Accenture PLC (NYSE:ACN)

The financial data reveals several notable trends over the six-year period ending in 2024.

Receivables Turnover

The receivables turnover ratio exhibits moderate fluctuations, starting at 5.79 in 2019, peaking at 6.16 in 2020, then gradually declining to 5.47 in 2024. This indicates a slight decrease in the efficiency of collecting receivables in the most recent year compared to the earlier peak.

Payables Turnover

The payables turnover ratio shows higher variability. It increased sharply from 18.16 in 2019 to 22.48 in 2020, indicating faster payment to suppliers during that year. However, it subsequently declined to 15.94 by 2024, suggesting a slower payment process relative to earlier years. This downward trend may reflect strategic changes in managing payables or cash flow considerations.

Working Capital Turnover

Working capital turnover experienced a general upward trend with some volatility. After decreasing from 9.85 in 2019 to 8.71 in 2020, it rose significantly to 34.49 in 2024, indicating improved utilization of working capital to generate sales or revenue in the latest period. This sharp increase may reflect operational efficiency gains or changes in the company's working capital management policy.

Average Receivable Collection Period

The average days to collect receivables fluctuated narrowly between 59 and 67 days over the period, showing a relatively stable collection timeframe. The increase to 67 days in 2024 contrasts with the previous years, indicating slower collection efforts in the most recent year.

Average Payables Payment Period

The average payment period to suppliers demonstrated variability, decreasing to 16 days in 2020, and then fluctuating around the low twenties in subsequent years, reaching 23 days in 2024. The increase after 2020 suggests a longer duration to settle payables, aligning with the observed decline in payables turnover ratio.

Overall, the data points to a generally stable but slightly less efficient receivables management in the latest year alongside a slower payment pattern towards suppliers. The most significant change is observed in working capital turnover, signaling enhanced efficiency or altered operational dynamics in managing capital resources in 2024.

Revenues

The revenues have demonstrated a consistent upward trend over the six-year period. Starting from approximately $43.2 billion in 2019, the revenues increased each year, reaching about $64.9 billion in 2024. The most notable growth occurred between 2020 and 2022, with a significant jump in 2022 reaching over $61.5 billion. Growth continued in the subsequent years but at a comparatively slower pace.

Receivables

Receivables have also shown an overall increasing pattern from around $7.47 billion in 2019 to approximately $11.87 billion in 2024. There was a slight decline in 2020 followed by a steady rise through 2024. The increase in receivables aligns with the growth in revenues, though the receivables appear to be increasing at a somewhat faster pace, especially in later years.

Receivables Turnover Ratio

The receivables turnover ratio fluctuated within a narrow range, beginning at 5.79 in 2019 and ending at 5.47 in 2024. The ratio peaked at 6.16 in 2020, indicating improved efficiency in collecting receivables during that year. Although there was a decline afterward, the ratio remained relatively stable, oscillating close to 6 before decreasing slightly in 2024. This suggests that the company's ability to convert receivables into cash remained generally steady despite increasing receivables and revenues.

Cost of Services

The cost of services exhibited an overall increasing trend from 2019 to 2024. Starting at approximately 29.9 billion USD in 2019, it rose slightly to around 30.4 billion USD in 2020. A more pronounced increase occurred in the subsequent years, reaching approximately 34.2 billion USD in 2021, then sharply rising to 41.9 billion USD in 2022. There was a continued, albeit moderate, increase to about 43.4 billion USD in 2023 and 43.7 billion USD in 2024. This pattern indicates rising operational expenses over the years, with a significant surge between 2021 and 2022.

Accounts Payable

Accounts payable levels fluctuated during the period. Starting at roughly 1.65 billion USD in 2019, the balance decreased to about 1.35 billion USD in 2020, signaling reduced short-term liabilities. However, from 2021 onwards, accounts payable increased steadily from approximately 2.27 billion USD to 2.55 billion USD in 2022, slightly decreased to 2.49 billion USD in 2023, and rose again to about 2.74 billion USD in 2024. This trend suggests increasing reliance on vendor credit or delayed payments in recent years.

Payables Turnover Ratio

The payables turnover ratio exhibited notable volatility. It peaked at 22.48 in 2020, indicating faster payments to suppliers during that year. The ratio then sharply decreased to 15.03 in 2021, implying slower payment cycles, before modest recovery levels of 16.37 in 2022 and 17.41 in 2023. In 2024, the turnover decreased again to 15.94. Lower turnover ratios in recent years compared to 2020 suggest lengthening payment periods to suppliers, potentially reflecting changes in cash management practices or supplier negotiations.

Working Capital

The working capital figures show fluctuating patterns over the analyzed periods. Initially, there was an increase from approximately 4.39 billion in 2019 to about 5.09 billion in 2020. However, this was followed by a decline to approximately 3.96 billion in 2021 and a slight recovery to roughly 4.09 billion in 2022. The following year showed another increase to approximately 5.37 billion, before experiencing a sharp decrease to around 1.88 billion in 2024.

Revenues

Revenues demonstrated a consistent upward trend across the entire period. Starting at roughly 43.22 billion in 2019, revenues increased steadily each year, peaking near 64.90 billion in 2024. The growth appears to accelerate particularly from 2021 onward, with notable year-on-year increments.

Working Capital Turnover

The working capital turnover ratio, which measures efficiency in using working capital to generate revenues, exhibited variability. It started at 9.85 in 2019 and declined to 8.71 in 2020, suggesting lower efficiency. Subsequently, there was a marked increase to 12.77 in 2021 and a further rise to 15.07 in 2022, indicating improved effectiveness. The ratio decreased to 11.93 in 2023 but experienced a significant spike to 34.49 in 2024, implying a dramatic improvement in revenue generated relative to working capital, likely influenced by the notable drop in working capital that year combined with continuing revenue growth.

Summary and Insights

Overall, revenues display consistent growth, reflecting positive business expansion or increased sales volume. Working capital levels, while fluctuating, show a sharp reduction in the final year, which contrasts with the ongoing revenue growth. This discrepancy has led to an elevated working capital turnover ratio in 2024, indicating higher operational efficiency or a tighter management of working capital. The sudden decrease in working capital may warrant further examination to determine if this is due to structural changes, asset disposals, or other factors. The general trend suggests an improving capacity to generate revenue from working capital, although the volatility in capital levels may imply some risk or changing operational dynamics.

Receivables Turnover

The receivables turnover ratio exhibited moderate fluctuations over the analyzed periods. Starting at 5.79 in 2019, it increased to 6.16 in 2020, indicating an improvement in the efficiency of collecting receivables. However, this was followed by a decline to 5.74 in 2021, suggesting a slight slowdown in collection efficiency. The ratio recovered marginally to 5.87 in 2022 and further increased to 6.00 in 2023, signaling a positive trend in receivables management. In 2024, the ratio decreased to 5.47, the lowest point in the observed timeframe, pointing to a potential weakening in the speed of receivables turnover.

Average Receivable Collection Period

The average collection period showed an inverse relationship with the receivables turnover ratio. Beginning at 63 days in 2019, it improved to 59 days in 2020, reflecting faster collection of outstanding receivables. Subsequently, this period lengthened to 64 days in 2021, aligning with the decline in turnover ratio during the same year. It then decreased again to 62 days in 2022 and further to 61 days in 2023, indicating enhanced collection efficiency. However, in 2024, the collection period extended to 67 days, the longest duration recorded in the set, which corresponds with the noted decrease in the turnover ratio and suggests a delay in collecting receivables.

Overall Observations

The data depicts a pattern of alternating improvements and setbacks in the company's receivables management over the six-year span. While periods of efficient collections are apparent, particularly in 2020 and 2023, the latest data point in 2024 indicates a lag in collections. This could have implications on liquidity and working capital management if the trend persists.

Payables Turnover

The payables turnover ratio exhibits a fluctuating trend over the periods analyzed. It increased from 18.16 in 2019 to a peak of 22.48 in 2020, indicating an improvement in the speed at which payables were settled. However, from 2020 onwards, the ratio generally declined, reaching 15.94 in 2024, which is the lowest value in the series. This declining trend suggests a slowing pace of payment to suppliers in recent years.

Average Payables Payment Period

The average payables payment period shows an inverse movement relative to the payables turnover ratio. It decreased from 20 days in 2019 to 16 days in 2020, reflecting faster payments during that year. Subsequently, the payment period increased to 24 days in 2021, followed by a slight decrease to 21 days in 2023, then rose again to 23 days in 2024. The extended payment periods in the later years correspond with the declining payables turnover ratios observed.

Overall Analysis

The combined analysis of these two indicators indicates an initial improvement in the company's payment efficiency in 2020, with quicker payments and higher turnover ratios. However, from 2021 onwards, there was a reversal with payments taking longer on average and turnover ratios decreasing. This pattern might suggest changes in payment policies, cash management strategies, or liquidity considerations during the later years. The payment period generally remained above 20 days after 2020, indicating a moderate extension of supplier payment terms.