Analysis of Long-term (Investment) Activity Ratios
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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Long-term Activity Ratios (Summary)
Fortinet Inc., long-term (investment) activity ratios
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Net fixed asset turnover | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset) | ||||||
| Total asset turnover | ||||||
| Equity turnover |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The financial data reveals several notable trends in asset and equity turnover ratios over the five-year period. The net fixed asset turnover shows a consistent decline from 6.64 in 2018 to 4.92 in 2022. This indicates that the company is generating less revenue per unit of fixed asset value over time, suggesting either increased investment in fixed assets or a relative slowdown in sales growth in relation to those assets.
Similarly, when including operating lease right-of-use assets, the net fixed asset turnover ratio declines from 6.64 in 2018 to 4.44 by 2022. This slightly sharper decline compared to the basic net fixed asset turnover suggests that the incorporation of lease assets is further diluting efficiency measures, reflecting the growing impact of leasing obligations on asset utilization metrics.
The total asset turnover ratio exhibits some variability but generally trends upward from 0.59 in 2018 to 0.71 in 2022, with a notable dip in 2021. This increase indicates improved efficiency in utilizing total assets to generate revenue, which may suggest better asset management or growth in sales relative to total asset base.
Equity turnover shows a marked increase over the period, rising from 1.78 in 2018 to a peak of 4.28 in 2021, although the figure for 2022 is not available. This sharp growth signals a significant acceleration in the utilization of shareholders' equity to produce revenue during these years, suggesting enhanced operational leverage or changes in capital structure impacting equity base.
- Net Fixed Asset Turnover
- Declining from 6.64 (2018) to 4.92 (2022), indicating reduced revenue generation efficiency from fixed assets.
- Net Fixed Asset Turnover Including Operating Lease
- Declined from 6.64 (2018) to 4.44 (2022), reflecting increased influence of lease assets on asset utilization.
- Total Asset Turnover
- Generally increasing with fluctuations, from 0.59 (2018) to 0.71 (2022), showing improved overall asset efficiency.
- Equity Turnover
- Increased substantially from 1.78 (2018) to 4.28 (2021), indicating stronger use of equity to support revenue; data for 2022 is missing.
Net Fixed Asset Turnover
Fortinet Inc., net fixed asset turnover calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Revenue | ||||||
| Property and equipment, net | ||||||
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | ||||||
| Benchmarks | ||||||
| Net Fixed Asset Turnover, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Fair Isaac Corp. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| ServiceNow Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
| Net Fixed Asset Turnover, Sector | ||||||
| Software & Services | ||||||
| Net Fixed Asset Turnover, Industry | ||||||
| Information Technology | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Net fixed asset turnover = Revenue ÷ Property and equipment, net
= ÷ =
2 Click competitor name to see calculations.
- Revenue Trends
- Revenue exhibited a consistent upward trajectory over the five-year period. Starting at $1,801,200 thousand in 2018, revenue increased steadily each year to reach $4,417,400 thousand by the end of 2022. This represents a strong cumulative growth, indicating robust sales expansion and possibly an increasing market share or customer base.
- Property and Equipment, Net
- The net value of property and equipment increased significantly from $271,400 thousand in 2018 to $898,500 thousand in 2022. The growth was particularly pronounced between 2020 and 2021, where the value rose by approximately 53%, suggesting substantial capital investments during this period. Such an increase may reflect strategic expansion or upgrading of physical assets.
- Net Fixed Asset Turnover Ratio
- The net fixed asset turnover ratio, which measures the efficiency of fixed assets in generating revenue, showed a gradual decline from 6.64 in 2018 to 4.92 in 2022. Despite a slight uptick in the final year, the overall downward trend indicates that the company is generating less revenue per dollar of fixed asset value than in prior years. This might be due to the aggressive increase in fixed assets outpacing revenue growth or changes in asset utilization efficiency.
- Summary
- The company demonstrated strong revenue growth alongside significant investments in property and equipment, suggesting a phase of expansion and asset buildup. However, the declining net fixed asset turnover ratio points to a potential reduction in asset efficiency, which could warrant further analysis to ensure that the increased asset base effectively supports revenue generation in the future.
Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
Fortinet Inc., net fixed asset turnover (including operating lease, right-of-use asset) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Revenue | ||||||
| Property and equipment, net | ||||||
| Operating lease ROU assets, non-current (classification: Other assets) | ||||||
| Property and equipment, net (including operating lease, right-of-use asset) | ||||||
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset)1 | ||||||
| Benchmarks | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Fair Isaac Corp. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| ServiceNow Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Sector | ||||||
| Software & Services | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Industry | ||||||
| Information Technology | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Net fixed asset turnover (including operating lease, right-of-use asset) = Revenue ÷ Property and equipment, net (including operating lease, right-of-use asset)
= ÷ =
2 Click competitor name to see calculations.
- Revenue Trends
- The revenue shows a consistent upward trend across the observed periods, increasing from 1,801,200 thousand US dollars at the end of 2018 to 4,417,400 thousand US dollars by the end of 2022. This represents a significant growth in annual revenue, with the increase accelerating notably after 2020.
- Property and Equipment, Net
- The net value of property and equipment, including operating lease and right-of-use asset, has also displayed a steady rise from 271,400 thousand US dollars in 2018 to 994,800 thousand US dollars in 2022. This sharp increase suggests substantial capital investment, with the asset base more than tripling over the period.
- Net Fixed Asset Turnover
- The net fixed asset turnover ratio has gradually declined over the years, starting at 6.64 in 2018 and stabilizing at 4.44 in both 2021 and 2022. This decline indicates that despite rising revenue, the growth in net fixed assets has outpaced revenue growth, leading to lower efficiency in utilizing fixed assets to generate sales.
- General Insights
- Overall, the company has demonstrated robust revenue growth alongside significant investment in property and equipment. However, the declining net fixed asset turnover ratio points to a decreasing efficiency in asset utilization. This could imply that recent asset expansions have not yet fully translated into proportional revenue gains, or that there is an intentional strategic investment to support future growth.
Total Asset Turnover
Fortinet Inc., total asset turnover calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Revenue | ||||||
| Total assets | ||||||
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | ||||||
| Benchmarks | ||||||
| Total Asset Turnover, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Fair Isaac Corp. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| ServiceNow Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
| Total Asset Turnover, Sector | ||||||
| Software & Services | ||||||
| Total Asset Turnover, Industry | ||||||
| Information Technology | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Total asset turnover = Revenue ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals several notable trends over the five-year period from 2018 to 2022. There is a clear upward trajectory in revenues, which consistently increased each year, rising from approximately $1.8 billion to $4.42 billion. This pattern indicates substantial growth in the company's sales or service income over the period.
Total assets also showed an increasing pattern, starting at about $3.08 billion in 2018 and reaching $6.23 billion by the end of 2022. Despite some fluctuations in growth rate, particularly a significant jump between 2020 and 2021, the overall trend indicates an expansion in the asset base, likely reflecting investments in property, equipment, or other resources to support business operations.
The total asset turnover ratio, which measures how efficiently the company uses its assets to generate revenue, exhibited some variability. It began at 0.59 in 2018, then dipped to 0.55 in 2019, increased to 0.64 in 2020, decreased again to 0.56 in 2021, and finally rose to 0.71 in 2022. This fluctuation suggests that the efficiency in utilizing assets to generate revenue was inconsistent, but the upward movement in 2022 to the highest ratio in the period implies improved asset utilization efficiency in the most recent year.
- Revenue Growth
- Continuous and substantial increase over each year, reaching more than double from 2018 to 2022.
- Total Assets
- Moderate growth with a notable increase between 2020 and 2021, overall expanding the asset base significantly.
- Total Asset Turnover Ratio
- Variable over the years with a general improvement in 2022, indicating enhanced efficiency in asset usage to generate revenue.
In summary, the data reflects strong sales growth supported by expanding asset investments. The improved asset turnover ratio in 2022 suggests enhanced operational efficiency, which, combined with revenue growth, could point to favorable financial performance trends.
Equity Turnover
Fortinet Inc., equity turnover calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Revenue | ||||||
| Total Fortinet, Inc. stockholders’ equity (deficit) | ||||||
| Long-term Activity Ratio | ||||||
| Equity turnover1 | ||||||
| Benchmarks | ||||||
| Equity Turnover, Competitors2 | ||||||
| Accenture PLC | ||||||
| Adobe Inc. | ||||||
| Cadence Design Systems Inc. | ||||||
| CrowdStrike Holdings Inc. | ||||||
| Fair Isaac Corp. | ||||||
| International Business Machines Corp. | ||||||
| Intuit Inc. | ||||||
| Microsoft Corp. | ||||||
| Oracle Corp. | ||||||
| Palantir Technologies Inc. | ||||||
| Palo Alto Networks Inc. | ||||||
| Salesforce Inc. | ||||||
| ServiceNow Inc. | ||||||
| Synopsys Inc. | ||||||
| Workday Inc. | ||||||
| Equity Turnover, Sector | ||||||
| Software & Services | ||||||
| Equity Turnover, Industry | ||||||
| Information Technology | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Equity turnover = Revenue ÷ Total Fortinet, Inc. stockholders’ equity (deficit)
= ÷ =
2 Click competitor name to see calculations.
- Revenue
- Revenue exhibited a consistent upward trend over the five-year period. Starting from approximately 1.8 billion US dollars at the end of 2018, revenue increased each year, reaching about 4.4 billion by the end of 2022. The growth accelerated particularly in the latter years, reflecting a strong expansion of the company's sales or service capacity.
- Total Stockholders’ Equity
- Stockholders’ equity showed a fluctuating pattern with an overall declining trend in recent years. It increased from just over 1 billion US dollars at the end of 2018 to approximately 1.3 billion at the end of 2019. However, it then decreased significantly in the subsequent years, dropping to a negative value of around -282 million US dollars by the end of 2022. This decline suggests possible accumulated losses, repurchases of shares, or other factors impacting the equity base negatively.
- Equity Turnover Ratio
- The equity turnover ratio increased substantially through 2021, starting at 1.78 in 2018 and reaching 4.28 by the end of 2021, indicating more efficient use of equity to generate revenue during this period. The ratio's high value suggests improved operational efficiency relative to equity. Data for 2022 was not provided, making it unclear whether this positive trend continued or reversed.