Etsy Inc. (NASDAQ:ETSY)

Receivables Turnover

The receivables turnover ratio exhibits a strong increasing trend from 13.1 in 2017 to 85.42 in 2021. This suggests an improvement in the efficiency of collecting receivables over these years, indicating faster conversion of credit sales into cash.

Payables Turnover

The payables turnover ratio shows some fluctuations initially, dropping from 11.08 in 2017 to 7.19 in 2018, then gradually increasing to 23.37 by 2021. The significant rise in the last year suggests the company is paying its suppliers faster or managing payables more aggressively.

Working Capital Turnover

Working capital turnover remains relatively stable from 2017 to 2020, ranging between 1.06 and 1.31, then rises sharply to 3.21 in 2021. This indicates a marked improvement in the ability to generate sales from working capital invested in the business in the most recent period.

Average Receivable Collection Period

The average receivable collection period shortens considerably from 28 days in 2017 to just 4 days in 2021, confirming the enhanced effectiveness in collecting accounts receivable quickly.

Average Payables Payment Period

The average payables payment period increases from 33 days in 2017 to 51 days in 2018, then steadily declines to 16 days in 2021. This trend reflects a shift from longer payment terms towards quicker settlement of payables in the latest year.

The financial data reveals a consistent upward trajectory in revenue over the five-year period from 2017 to 2021. Revenue increased nearly fivefold, starting at $441.2 million in 2017 and reaching approximately $2.33 billion by the end of 2021. This significant growth indicates strong business expansion and increased market demand.

Regarding accounts receivable, the net balance shows some fluctuations but overall exhibits a rising trend. Initially, accounts receivable decreased sharply from $33.7 million in 2017 to $12.2 million in 2018, then gradually increased in subsequent years to $27.3 million in 2021. This pattern suggests improved collections efficiency early on, followed by a moderate buildup consistent with the overall company growth.

The receivables turnover ratio further corroborates this interpretation by demonstrating a substantial increase from 13.1 times in 2017 to 85.42 times in 2021. This ratio measures how quickly receivables are collected relative to revenue. The steady increase indicates progressively enhanced efficiency in collecting receivables, allowing the company to better manage its cash flow despite the growing revenue base.

Revenue Growth

Revenue exhibited a strong and continuous increase each year, reflecting expanding operations and sales volumes.

Accounts Receivable

Accounts receivable initially declined sharply, indicating improved collection policies or credit controls, but then rose moderately in line with growing sales, suggesting a stable management of credit risk amid expansion.

Receivables Turnover

The rapidly increasing turnover ratio points to significant improvements in working capital management and the efficiency of converting receivables into cash.

Overall, the data depicts a company experiencing robust revenue growth while concurrently enhancing operational efficiency in managing receivables. The increasing turnover ratio, alongside the moderate receivables balance despite revenue growth, reflects effective credit and collection strategies. These factors likely contribute positively to liquidity and financial health.

Cost of Revenue

The cost of revenue exhibits a consistent upward trend over the five-year period. Starting at $150,986 thousand in 2017, it increases to $654,512 thousand by the end of 2021. The increase is notably steep especially from 2019 onwards, with 2020 showing a significant jump compared to prior years, and the trend continuing into 2021. This indicates rising operational expenses related to revenue generation.

Accounts Payable

Accounts payable amounts display variability throughout the period. Initially, the figure nearly doubles from $13,622 thousand in 2017 to $26,545 thousand in 2018, then remains relatively stable with a minor decrease to $26,324 thousand in 2019. A sharp increase to $40,883 thousand occurs in 2020, followed by a decline to $28,007 thousand in 2021. This pattern suggests fluctuations in short-term obligations to suppliers, with a peak in 2020 before a reduction the following year.

Payables Turnover Ratio

The payables turnover ratio shows significant variation, starting at 11.08 in 2017 and decreasing notably to 7.19 in 2018, indicating slower payment to suppliers during that year. The ratio then recovers to 10.3 in 2019 and improves slightly to 11.37 in 2020. In 2021, the ratio dramatically increases to 23.37, reflecting a much faster rate of settling payables. This sharp rise might indicate improved liquidity management or changes in payment policies in the latest period.

Working Capital

The working capital demonstrated a positive growth trend from 2017 through 2020, increasing from 336,787 thousand US dollars to 1,440,117 thousand US dollars. However, in 2021, there was a notable decline to 725,913 thousand US dollars, approximately half of the previous year's figure. This suggests a significant change in the liquidity or short-term financial management during the last year observed.

Revenue

Revenue showed a consistent upward trajectory over the entire period. Starting at 441,231 thousand US dollars in 2017, revenue more than quintupled to 2,329,114 thousand US dollars by the end of 2021. This steady and substantial increase indicates strong business growth and expanding sales or service volume across these years.

Working Capital Turnover Ratio

The working capital turnover ratio initially declined from 1.31 in 2017 to a low of 1.06 in 2018, then gradually rose to 1.2 by 2020. A significant jump occurred in 2021 with the ratio reaching 3.21. The ratio measures how efficiently the company used its working capital to generate revenue. The sharp increase in 2021 suggests a marked improvement in working capital efficiency or a marked change in the relationship between working capital and revenue, potentially due to the drop in working capital combined with continued revenue growth.

Overall Analysis

The data reflects a period of robust revenue expansion paired with fluctuating working capital levels. The rapid increase in working capital up to 2020 likely supported revenue growth, while the reduction in working capital in 2021, alongside continued rising revenue, improved turnover efficiency markedly. This could indicate a strategic adjustment in capital management, emphasizing more efficient use of resources or altered operational dynamics in 2021.

The financial data reveals a clear trend of improving efficiency in receivables management over the analyzed five-year period.

Receivables Turnover Ratio

The receivables turnover ratio demonstrates a consistent and significant increase, rising from 13.1 in 2017 to 85.42 by the end of 2021. This upward trajectory indicates that the company is collecting its receivables much more frequently within the year, reflecting enhanced collection effectiveness and possibly stricter credit policies or improved customer payment behavior.

Average Receivable Collection Period

The average collection period exhibits a corresponding downward trend, declining from 28 days in 2017 to just 4 days in 2021. This reduction implies that the company is able to convert its receivables into cash more rapidly, improving liquidity and reducing the risk associated with outstanding receivables.

Overall, the data suggests that the company has successfully optimized its accounts receivable processes, resulting in faster cash inflows and potentially better working capital management. The significant improvements in both ratios over this period point to strengthened operational efficiency in credit and collections functions.

Payables Turnover

The payables turnover ratio exhibited fluctuations over the five-year period. Starting at 11.08 in 2017, it declined significantly to 7.19 in 2018, indicating slower payment of payables. It then increased progressively to 10.3 in 2019 and 11.37 in 2020, suggesting an improvement in the efficiency of paying suppliers. A notable surge was observed in 2021, reaching 23.37, more than doubling the 2020 figure, which implies a strong acceleration in payables payment during that year.

Average Payables Payment Period

The average payables payment period, expressed in days, moved inversely to the payables turnover, as expected. Initially, the period extended from 33 days in 2017 to 51 days in 2018, showing a delay in payments to suppliers. Subsequent years reflected a reduction in this period, dropping to 35 days in 2019 and further to 32 days in 2020, implying faster payments. The sharpest decrease occurred in 2021 when the payment period shortened significantly to 16 days, highlighting an accelerated settlement of payables consistent with the higher turnover ratio.

Summary of Trends

The data reveal a period of slower payments in 2018, followed by a gradual improvement and a marked enhancement in the efficiency of payables management by 2021. The substantial jump in payables turnover and the corresponding reduction in payment days in the last year suggest a strategic shift toward faster supplier payments or a change in working capital management practices.