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)
Yahoo! Inc., long-term (investment) activity ratios
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
The analysis of investment activity ratios between 2012 and 2016 reveals a significant divergence between the efficiency of fixed asset utilization and the overall efficiency of the total asset and equity bases. While fixed asset productivity improved steadily, the broader asset turnover experienced a sharp decline starting in 2014, indicating a period of substantial underutilization of total resources relative to revenue generation.
- Net Fixed Asset Turnover
- A consistent positive trend is observed in net fixed asset turnover, which rose from 2.96 in 2012 to 4.27 in 2016. The most pronounced increase occurred between 2015 and 2016, suggesting a marked improvement in the company's ability to generate sales from its long-term physical investments.
- Total Asset Turnover
- Total asset turnover remained relatively stable between 2012 and 2013, before experiencing a severe contraction in 2014, dropping from 0.28 to 0.07. Although a slight recovery to 0.11 was recorded in 2015 and maintained through 2016, the ratio remained significantly lower than pre-2014 levels, reflecting a decrease in overall asset efficiency.
- Equity Turnover
- Equity turnover mirrored the trajectory of total asset turnover. After peaking at 0.36 in 2013, the ratio fell sharply to 0.12 in 2014. A modest recovery occurred in 2015, with the ratio stabilizing at 0.17 through 2016, indicating that the efficiency of shareholder equity in generating revenue was diminished and failed to return to historical norms.
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Net Fixed Asset Turnover
Yahoo! Inc., net fixed asset turnover calculation, comparison to benchmarks
| Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Revenue | 5,169,135) | 4,968,301) | 4,618,133) | 4,680,380) | 4,986,566) | |
| Property and equipment, net | 1,209,937) | 1,547,323) | 1,487,684) | 1,488,518) | 1,685,845) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | 4.27 | 3.21 | 3.10 | 3.14 | 2.96 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover, Competitors2 | ||||||
| Accenture PLC | — | — | — | — | — | |
| Adobe Inc. | — | — | — | — | — | |
| AppLovin Corp. | — | — | — | — | — | |
| Cadence Design Systems Inc. | — | — | — | — | — | |
| Datadog Inc. | — | — | — | — | — | |
| 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. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
1 2016 Calculation
Net fixed asset turnover = Revenue ÷ Property and equipment, net
= 5,169,135 ÷ 1,209,937 = 4.27
2 Click competitor name to see calculations.
The analysis of long-term investment activity reveals a consistent improvement in the efficiency of asset utilization between 2012 and 2016. A positive trend in the net fixed asset turnover ratio indicates that the organization became increasingly effective at generating revenue from its investment in property and equipment.
- Revenue Performance
- Revenue experienced a period of volatility, declining from 4,986,566 thousand US$ in 2012 to a low of 4,618,133 thousand US$ in 2014. However, a recovery trend emerged in the subsequent two years, with revenue climbing to 5,169,135 thousand US$ by the end of 2016, representing the highest value in the observed period.
- Net Fixed Asset Trends
- Net property and equipment showed a general downward trajectory. After an initial decrease from 1,685,845 thousand US$ in 2012 to approximately 1.49 billion US$ in 2013 and 2014, a brief increase occurred in 2015. This was followed by a significant reduction in 2016, where net fixed assets dropped to 1,209,937 thousand US$, the lowest level recorded during the five-year window.
- Net Fixed Asset Turnover Interpretation
- The net fixed asset turnover ratio rose steadily from 2.96 in 2012 to 3.21 in 2015. A substantial spike is observed in 2016, where the ratio reached 4.27. This sharp increase is the result of a dual impact: the simultaneous growth in annual revenue and the significant contraction of the net fixed asset base. This suggests a strategic shift toward a more asset-light operational model or the divestment of underperforming fixed assets, thereby maximizing the revenue output per unit of investment.
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Total Asset Turnover
Yahoo! Inc., total asset turnover calculation, comparison to benchmarks
| Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Revenue | 5,169,135) | 4,968,301) | 4,618,133) | 4,680,380) | 4,986,566) | |
| Total assets | 48,083,079) | 45,203,966) | 61,960,344) | 16,804,959) | 17,103,253) | |
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | 0.11 | 0.11 | 0.07 | 0.28 | 0.29 | |
| Benchmarks | ||||||
| Total Asset Turnover, Competitors2 | ||||||
| Accenture PLC | — | — | — | — | — | |
| Adobe Inc. | — | — | — | — | — | |
| AppLovin Corp. | — | — | — | — | — | |
| Cadence Design Systems Inc. | — | — | — | — | — | |
| Datadog Inc. | — | — | — | — | — | |
| 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. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
1 2016 Calculation
Total asset turnover = Revenue ÷ Total assets
= 5,169,135 ÷ 48,083,079 = 0.11
2 Click competitor name to see calculations.
An analysis of the financial performance from 2012 to 2016 reveals a significant decline in asset utilization efficiency. While revenue levels remained relatively stable over the five-year period, a substantial expansion of the asset base led to a sharp contraction in the total asset turnover ratio.
- Revenue Trends
- Revenue exhibited a period of moderate volatility, beginning at 4,986,566 thousand US$ in 2012 and experiencing a slight downward trajectory through 2014. A recovery phase followed, with revenue increasing to 4,968,301 thousand US$ in 2015 and reaching a peak of 5,169,135 thousand US$ by the end of 2016.
- Total Asset Fluctuations
- The asset base remained stable between 2012 and 2013, hovering around 17 billion US$. However, a dramatic increase occurred in 2014, where total assets surged to 61,960,344 thousand US$. This peak was followed by a reduction to 45,203,966 thousand US$ in 2015 and a subsequent slight increase to 48,083,079 thousand US$ in 2016.
- Total Asset Turnover Analysis
- The total asset turnover ratio, which measures the efficiency of a company's assets in generating revenue, showed a marked decline. In 2012 and 2013, the ratios were 0.29 and 0.28, respectively. The sudden expansion of assets in 2014 caused the ratio to plummet to 0.07, representing a significant drop in operational efficiency relative to the size of the balance sheet. Although a slight recovery to 0.11 occurred in 2015 and remained steady through 2016, the efficiency level remained substantially lower than the pre-2014 benchmarks.
The divergence between the relatively flat revenue growth and the expanded asset base indicates that the increase in investments or acquisitions did not yield a proportional increase in top-line growth. Consequently, the organization experienced a long-term reduction in its capacity to generate sales per unit of asset investment.
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Equity Turnover
Yahoo! Inc., equity turnover calculation, comparison to benchmarks
| Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Revenue | 5,169,135) | 4,968,301) | 4,618,133) | 4,680,380) | 4,986,566) | |
| Total Yahoo! Inc. stockholders’ equity | 31,049,283) | 29,043,537) | 38,741,837) | 13,074,909) | 14,560,200) | |
| Long-term Activity Ratio | ||||||
| Equity turnover1 | 0.17 | 0.17 | 0.12 | 0.36 | 0.34 | |
| Benchmarks | ||||||
| Equity Turnover, Competitors2 | ||||||
| Accenture PLC | — | — | — | — | — | |
| Adobe Inc. | — | — | — | — | — | |
| AppLovin Corp. | — | — | — | — | — | |
| Cadence Design Systems Inc. | — | — | — | — | — | |
| Datadog Inc. | — | — | — | — | — | |
| 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. | — | — | — | — | — | |
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
1 2016 Calculation
Equity turnover = Revenue ÷ Total Yahoo! Inc. stockholders’ equity
= 5,169,135 ÷ 31,049,283 = 0.17
2 Click competitor name to see calculations.
The analysis of long-term investment activity reveals a significant shift in the relationship between revenue generation and equity capital between 2012 and 2016. While revenue levels remained relatively stable with a gradual upward trajectory toward the end of the period, stockholders' equity underwent a substantial expansion, leading to a marked decrease in equity turnover efficiency.
- Equity Turnover Trends (2012-2013)
- During the initial two-year period, equity turnover remained relatively high and stable, increasing slightly from 0.34 in 2012 to 0.36 in 2013. This period was characterized by a proportional relationship between the equity base, which ranged between 13.1 billion and 14.6 billion USD, and annual revenues.
- Equity Turnover Contraction (2014)
- A sharp decline in the equity turnover ratio is observed in 2014, falling to 0.12. This contraction was primarily driven by a substantial increase in total stockholders' equity, which rose from approximately 13.1 billion USD to 38.7 billion USD. Because revenue remained nearly flat at 4.6 billion USD, the expanded equity base resulted in a significant reduction in the revenue-generating efficiency of the company's equity.
- Stabilization Phase (2015-2016)
- In the final two years of the analysis, the equity turnover ratio stabilized at 0.17. This slight recovery from the 2014 low coincided with a moderate increase in revenue, reaching 5.17 billion USD by 2016, and a correction of stockholders' equity, which settled between 29 billion and 31 billion USD. Despite this stabilization, the turnover efficiency remained considerably lower than the levels observed prior to 2014, indicating a permanently larger equity base relative to revenue output.
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