall, receivables increase from around $584 million to $1.75 billion by October 2025, mirroring the revenue growth but with greater variability.

Receivables Turnover Ratio

The receivables turnover ratio, which measures the efficiency in collecting receivables, ranges predominantly between approximately 3.96 and 6.94 over the periods. There is a noticeable tendency for this ratio to decrease during quarters where receivables spike sharply, such as January 2021, January 2022, and January 2023, where ratios drop to near or below 4. This pattern implies a temporary slowdown in collection efficiency during these quarters. Conversely, higher turnover ratios (above 6) in quarters with lower receivables suggest improved collection efforts. Over the long term, the turnover ratio fluctuates but shows no clear sustained upward or downward trend, indicating variable but generally stable collection performance relative to the receivables balance.

The analysis of the financial data reveals notable trends in the costs of revenues, accounts payable, and payables turnover over the observed periods.

Costs of Revenues

The costs of revenues exhibit a generally increasing trend over time, rising from 306 million US dollars in April 2020 to 591 million US dollars in October 2025. There are some fluctuations, such as slight decreases observed around April 2023 and October 2023; however, the overall pattern indicates a steady upward trajectory. This growth reflects expanding operational expenses related to revenue generation over the periods analyzed.

Accounts Payable

Accounts payable show significant variability throughout the periods. Starting at 35 million US dollars in April 2020, the value increases and decreases irregularly, reaching 103 million US dollars by October 2025. Notably, there are sharp spikes at April 2022 and January 2023 with values of 123 and 154 million US dollars respectively, followed by a decline in subsequent quarters. Despite fluctuations, the long-term trend suggests an overall increase in accounts payable, suggesting changes in the company’s short-term liabilities management or purchasing practices.

Payables Turnover

The payables turnover ratio demonstrates considerable volatility. Initially high at 31.83 in April 2020, it declines sharply to values around the low teens during April 2022 and January 2023, indicating slower payment to suppliers during these periods. Afterward, the ratio recovers somewhat, settling in the low twenties towards the later quarters but never regaining the initial peak levels. The fluctuating turnover suggests variability in how efficiently the company manages its payables, potentially reflecting changes in credit terms, cash flow management, or supplier relationships.

In summary, the data shows a consistent rise in costs of revenues, a fluctuating but upward trend in accounts payable, and a highly variable payables turnover ratio with cycles of slower and faster payment periods. These patterns point to evolving operational scale and varying short-term financial management strategies over the continuous fiscal quarters analyzed.

Working Capital

The working capital exhibits notable volatility throughout the observed periods. Initially, it shows a positive value of 679 million USD, increasing to a peak of 1161 million USD in mid-2020, followed by a sharp decline to 333 million USD and further fluctuations including a negative value of -305 million USD in early 2021. From mid-2021 onward, working capital consistently increases, reaching a high of 5462 million USD by mid-2025 before declining to 4158 million USD at the last reported period. This trend suggests periods of fluctuating liquidity positions with a general upward movement in the later years, indicating an improvement in the company’s short-term financial health over time despite some reversals.

Revenues

The revenue stream shows a consistent and steady upward trend over the entire period. Starting from 1018 million USD in early 2020, revenues progressively increase quarter over quarter, reaching 2432 million USD by mid-2025. The increase is relatively smooth, with no significant dips or volatility, indicating sustained growth and effective market performance. This continuous rise in revenues reflects expanding sales or service uptake and positive operational momentum.

Working Capital Turnover

The working capital turnover ratio displays considerable fluctuations, particularly in the earlier periods. Starting at 5.62, it drops to 3.44 and then spikes significantly to 12.5 and, even more notably, 24.99 and 35.15 in the 2021 and early 2022 windows. This high level indicates a very efficient use of working capital relative to revenues during these quarters, possibly driven by low or negative working capital balances. After this peak phase, the turnover ratio declines sharply and stabilizes within a narrow range of approximately 1.5 to 1.8 from early 2022 onward, with minor variations. Near the last recorded dates, a slight increase to 2.22 is noted. The initial volatility reflects irregular working capital management relative to sales, but the later stabilization suggests the company reached a more balanced and consistent operational efficiency in converting working capital into revenue.

Summary

The financial data illustrate a company undergoing phases of fluctuating liquidity but achieving strong and continuous revenue growth. The early instability in working capital and turnover ratios may reflect adjustments in operational or financial strategies. Over time, the increase and stabilization of working capital alongside steady revenue expansion indicate improved operational stability and an enhanced capacity to fund current obligations through working capital. The stabilized working capital turnover ratio in the latter periods suggests more efficient management of assets and liabilities relative to sales. Overall, the trends convey a positive growth trajectory with improving financial metrics supporting sustainable operations.

The analysis of the receivables turnover ratio and the average receivable collection period reveals cyclical fluctuations over the observed quarters. The receivables turnover ratio, which measures the efficiency in collecting receivables, shows variability with alternating periods of increase and decrease. Peaks in turnover are observed around April 2021, April 2022, and April 2024, indicating quarters with stronger collection efficiency. Conversely, notable lows appear around January 2021, January 2022, and January 2023, suggesting reduced turnover efficiency during these periods.

The average receivable collection period, representing the average number of days taken to collect receivables, inversely correlates with the turnover ratio and exhibits a similar pattern of fluctuation. Periods with a higher turnover ratio correspond with shorter collection periods (approximately 53-57 days), while periods of lower turnover coincide with extended collection times reaching 82 to 92 days. This cyclical pattern indicates recurring fluctuations possibly tied to seasonal business activities or changes in credit terms.

Overall, the data suggests a repeating pattern in accounts receivable management, with a tendency for improved collection efficiency and shorter collection cycles during the second quarter of each year. The fluctuations imply that the company experiences periodic challenges in maintaining consistent receivables turnover, which may impact cash flow forecasting and working capital management. Monitoring these patterns could enable better anticipation of credit collection performance and inform strategies for optimizing receivables management.

Receivables Turnover Ratio

Shows cyclical fluctuations with peaks around April quarters and troughs around January quarters, ranging approximately between 3.96 and 6.94.

Average Receivable Collection Period

Varies inversely to turnover, with collection periods ranging from about 53 to 92 days, shortest in the second quarter and longest in the first quarter of the year.

Trend Insights

Regular annual cycles suggest seasonality in collection efficiency; ongoing variability highlights the need for focused receivables management to stabilize cash inflows.

Payables Turnover

The payables turnover ratio exhibits considerable variability over the periods analyzed. Initially, it begins at a high point near 32 in April 2020, then declines markedly to a range between approximately 15 and 25 during mid to late 2020 and early 2021. A notable drop is observed in April 2022, falling to around 12, followed by fluctuations that bring the ratio mostly within the 15 to 25 range across subsequent quarters. The ratio ends on a moderate note, slightly above 20 by October 2025. This pattern suggests oscillations in the efficiency with which the company manages its payables, with periods of both quicker and slower turnover.

Average Payables Payment Period

The average payables payment period, measured in days, inversely mirrors the trends seen in the payables turnover ratio, as expected. The payment period starts relatively low at 11 days in April 2020, then extends to over 20 days in some quarters between mid-2020 and early 2021. A significant spike occurs in January 2023 and April 2022 with the highest values reaching up to 33 and 30 days respectively. Following these peaks, the period mostly stabilizes between 14 and 19 days through to October 2025. The increase in days during certain quarters may reflect longer payment terms or delays in settling payables during those times.

Overall Insights

The data reveals cyclical patterns in payables management. Periods of higher payables turnover correspond with shorter payment periods, indicating more rapid settlement of obligations, while the converse holds true during times of lower turnover. The pronounced fluctuations in both metrics suggest the company may be adjusting its payment strategy periodically, possibly in response to cash flow considerations or supplier negotiations. The stabilization toward the later periods could indicate a more consistent payables management approach in recent quarters.