Akamai Technologies Inc (AKAM)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | — | — | — | — | — |
| Receivables turnover | 5.28 | 5.35 | 5.04 | 4.77 | 5.16 |
| Payables turnover | 10.28 | 9.52 | 11.54 | 9.55 | 7.11 |
| Working capital turnover | 3.95 | 3.16 | 3.02 | 2.69 | 1.85 |
Inventory turnover is not provided, which makes it difficult to assess Akamai's efficiency in managing its inventory.
Receivables turnover has remained relatively stable over the past five years, ranging from 4.85 to 5.32 times. This indicates that Akamai is efficient in collecting payments from its customers. A higher turnover rate suggests that the company is collecting receivables more quickly.
Payables turnover has shown fluctuation over the years, with a range of 7.11 to 11.54 times. A higher payables turnover ratio implies that Akamai is paying its suppliers more frequently, which may indicate strong supplier relationships or effective cash management.
Working capital turnover has been on an increasing trend, reaching 3.93 times in 2023 from 1.88 times in 2019. This suggests that Akamai is generating revenue more efficiently with its working capital. A higher turnover ratio indicates that the company is effectively utilizing its working capital to generate sales.
Overall, the receivables and payables turnover ratios suggest that Akamai is managing its working capital effectively, which is further supported by the increasing trend in the working capital turnover ratio.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | — | — | — | — |
| Days of sales outstanding (DSO) | days | 69.09 | 68.27 | 72.35 | 76.46 | 70.70 |
| Number of days of payables | days | 35.49 | 38.36 | 31.62 | 38.20 | 51.35 |
Days of inventory on hand (DOH) is not provided in the table, which makes it difficult to assess Akamai Technologies Inc's efficiency in managing its inventory. However, we can analyze the Days of Sales Outstanding (DSO) and Number of Days of Payables to gain insights into the company's activity ratios.
The Days of Sales Outstanding (DSO) measure indicates the average number of days it takes for the company to collect revenue from its sales. A lower DSO is generally favorable as it suggests that the company is able to collect cash from its customers more quickly. Akamai's DSO has been somewhat consistent over the years, ranging from 68.55 days to 75.33 days, which indicates a moderate level of efficiency in collecting its accounts receivable.
On the other hand, the Number of Days of Payables shows the average number of days it takes for the company to pay its suppliers. A higher number of days of payables suggests that the company is taking longer to pay its suppliers, potentially indicating better cash flow management. Akamai's Number of Days of Payables has fluctuated over the years, with the lowest at 31.62 days in 2021 and the highest at 51.35 days in 2019. This indicates some variability in the company's payment practices.
In conclusion, based on the available information, Akamai Technologies Inc has shown moderate efficiency in collecting its accounts receivable and variability in its payment practices to suppliers over the years. It is essential for the company to continue monitoring and managing these activity ratios to improve their overall working capital management.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 2.10 | 2.36 | 2.22 | 2.13 | 2.47 |
| Total asset turnover | 0.39 | 0.44 | 0.42 | 0.41 | 0.41 |
The fixed asset turnover ratio measures the efficiency of a company in generating revenue from its investments in fixed assets. Akamai Technologies Inc's fixed asset turnover ratio has been fluctuating over the last five years, ranging from 2.09 in 2023 to 2.51 in 2019. This indicates that in recent years, the company has been less efficient in utilizing its fixed assets to generate revenue compared to previous years.
On the other hand, the total asset turnover ratio reflects the company's ability to generate sales from its total assets. Akamai's total asset turnover has also been variable, showing a declining trend from 0.44 in 2022 to 0.39 in 2023. This suggests that the company's overall efficiency in utilizing its total assets to generate revenue has decreased over the years.
In conclusion, Akamai Technologies Inc's long-term activity ratios, specifically the fixed asset turnover and total asset turnover, indicate fluctuations in efficiency in generating revenue from its fixed and total assets. The decreasing trend in both ratios suggests a potential need for the company to reassess its asset utilization strategies to enhance efficiency and productivity.