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 Liquidity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2013
- Debt to Equity since 2013
- Total Asset Turnover since 2013
- Analysis of Revenues
- Aggregate Accruals
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Short-term Activity Ratios (Summary)
Twitter Inc., short-term (operating) activity ratios (quarterly data)
Based on: 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), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
- Receivables Turnover
- The receivables turnover ratio demonstrates a generally upward trend from March 2018 to June 2022, increasing from approximately 3.68 to values above 5.3 in some quarters. There are some fluctuations; for instance, a decline occurs towards the end of 2020, dropping to 3.57, followed by a recovery to between 4.6 and 4.7 by the end of 2021. The turnover rate increases again significantly in mid-2022, reaching 5.53 and 5.38 in the last two quarters available, indicating improved efficiency in collecting receivables over time.
- Payables Turnover
- The payables turnover ratio shows considerable volatility across the observed periods but displays an overall increasing trend. Starting around 5.04 in early 2018, it fluctuates but peaks notably at 13.38 by June 2022. This suggests a progressively faster rate of paying suppliers, especially pronounced in 2022 where the ratios jump from 8.85 to 10.15 and then to 13.38 within three quarters. Earlier quarters show moderate fluctuations with occasional decreases, but the overall pattern indicates acceleration in payables turnover.
- Working Capital Turnover
- Working capital turnover remains relatively stable with some modest growth over the period. It fluctuates modestly within a range from 0.43 to 0.84, starting at 0.52 in early 2018 and ending at 0.84 in June 2022. The increase appears gradual, with some dips observed around mid-2020 followed by recovery and steady growth through 2021 and into 2022. This indicates a generally improving efficiency in using working capital to generate sales.
- Average Receivable Collection Period
- The average receivable collection period decreases overall from 99 days in March 2018 to 66-68 days by mid-2022, indicating faster collection of receivables. There is noticeable variability, including a peak of 102 days in December 2020, which represents a delayed collection period during that quarter. This is followed by a sharp improvement to lower days across subsequent quarters. The pattern reflects both short-term disruptions and an overall trend towards more efficient receivables management.
- Average Payables Payment Period
- The average payables payment period exhibits a strong downward trend over the observed timeframe. Starting from 72 days in March 2018, it reduces steadily with some fluctuations and reaches as low as 27 days by June 2022. Notable short-term increases are evident, for example, 75 days in September 2021, but the general pattern shows that payments to suppliers are being settled more quickly over time, aligning with the increasing payables turnover ratios.
Turnover Ratios
Average No. Days
Receivables Turnover
Twitter Inc., receivables turnover calculation (quarterly data)
| Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||||||
| Accounts receivable, net of allowance for doubtful accounts | |||||||||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||||||||
| Receivables turnover1 | |||||||||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||||||||
| Receivables Turnover, Competitors2 | |||||||||||||||||||||||||||||
| Alphabet Inc. | |||||||||||||||||||||||||||||
| Comcast Corp. | |||||||||||||||||||||||||||||
| Meta Platforms Inc. | |||||||||||||||||||||||||||||
| Take-Two Interactive Software Inc. | |||||||||||||||||||||||||||||
| Walt Disney Co. | |||||||||||||||||||||||||||||
Based on: 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), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
1 Q2 2022 Calculation
Receivables turnover
= (RevenueQ2 2022
+ RevenueQ1 2022
+ RevenueQ4 2021
+ RevenueQ3 2021)
÷ Accounts receivable, net of allowance for doubtful accounts
= ( + + + )
÷ =
2 Click competitor name to see calculations.
- Revenue Trends
- Revenue demonstrates an overall increasing trend from March 2017 to June 2022, with some fluctuations. Initially, revenue steadily grew from approximately 548 million USD in March 2017 to a peak around 1.57 billion USD by December 2021, indicating significant expansion. However, occasional declines appear, such as between December 2019 and June 2020, where revenue decreased from 1.01 billion USD to 683 million USD, potentially reflecting external challenges. After this dip, revenue rebounded sharply towards the end of 2020 and early 2021 before slightly declining again by mid-2022.
- Accounts Receivable Patterns
- Accounts receivable, net of doubtful accounts, follows a generally increasing trajectory similar to revenue but exhibits higher volatility. Beginning at about 501 million USD in March 2017, it rises substantially to over 1.21 billion USD by March 2022. Notable increases correspond to periods of rising revenue, suggesting growth in credit sales. Nonetheless, some decreases in receivables are observed, for example between December 2019 and June 2020, paralleling revenue declines. The data indicates the company experiences fluctuations in receivables collections relative to sales volumes.
- Receivables Turnover Ratio Analysis
- The receivables turnover ratio reveals variability in the efficiency of collections over time. Beginning near 3.68 in December 2017, the ratio generally improves, reaching values above 5.0 during several quarters in 2020 and mid-2022, indicating faster collection of receivables relative to credit sales. However, occasional dips below 4.0 are apparent, suggesting periods when receivables remained outstanding longer. The ratio's fluctuations imply that while collection practices strengthened at times, there are intervals where collection efficiency decreased, possibly due to operational or market conditions.
- Integrated Financial Observations
- The combined trends suggest that revenue growth is accompanied by increases in accounts receivable, with collection efficiency varying across periods. Periods of revenue declines or slower growth often coincide with drops in accounts receivable and lower turnover ratios, highlighting sensitivity to market or economic factors. The overall improvement in receivables turnover in the later periods may indicate enhanced credit management or collection processes. Despite short-term volatilities, the company maintained an expanding revenue base and managed receivables with fluctuating but overall reasonable efficiency during the observed quarters.
Payables Turnover
Twitter Inc., payables turnover calculation (quarterly data)
| Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||||||||
| Accounts payable | |||||||||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||||||||
| Payables turnover1 | |||||||||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||||||||
| Payables Turnover, Competitors2 | |||||||||||||||||||||||||||||
| Alphabet Inc. | |||||||||||||||||||||||||||||
| Comcast Corp. | |||||||||||||||||||||||||||||
| Meta Platforms Inc. | |||||||||||||||||||||||||||||
| Netflix Inc. | |||||||||||||||||||||||||||||
| Take-Two Interactive Software Inc. | |||||||||||||||||||||||||||||
Based on: 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), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
1 Q2 2022 Calculation
Payables turnover
= (Cost of revenueQ2 2022
+ Cost of revenueQ1 2022
+ Cost of revenueQ4 2021
+ Cost of revenueQ3 2021)
÷ Accounts payable
= ( + + + )
÷ =
2 Click competitor name to see calculations.
- Cost of Revenue
- The cost of revenue exhibited a generally increasing trend from March 31, 2017 to June 30, 2022. Initial values were around 220 million US dollars, rising steadily over the years, with notable acceleration starting in late 2019. The cost peaked near 540 million by mid-2022, indicating a substantial increase in expenses related to generating revenue. This upward trajectory suggests growth in business scale or increased operational costs over the period considered.
- Accounts Payable
- Accounts payable showed significant fluctuations during the observed timeframe. Beginning at approximately 86 million in early 2017, the figures rose sharply by the end of that year, reaching over 170 million. The subsequent years saw periods of both increases and decreases, with a notable peak of around 325 million in late 2021. However, this was followed by a decline towards 153 million by mid-2022. These variations suggest changing payment cycles or supplier credit terms impacting liabilities over quarters.
- Payables Turnover Ratio
- The payables turnover ratio generally trended upwards between early 2018 and mid-2022, indicating an increase in the frequency of paying off accounts payable during the periods. Starting at 5.04 in March 2018, the ratio fluctuated but displayed an accelerating climb from 2019 onward, reaching as high as 13.38 by June 2022. Higher turnover ratios imply improved efficiency in managing payments to suppliers, possibly reflecting a strategic emphasis on quicker settlements or better cash management practices.
- Summary of Interrelationships
- The concurrent increase in cost of revenue and payables turnover ratio suggests that while expenses related to revenue generation expanded, the company managed to relatively expedite payments to suppliers. Meanwhile, accounts payable fluctuated, which may be due to operational adjustments or external factors affecting procurement cycles. The interplay between these metrics denotes active management of both operational growth and liquidity considerations over the analyzed period.
Working Capital Turnover
Twitter Inc., working capital turnover calculation (quarterly data)
| Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||||||||
| Current assets | |||||||||||||||||||||||||||||
| Less: Current liabilities | |||||||||||||||||||||||||||||
| Working capital | |||||||||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||||||||
| Working capital turnover1 | |||||||||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||||||||
| Working Capital Turnover, Competitors2 | |||||||||||||||||||||||||||||
| Alphabet Inc. | |||||||||||||||||||||||||||||
| Comcast Corp. | |||||||||||||||||||||||||||||
| Meta Platforms Inc. | |||||||||||||||||||||||||||||
| Netflix Inc. | |||||||||||||||||||||||||||||
| Take-Two Interactive Software Inc. | |||||||||||||||||||||||||||||
| Walt Disney Co. | |||||||||||||||||||||||||||||
Based on: 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), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
1 Q2 2022 Calculation
Working capital turnover
= (RevenueQ2 2022
+ RevenueQ1 2022
+ RevenueQ4 2021
+ RevenueQ3 2021)
÷ Working capital
= ( + + + )
÷ =
2 Click competitor name to see calculations.
- Working Capital
- The working capital shows a general increasing trend from March 2017 through June 2020, rising from approximately 4.2 billion to a peak near 7.76 billion US dollars. After this peak, a decline is noted in the subsequent quarters, reaching close to 6.26 billion by June 2022. This indicates that while the company initially increased its liquid assets relative to current liabilities, it faced a phase of reduction in this buffer from mid-2020 onward.
- Revenue
- Revenue exhibits considerable fluctuations across the quarters. From March 2017 to December 2017, there is a rising trajectory in revenue, increasing from around 548 million US dollars to over 730 million. Following this period, quarterly revenue maintains an overall upward movement with several peaks and troughs, notably reaching a significant high of over 1.56 billion in March 2022. However, some quarters exhibit comparable or slightly lower revenue levels than previous peaks, indicating variability and potential seasonality in sales performance.
- Working Capital Turnover Ratio
- This ratio, available starting from September 2017, largely remains between 0.43 and 0.84 over the observed period. It initially fluctuates around 0.5 to 0.57 from late 2017 through 2019. A marked increase is seen starting in late 2020, rising steadily from 0.52 to a peak of 0.84 by June 2022. This suggests improved efficiency in the utilization of working capital to generate revenue in the most recent periods, despite the decline in absolute working capital figures.
- Summary Insights
- The company demonstrates a capacity to grow both its working capital and revenue over the analyzed timeframe, with working capital peaking before revenue does. The increased working capital turnover ratio in the later periods indicates an enhanced effectiveness in using working capital to drive revenue growth, which is particularly notable from late 2020 onwards. Despite some volatility in revenue, the overall trend is positive, with substantial growth achieved by 2022. The decrease in working capital alongside rising turnover suggests a strategic move towards leaner operations or faster asset turnover during the recent quarters.
Average Receivable Collection Period
Twitter Inc., average receivable collection period calculation (quarterly data)
| Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||||||||
| Receivables turnover | |||||||||||||||||||||||||||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||||||||||
| Average receivable collection period1 | |||||||||||||||||||||||||||||
| Benchmarks (no. days) | |||||||||||||||||||||||||||||
| Average Receivable Collection Period, Competitors2 | |||||||||||||||||||||||||||||
| Alphabet Inc. | |||||||||||||||||||||||||||||
| Comcast Corp. | |||||||||||||||||||||||||||||
| Meta Platforms Inc. | |||||||||||||||||||||||||||||
| Take-Two Interactive Software Inc. | |||||||||||||||||||||||||||||
| Walt Disney Co. | |||||||||||||||||||||||||||||
Based on: 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), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
1 Q2 2022 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
- Receivables Turnover
- The receivables turnover exhibited an overall increasing trend from early 2017 through mid-2022. Starting at 3.68 in March 2018, the ratio improved consistently, reaching a peak of 5.53 in June 2020 and June 2022. Despite fluctuations, such as a dip to 3.57 in December 2020, the general trajectory indicates enhanced efficiency in collecting receivables over time.
- Average Receivable Collection Period
- The average receivable collection period inversely mirrors the receivables turnover trend. Initially at 99 days in March 2018, it decreased steadily to a low of 66 days in June 2020 and again in June 2022, indicating faster collection cycles during these periods. However, there are periods of elongation, notably spikes to 102 days in March 2021 and 90 days in March 2020, reflecting temporary slowdowns in collections. Overall, the trend suggests improved collection efficiency despite intermittent increases in days outstanding.
- Relationship and Insights
- The inverse relationship between receivables turnover and average collection period is evident, as increases in turnover correspond with decreases in collection days. The variability in both metrics points to periodic disruptions, potentially due to external or operational factors impacting collections. Nonetheless, the general improvement implies strengthening credit management or customer payment behavior over the analyzed timeframe.
Average Payables Payment Period
Twitter Inc., average payables payment period calculation (quarterly data)
| Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||||||||
| Payables turnover | |||||||||||||||||||||||||||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||||||||||
| Average payables payment period1 | |||||||||||||||||||||||||||||
| Benchmarks (no. days) | |||||||||||||||||||||||||||||
| Average Payables Payment Period, Competitors2 | |||||||||||||||||||||||||||||
| Alphabet Inc. | |||||||||||||||||||||||||||||
| Comcast Corp. | |||||||||||||||||||||||||||||
| Meta Platforms Inc. | |||||||||||||||||||||||||||||
| Netflix Inc. | |||||||||||||||||||||||||||||
| Take-Two Interactive Software Inc. | |||||||||||||||||||||||||||||
Based on: 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), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
1 Q2 2022 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
The analysis of the payables turnover ratio and average payables payment period over the examined quarters reveals distinct trends and fluctuations in the company’s payment behavior and vendor management efficiency.
- Payables Turnover Ratio
- The payables turnover ratio displays a general upward trajectory from March 2017 through June 2022, indicating an increasing frequency in the settlement of payables. Initially, the ratio fluctuated between approximately 5.0 and 7.8 in 2017-2018, reflecting moderate efficiency in payables management. From 2019 onwards, the ratio shows a gradual increase with some variability, reaching a peak of 13.38 in June 2022. This upward trend implies the company has been accelerating its payments to suppliers, possibly negotiating better credit terms or improving cash flow management.
- Average Payables Payment Period
- The average payables payment period inversely correlates with the turnover ratio, as expected. The period ranged from 72 days in early 2017 to a lower 47 days by the end of 2017, then exhibited fluctuations throughout 2018 and 2019, mostly hovering between 50 and 70 days. Starting in 2020, the payment period showed increased variability, with values oscillating between approximately 36 and 75 days. The most recent quarters in 2022 demonstrate a marked reduction to as low as 27 days in June 2022, consistent with the increase in payables turnover ratio. This suggests the company has shortened its payment cycle substantially in recent periods, thus paying suppliers more quickly.
- Overall Insights
- The data suggest that over the period examined, the company has progressively enhanced its payable management efficiency. The increased turnover ratio alongside the reduced average payment period indicate a strategic shift towards faster settlement of liabilities. This could imply stronger liquidity or deliberate efforts to improve supplier relationships. The notable decrease in payment days in mid-2022 underscores this shift, reinforcing the assessment of increasing payment speed and possibly a more robust cash position or altered credit practices.