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.
Long-term Activity Ratios (Summary)
Paramount Global, long-term (investment) activity ratios
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 analysis of long-term activity ratios between 2018 and 2022 reveals a divergence between the efficiency of fixed asset utilization and the overall efficiency of total asset and equity employment. While fixed asset turnover shows a positive trajectory, broader asset and equity turnover ratios have experienced significant declines over the five-year period.
- Net Fixed Asset Turnover
- A general upward trend is observed in net fixed asset turnover, which rose from 12.00 in 2018 to 17.11 by 2022. This suggests an increasing ability to generate revenue from tangible fixed assets, with a particularly sharp acceleration occurring between 2020 and 2021.
- Net Fixed Asset Turnover (Including Operating Leases)
- A significant contraction occurred between 2018 and 2019, where the ratio dropped from 12.00 to 6.91. This decline is likely attributable to the recognition of right-of-use assets on the balance sheet. Following this adjustment, a consistent recovery pattern emerged, with the ratio improving steadily to 9.56 by the end of 2022.
- Total Asset Turnover
- Total asset efficiency experienced a downward trend during the initial period, declining from 0.66 in 2018 to a low of 0.48 in 2020. A modest recovery followed in the subsequent two years, with the ratio reaching 0.52 in 2022, although it remained well below the 2018 baseline.
- Equity Turnover
- A substantial and sustained decrease in equity turnover is evident, falling from 5.18 in 2018 to 1.31 in 2022. The most rapid decline occurred between 2018 and 2019. This trend indicates that revenue generation relative to shareholder equity has diminished significantly, suggesting either a substantial increase in the equity base or a relative stagnation in revenue growth compared to equity accumulation.
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Net Fixed Asset Turnover
Paramount Global, 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 millions) | ||||||
| Revenues | 30,154) | 28,586) | 25,285) | 27,812) | 14,514) | |
| Property and equipment, net | 1,762) | 1,736) | 1,994) | 2,085) | 1,209) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | 17.11 | 16.47 | 12.68 | 13.34 | 12.00 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover, Competitors2 | ||||||
| Alphabet Inc. | 2.51 | 2.64 | — | — | — | |
| Comcast Corp. | 2.19 | 2.15 | — | — | — | |
| Meta Platforms Inc. | 1.47 | 2.04 | — | — | — | |
| Netflix Inc. | 22.61 | 22.44 | — | — | — | |
| Walt Disney Co. | 2.44 | 2.05 | 2.02 | — | — | |
| Net Fixed Asset Turnover, Sector | ||||||
| Media & Entertainment | 2.24 | 2.42 | — | — | — | |
| Net Fixed Asset Turnover, Industry | ||||||
| Communication Services | 1.73 | 1.90 | — | — | — | |
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 = Revenues ÷ Property and equipment, net
= 30,154 ÷ 1,762 = 17.11
2 Click competitor name to see calculations.
The analysis of long-term activity ratios reveals a consistent improvement in the efficiency of fixed asset utilization between 2018 and 2022. A strong correlation is observed between rising revenue streams and a stabilized asset base, leading to a significant increase in the net fixed asset turnover ratio over the analyzed period.
- Revenue Trajectory
- Revenues demonstrated substantial growth, nearly doubling from 14,514 million in 2018 to 27,812 million in 2019. Despite a slight contraction in 2020 to 25,285 million, the upward trend resumed, reaching a five-year peak of 30,154 million by December 31, 2022.
- Fixed Asset Management
- Net property and equipment experienced an initial increase, peaking at 2,085 million in 2019. In the subsequent three years, a gradual decline was observed, with the asset base reducing to 1,762 million by 2022. This suggests a period of asset optimization or depreciation exceeding new capital expenditures.
- Net Fixed Asset Turnover Performance
- The net fixed asset turnover ratio improved from 12.00 in 2018 to 17.11 in 2022. The most pronounced increase occurred between 2020 and 2021, when the ratio rose from 12.68 to 16.47. This progression indicates that the organization has become increasingly effective at generating revenue relative to its investment in net fixed assets, reflecting higher operational productivity of its physical infrastructure.
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Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
Paramount Global, 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 millions) | ||||||
| Revenues | 30,154) | 28,586) | 25,285) | 27,812) | 14,514) | |
| Property and equipment, net | 1,762) | 1,736) | 1,994) | 2,085) | 1,209) | |
| Operating lease assets | 1,391) | 1,630) | 1,602) | 1,939) | —) | |
| Property and equipment, net (including operating lease, right-of-use asset) | 3,153) | 3,366) | 3,596) | 4,024) | 1,209) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset)1 | 9.56 | 8.49 | 7.03 | 6.91 | 12.00 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Competitors2 | ||||||
| Alphabet Inc. | 2.23 | 2.33 | — | — | — | |
| Comcast Corp. | 1.98 | 1.92 | — | — | — | |
| Meta Platforms Inc. | 1.26 | 1.69 | — | — | — | |
| Netflix Inc. | 8.72 | 7.88 | — | — | — | |
| Walt Disney Co. | 2.18 | 1.83 | 1.81 | — | — | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Sector | ||||||
| Media & Entertainment | 1.97 | 2.09 | — | — | — | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Industry | ||||||
| Communication Services | 1.43 | 1.54 | — | — | — | |
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) = Revenues ÷ Property and equipment, net (including operating lease, right-of-use asset)
= 30,154 ÷ 3,153 = 9.56
2 Click competitor name to see calculations.
Financial performance between 2018 and 2022 is characterized by a significant expansion in revenue and a notable shift in the utilization of fixed assets. After a substantial increase in both revenue and the net fixed asset base in 2019, a period of steady asset optimization and consistent revenue growth followed.
- Revenue Growth Trends
- Revenues exhibited a sharp increase from US$ 14,514 million in 2018 to US$ 27,812 million in 2019. Following a minor contraction in 2020, revenues resumed an upward trajectory, reaching US$ 30,154 million by the end of 2022.
- Net Fixed Asset Trajectory
- Property and equipment, including right-of-use assets, surged from US$ 1,209 million in 2018 to a peak of US$ 4,024 million in 2019. From 2020 through 2022, this figure declined consistently, ending the period at US$ 3,153 million, suggesting a reduction in the net book value of fixed assets or a strategic shift in capital allocation.
- Net Fixed Asset Turnover Efficiency
- The net fixed asset turnover ratio experienced a significant decline from 12.00 in 2018 to 6.91 in 2019, reflecting the disproportionate increase in the asset base relative to revenue growth during that period. However, a consistent recovery trend is observed from 2020 onward, with the ratio improving to 7.03 in 2020, 8.49 in 2021, and 9.56 in 2022. This improvement indicates an increasing efficiency in generating revenue from the company's fixed asset investments.
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Total Asset Turnover
Paramount Global, 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 millions) | ||||||
| Revenues | 30,154) | 28,586) | 25,285) | 27,812) | 14,514) | |
| Total assets | 58,393) | 58,620) | 52,663) | 49,519) | 21,859) | |
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | 0.52 | 0.49 | 0.48 | 0.56 | 0.66 | |
| Benchmarks | ||||||
| Total Asset Turnover, Competitors2 | ||||||
| Alphabet Inc. | 0.77 | 0.72 | — | — | — | |
| Comcast Corp. | 0.47 | 0.42 | — | — | — | |
| Meta Platforms Inc. | 0.63 | 0.71 | — | — | — | |
| Netflix Inc. | 0.65 | 0.67 | — | — | — | |
| Walt Disney Co. | 0.41 | 0.33 | 0.32 | — | — | |
| Total Asset Turnover, Sector | ||||||
| Media & Entertainment | 0.60 | 0.56 | — | — | — | |
| Total Asset Turnover, Industry | ||||||
| Communication Services | 0.47 | 0.45 | — | — | — | |
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 = Revenues ÷ Total assets
= 30,154 ÷ 58,393 = 0.52
2 Click competitor name to see calculations.
The total asset turnover ratio exhibits a general decline between 2018 and 2020, followed by a modest recovery through 2022. This trend indicates a period of decreasing efficiency in asset utilization to generate revenue, succeeded by a gradual stabilization in the latter years of the analyzed period.
- Revenue and Asset Growth Patterns
- A substantial increase in both revenues and total assets occurred in 2019. Revenues grew from 14,514 million USD in 2018 to 27,812 million USD in 2019, while total assets more than doubled from 21,859 million USD to 49,519 million USD. Because the growth in the asset base significantly outpaced the growth in revenue during this interval, the total asset turnover ratio dropped from 0.66 to 0.56.
- Efficiency Downturn (2018-2020)
- The lowest point of asset efficiency was reached in 2020, with the turnover ratio falling to 0.48. During this period, total assets continued to expand to 52,663 million USD, while revenues experienced a slight contraction to 25,285 million USD, further compounding the decline in the ratio.
- Recovery and Stabilization (2021-2022)
- A corrective trend is observed from 2021 onwards. The total asset turnover ratio improved to 0.49 in 2021 and further to 0.52 in 2022. This improvement is attributed to revenue growth reaching 30,154 million USD by 2022, while the total asset base remained relatively flat, ending the period at 58,393 million USD. This suggests a shift toward more effective utilization of the existing asset base to drive top-line growth.
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Equity Turnover
Paramount Global, 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 millions) | ||||||
| Revenues | 30,154) | 28,586) | 25,285) | 27,812) | 14,514) | |
| Total Paramount stockholders’ equity | 23,036) | 22,402) | 15,371) | 13,207) | 2,804) | |
| Long-term Activity Ratio | ||||||
| Equity turnover1 | 1.31 | 1.28 | 1.64 | 2.11 | 5.18 | |
| Benchmarks | ||||||
| Equity Turnover, Competitors2 | ||||||
| Alphabet Inc. | 1.10 | 1.02 | — | — | — | |
| Comcast Corp. | 1.50 | 1.21 | — | — | — | |
| Meta Platforms Inc. | 0.93 | 0.94 | — | — | — | |
| Netflix Inc. | 1.52 | 1.87 | — | — | — | |
| Walt Disney Co. | 0.87 | 0.76 | 0.78 | — | — | |
| Equity Turnover, Sector | ||||||
| Media & Entertainment | 1.10 | 1.02 | — | — | — | |
| Equity Turnover, Industry | ||||||
| Communication Services | 1.16 | 1.09 | — | — | — | |
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 = Revenues ÷ Total Paramount stockholders’ equity
= 30,154 ÷ 23,036 = 1.31
2 Click competitor name to see calculations.
The financial trajectory from 2018 to 2022 is characterized by a significant expansion of the equity base that has outpaced revenue growth, leading to a substantial decline in the equity turnover ratio. While revenues more than doubled over the five-year period, increasing from 14,514 million USD to 30,154 million USD, total stockholders' equity grew more aggressively, rising from 2,804 million USD to 23,036 million USD.
- Equity Turnover Trend
- A consistent downward trend in equity turnover is observed, falling from 5.18 in 2018 to 1.31 in 2022. The most precipitous drop occurred between 2018 and 2019, where the ratio decreased from 5.18 to 2.11. This suggests a sharp increase in the amount of equity required to generate each unit of revenue, indicating a reduction in the efficiency of equity utilization.
- Revenue and Equity Correlation
- The decline in turnover is primarily driven by the disproportionate growth of total stockholders' equity compared to revenue. Between 2018 and 2021, equity increased by approximately 700%, while revenues increased by approximately 96%. This imbalance caused the equity turnover ratio to contract steadily from 2019 through 2021, reaching a low of 1.28.
- Recent Stabilization
- A marginal reversal of the downward trend occurred in 2022, with the equity turnover ratio increasing slightly to 1.31. This movement reflects a period where revenue growth slightly exceeded the rate of equity accumulation, though the ratio remains significantly lower than the levels recorded at the start of the analyzed period.
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