Analysis of Short-term (Operating) Activity Ratios
Quarterly Data
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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- Analysis of Solvency Ratios
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Capital Asset Pricing Model (CAPM)
- Selected Financial Data since 2005
- Net Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Return on Assets (ROA) since 2005
- Price to Earnings (P/E) since 2005
- Analysis of Revenues
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Short-term Activity Ratios (Summary)
CoStar Group Inc., short-term (operating) activity ratios (quarterly data)
Based on: 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
The analysis of the quarterly financial ratios reveals several notable trends over the observed periods.
- Receivables Turnover
- The receivables turnover ratio shows an overall upward trend from 13.36 in March 2018 to a peak of around 16.7 in December 2021, indicating improved efficiency in collecting receivables during these years. However, following this peak, the ratio declines gradually, reaching 12.81 by June 2023. This decline towards the end of the period suggests a reduction in collection efficiency or slower conversion of receivables into cash.
- Payables Turnover
- The payables turnover ratio exhibits significant volatility throughout the periods. Initially high at 42.66 in March 2018, it decreases notably to below 20 by the end of 2019. The ratio then falls sharply to as low as 7.3 by June 2023. Such a decline implies that the company is taking longer to pay its suppliers, increasing the payment period substantially over time. This trend, coupled with notable fluctuations, indicates changing supplier payment strategies or cash flow management adjustments.
- Working Capital Turnover
- Working capital turnover follows a decreasing trend overall. Starting near 1.13 in early 2018, the ratio declines steadily to a low around 0.42-0.46 by mid-2023. This gradual decrease suggests reduced efficiency in utilizing working capital to generate sales, possibly reflecting increased investment in current assets or slower operational cycles relative to revenue generation.
- Average Receivable Collection Period
- The average collection period for receivables generally decreases from around 27 days in 2018 to a low near 22 days in 2021, consistent with the rising receivables turnover ratio in the same timeframe. This indicates faster collection of receivables. However, post-2021, the collection period mildly increases again to approximately 29 days by mid-2023, reflecting slower collection.
- Average Payables Payment Period
- The average payment period for payables displays the most marked change, increasing significantly from around 9-10 days early in the data to as high as 50 days by mid-2023. This indicates a substantial lengthening in the time taken to settle payables, potentially to conserve cash or due to changes in supplier terms. The period fluctuates somewhat but shows a clear upward trajectory overall.
In summary, the company improved its receivables management and collection efficiency until approximately 2021 but has experienced a reversal in these efficiencies subsequently. Payables management has trended toward slower payments, with the payment period extending significantly over time. The declining working capital turnover points to less effective use of working capital in generating sales. Overall, the data suggests shifts in operational cash conversion cycles, with increasing emphasis on extending payables and some deterioration in receivables collection in recent periods.
Turnover Ratios
Average No. Days
Receivables Turnover
CoStar Group Inc., receivables turnover calculation (quarterly data)
Based on: 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q2 2023 Calculation
Receivables turnover
= (RevenuesQ2 2023
+ RevenuesQ1 2023
+ RevenuesQ4 2022
+ RevenuesQ3 2022)
÷ Accounts receivable, net
= ( + + + )
÷ =
- Revenues
- The revenue figures show a consistent upward trend throughout the periods analyzed, increasing from approximately $274 million in the first quarter of 2018 to over $605 million by the second quarter of 2023. The growth pattern is continuous without notable declines, indicating steady expansion in sales or service income over the five-year span. Quarterly increases appear relatively stable with no significant volatility, reflecting a positive and reliable revenue generation trajectory.
- Accounts Receivable, Net
- The net accounts receivable display a general upward trajectory, starting around $69 million in early 2018 and reaching approximately $181 million by the middle of 2023. The increases are somewhat more uneven compared to revenues, with notable jumps such as between the end of 2019 and early 2020, and again in 2023. This growth suggests the company is extending more credit or experiencing longer collection periods, which could impact cash flow management. The receivables balance also reflects increased business volume, consistent with rising revenues, but the pace of receivables growth is relatively faster.
- Receivables Turnover Ratio
- The receivables turnover ratio, which measures the efficiency of collecting accounts receivable, shows moderate fluctuations. Starting at about 13.36 in Q1 2019, the ratio peaks around 16.7 in Q3 2021 and then gradually declines to approximately 12.81 by mid-2023. The peak indicates a period of improved collection efficiency, while the subsequent decline suggests some easing in collection efforts or longer outstanding receivables. Despite fluctuations, the ratio remains within a moderate range, implying a relatively stable credit collection environment. The downward trend towards the end of the period may warrant closer monitoring to ensure it does not signal deteriorating collection efficiency.
Payables Turnover
CoStar Group Inc., payables turnover calculation (quarterly data)
Based on: 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q2 2023 Calculation
Payables turnover
= (Cost of revenuesQ2 2023
+ Cost of revenuesQ1 2023
+ Cost of revenuesQ4 2022
+ Cost of revenuesQ3 2022)
÷ Accounts payable
= ( + + + )
÷ =
- Cost of Revenues
- The cost of revenues demonstrates a generally upward trend across the observed periods from March 31, 2018, to June 30, 2023. Starting at approximately $62.5 million in early 2018, it showed consistent increases with some quarterly fluctuations. Notably, the cost increased steadily reaching a peak of around $119.2 million in March 2023 before a slight decrease by June 2023. The overall trend suggests rising operational expenses or increased sales activity over time.
- Accounts Payable
- Accounts payable exhibited higher volatility with significant fluctuations between quarters. Initial values hovered around the $7.8 million to $10.1 million range in 2018, but starting in early 2020, a marked increase is evident, with payables jumping sharply to over $22 million in March 2020. Following this spike, the figures oscillated, peaking again at $61.5 million by June 2023. This volatility signals changes in payment cycles, supplier terms, or working capital management challenges during the period, especially post-2020.
- Payables Turnover Ratio
- The payables turnover ratio shows a declining trend from the 2018 levels to 2023, indicating slower turnover of payables over time. Initial available ratios near 40 suggest fast payment cycles, which decreased notably to below 20 by 2020 and further declined to below 10 by mid-2023. This signifies elongation in the payment period or slower discharge of payables. The decline in turnover ratio coupled with volatility in accounts payable points to possible strategic shifts in supplier payment timing or liquidity management considerations.
- Overall Insights
- The data collectively suggest that while the company’s cost structure expanded over the period, there was an increased reliance on accounts payable as a source of financing or operational leverage, as evidenced by the rising accounts payable figures and decreasing payables turnover. The abrupt increases in accounts payable starting in 2020 may reflect external economic disruptions or internal financial policy adjustments. The downward trend in payables turnover ratio raises concerns about cash flow efficiency and potential stress in supplier payments. Management might need to focus on optimizing working capital and balancing growth in operational costs with effective payment practices.
Working Capital Turnover
CoStar Group Inc., working capital turnover calculation (quarterly data)
Based on: 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q2 2023 Calculation
Working capital turnover
= (RevenuesQ2 2023
+ RevenuesQ1 2023
+ RevenuesQ4 2022
+ RevenuesQ3 2022)
÷ Working capital
= ( + + + )
÷ =
- Working Capital
- The working capital exhibits a generally upward trend over the observed periods. Starting at approximately 866 million US dollars in March 2018, it increased steadily with some fluctuations, reaching a peak close to 1.31 billion by September 2019. Notably, there is a significant drop in working capital in December 2019 to around 992 million, followed by a sharp increase to over 3.4 billion in June 2020. After this surge, working capital remains relatively stable with moderate increases, culminating near 5 billion US dollars by June 2023.
- Revenues
- Revenues demonstrate consistent growth throughout the periods analyzed. From approximately 274 million US dollars in March 2018, there is a steady increase quarter over quarter, reaching over 374 million by December 2019. The growth persists despite volatility in working capital, with revenues scaling to about 444 million in December 2020, and then continuing upward to approximately 606 million by June 2023. This sustained increase indicates ongoing sales expansion or increased service delivery.
- Working Capital Turnover Ratio
- The working capital turnover ratio, available from March 2019 onwards, reveals a declining trend initially. Starting at 1.13 in March 2019, it gradually decreases to roughly 1.03 by December 2019. Following this period, coinciding with the significant rise in working capital, the turnover ratio drops sharply to 0.8 in March 2020 and further declines to approximately 0.42 by December 2020. From 2021 onwards, the ratio shows modest recovery and stabilizes around 0.45 to 0.54, though remaining considerably lower than the initial values. This trend suggests the company is generating less revenue per unit of working capital over time, potentially implying increased investment in current assets or reduced efficiency in utilizing working capital.
- Overall Insights
- The data indicates that while revenues are growing steadily, working capital has increased disproportionately, particularly around mid-2020. The sharp rise in working capital coupled with a declining turnover ratio suggests a strategic build-up of current assets or inventory, or changes in payable or receivable policies. Post-2020, working capital remains high and stable while revenues continue to grow, resulting in a relatively low and stable working capital turnover ratio. This dynamic signals a shift in the company’s operational or financial management, possibly prioritizing liquidity or preparing for future growth opportunities.
Average Receivable Collection Period
CoStar Group Inc., average receivable collection period calculation (quarterly data)
Based on: 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q2 2023 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ =
- Receivables Turnover
- The receivables turnover ratio exhibited an overall upward trend from March 2018 through December 2021, increasing from approximately 13.3 to a peak of 16.7. This indicates an improvement in the efficiency with which receivables are collected during this period. However, starting in early 2022, the ratio began to decline, dropping from around 16.3 in the first quarter down to about 12.8 in the middle of 2023. This reversal suggests a possible weakening in collection efficiency or a buildup of receivables during the latter periods.
- Average Receivable Collection Period
- The average number of days for receivable collection correspondingly decreased from 27 days in early 2018 to a low of 22 days during 2021, reflecting faster collection times consistent with the rising turnover ratio. From 2022 onwards, this trend reversed, with the collection period extending back to around 29 days by mid-2023. This increase in collection days aligns with the decline in receivables turnover observed in the same timeframe.
- Summary
- Over the examined timeframe, an initial improvement in receivables management is evident, characterized by progressively higher turnover ratios and shorter collection periods. However, starting in 2022, these trends reversed, indicating a potential slowdown in collections or increased receivable balances relative to sales. This shift warrants further investigation to understand underlying causes, such as changes in credit policy, customer payment behavior, or market conditions.
Average Payables Payment Period
CoStar Group Inc., average payables payment period calculation (quarterly data)
Based on: 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q2 2023 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ =
The payables turnover ratio exhibits considerable fluctuations over the observed periods. Initially absent in early 2018 data, it starts at a high level around 42.66 in March 2019, then decreases moderately through the end of 2019 and into the first half of 2020. A notable decline occurs in the middle of 2020, reaching a low around 11.13 in September 2020. Subsequently, the ratio improves somewhat, stabilizing between approximately 18 and 20 through 2021, before dipping again to lower values ranging from 7.3 to 14.55 during 2022 and early 2023. The declining trend toward the later periods indicates a longer time taken to pay suppliers or a decrease in the frequency of payables turnover.
Correspondingly, the average payables payment period, expressed in number of days, displays an inversely related pattern. From around 9 to 10 days in early 2019, the payment period sharply increases to as high as 33 days in mid-2020, before exhibiting some volatility but trending generally higher than earlier periods through 2021 and 2022. Notably, the average payment period extends to about 50 days by mid-2023, representing a significant increase compared to earlier years. This suggests that the company has been taking progressively longer to settle its payables over time, aligning with the decreasing payables turnover ratio.
These trends indicate a shift in the company's payment practices, potentially reflecting changes in liquidity management, supplier negotiations, or operational cash flow cycles. The notably extended payment periods in recent quarters could have implications for vendor relationships or credit terms. Monitoring this aspect of financial management is advisable, considering the steady lengthening of the payment cycle observed in the data.