Twitter Inc. (NYSE:TWTR)

The financial data reveals several evolving trends in the company's operational efficiency over the five-year period ending December 31, 2021.

Receivables turnover

The receivables turnover ratio shows an overall upward trend from 3.68 in 2017 to 4.17 in 2021, with a slight dip in 2020. This suggests an improvement in the company's ability to collect receivables more frequently, indicating enhanced efficiency in credit management.

Payables turnover

The payables turnover ratio increased consistently from 5.04 in 2017 to 8.85 in 2021, reflecting that the company is paying its suppliers more rapidly over time. The rise in payables turnover corresponds to a reduction in the average payables payment period, evidencing quicker settlement of payables.

Working capital turnover

Working capital turnover remained relatively stable between 0.51 and 0.56 during the first four years but exhibited a substantial increase to 0.77 in 2021. This sharp rise suggests improved effectiveness in using working capital to generate sales in the most recent year.

Average receivable collection period

The average receivable collection period decreased modestly from 99 days in 2017 to 88 days in 2021, except for a notable increase to 102 days in 2020. This overall reduction aligns with the rising receivables turnover ratio, indicating more efficient collection of receivables except for the year 2020, which may reflect temporary collection challenges.

Average payables payment period

A clear downward trend is observable in the average payables payment period, dropping from 72 days in 2017 to 41 days in 2021. This indicates the company is paying its obligations more promptly, consistent with the increasing payables turnover ratio, and potentially improving supplier relationships or taking advantage of early payment benefits.

Revenue

The revenue has demonstrated a consistent upward trajectory over the five-year period. Starting at approximately $2.44 billion in 2017, it increased steadily each year, reaching about $5.08 billion by 2021. This represents a significant growth trend, with the most notable jump occurring between 2020 and 2021, where the revenue rose by roughly 36.7% compared to the previous year.

Accounts Receivable, Net of Allowance for Doubtful Accounts

The net accounts receivable have also shown a persistent increase throughout the timeframe, growing from around $664 million in 2017 to approximately $1.22 billion in 2021. This suggests that the company's outstanding customer payments have expanded in line with its revenue growth. The increase appears steady, reflecting potential proportional scaling with sales volumes.

Receivables Turnover Ratio

The receivables turnover ratio has exhibited some fluctuations but remains within a relatively narrow band. It started at 3.68 in 2017 and saw a gradual increase to 4.07 by 2019, indicating improved efficiency in collecting receivables during that period. However, the ratio dipped to 3.57 in 2020, suggesting a temporary slowdown in collections. In 2021, the ratio recovered strongly to 4.17, marking the highest level in the five years and pointing to enhanced cash flow management or stricter credit policies.

Overall Insights

The data reflects a company experiencing robust revenue growth accompanied by a rise in accounts receivable. The fluctuating but generally improving receivables turnover ratio indicates that despite the increase in credit extended to customers, the company has managed to maintain or even improve its collection efficiency in the long run. The temporary dip in 2020 could be attributed to external factors impacting payment cycles, but recovery in 2021 suggests effective management response.

Cost of Revenue

The cost of revenue exhibited a consistent upward trend over the five-year period. Starting at approximately 861 million US dollars in 2017, it increased steadily each year, reaching nearly 1.8 billion US dollars by the end of 2021. This indicates rising expenses related to generating revenue, potentially reflecting growth in operations or higher input costs.

Accounts Payable

Accounts payable values showed moderate fluctuations with a general increasing tendency. Beginning at roughly 171 million US dollars in 2017, the figure decreased to around 145 million in 2018, then rose steadily through 2021, ending at just over 203 million US dollars. This trend suggests a growing short-term liability possibly aligned with expanded purchasing or delayed payments.

Payables Turnover Ratio

The payables turnover ratio demonstrated a consistent increase over the period, rising from 5.04 times in 2017 to 8.85 times in 2021. This upward trend indicates an improvement in the efficiency of paying suppliers, with the company turning over its payables more frequently each year, which could reflect better cash flow management or stronger negotiating power.

The financial data reveals several trends in working capital, revenue, and working capital turnover over the five-year period ending December 31, 2021.

Working Capital

Working capital demonstrated a general upward trajectory from 2017 to 2019, increasing from approximately 4.74 billion US dollars to nearly 6.79 billion US dollars. In 2020 and 2021, however, working capital slightly declined, reaching about 6.57 billion US dollars by the end of 2021, which is still significantly higher than the 2017 figure but indicates a period of modest contraction or stabilization after growth.

Revenue

Revenue exhibited consistent growth throughout the entire period, rising from around 2.44 billion US dollars in 2017 to roughly 5.08 billion US dollars in 2021. This represents more than a doubling of revenue over five years, with notable acceleration in the final year where revenue increased by approximately 36.7%, indicating enhanced sales performance or market expansion.

Working Capital Turnover

The working capital turnover ratio fluctuated within a narrow range from 2017 to 2020, remaining between 0.51 and 0.56. In 2021, there was a marked increase in this ratio to 0.77, implying more efficient use of working capital to generate revenue. This improvement suggests operational enhancements or better asset management facilitating higher revenue generation relative to working capital employed.

In summary, the data indicates robust revenue growth accompanied by a steady increase in working capital until 2019, followed by slight declines in working capital but a notable improvement in capital efficiency in 2021. The elevated working capital turnover ratio in the most recent year points to more effective utilization of resources to drive income growth.

Receivables Turnover

The receivables turnover ratio shows an overall increasing trend from 3.68 in 2017 to 4.17 in 2021. This indicates an improvement in the efficiency with which receivables were collected over the five-year period. Notably, there was a slight dip in 2020 to 3.57, likely reflecting a temporary slowdown, but the ratio recovered and reached its highest level in 2021.

Average Receivable Collection Period

The average receivable collection period exhibits a generally decreasing trend, moving from 99 days in 2017 down to 88 days in 2021. This decrease complements the increase in receivables turnover, suggesting that the company became more effective in collecting its receivables more quickly. However, the average collection period peaked at 102 days in 2020, aligning with the dip in turnover, before improving again in the following year.

Overall Analysis

The trends in both ratios indicate enhanced credit management and collection efficiency over the long term. The temporary setbacks in 2020 may correspond to external factors affecting collection processes, but the subsequent recovery demonstrates resilience and improved operational control by the end of 2021.

Payables Turnover

The payables turnover ratio exhibits a clear upward trend over the five-year period under review. Beginning at 5.04 in 2017, it rises progressively each year, reaching 8.85 by the end of 2021. This consistent increase indicates an acceleration in the rate at which payables are being settled, implying improved efficiency in managing supplier obligations.

Average Payables Payment Period

The average payables payment period shows a decreasing trajectory throughout the same timeframe. Starting at 72 days in 2017, it declines substantially to 41 days by 2021. This shortening of the payment period aligns with the rising payables turnover ratio, suggesting that the company is prioritizing the faster clearance of outstanding payables, potentially to strengthen supplier relationships or to take advantage of early payment discounts.

Overall Analysis

The inverse relationship between payables turnover and the payment period indicates enhanced effectiveness in payables management. The company demonstrates a clear trend toward quicker payment of liabilities, which may reflect improved liquidity management or strategic shifts in supplier interactions. The notable acceleration in payables turnover alongside the compressed payment period points to a conscious effort to optimize working capital and meet financial obligations more promptly across the reported years.