Altair Engineering Inc (ALTR)

Working capital turnover

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 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
Revenue (ttm) US$ in thousands 665,788 644,660 627,213 619,579 612,701 601,631 586,979 578,474 572,221 552,585 554,541 541,797 532,179 524,823 509,972 488,621 469,921 460,357 454,307 462,519
Total current assets US$ in thousands 784,978 686,999 675,332 730,399 700,623 592,006 586,781 548,602 526,826 465,731 554,314 555,674 588,221 579,505 382,647 378,756 386,935 359,803 351,954 357,471
Total current liabilities US$ in thousands 487,769 210,108 216,825 296,754 324,110 296,915 319,248 300,394 232,738 198,476 187,064 430,741 473,978 347,896 356,210 359,390 200,754 149,488 146,074 150,640
Working capital turnover 2.24 1.35 1.37 1.43 1.63 2.04 2.19 2.33 1.95 2.07 1.51 4.34 4.66 2.27 19.29 25.23 2.52 2.19 2.21 2.24

December 31, 2024 calculation

Working capital turnover = Revenue (ttm) ÷ (Total current assets – Total current liabilities)
= $665,788K ÷ ($784,978K – $487,769K)
= 2.24

Altair Engineering Inc's working capital turnover has shown fluctuations over the periods provided. It was relatively stable around the range of 2.1 to 2.5 in the first half of 2020, indicating that the company was efficiently utilizing its working capital to generate sales.

However, there was a significant spike in the ratio in the first quarter of 2021 to 25.23, which suggests the company had either greatly reduced its working capital or experienced a substantial increase in sales during that period. This sudden increase might be due to various factors such as a large project completion or a significant increase in revenue.

Subsequently, in the following quarters of 2021, the ratio remained elevated, above the historical range, indicating continued efficient use of working capital. However, the ratio declined sharply in the second quarter of 2022 to 1.51, signifying a potential slowdown in working capital efficiency or a decrease in sales relative to the working capital levels.

From the second quarter of 2022 to the end of 2024, the working capital turnover ratio continued to decline, indicating a trend of the company being less effective in generating sales from its working capital. This may signal inefficiencies in working capital management or challenges in converting working capital into revenue during those periods.

Overall, Altair Engineering Inc's working capital turnover ratio has exhibited variations, with periods of high efficiency in utilizing working capital to generate sales, as well as periods of relatively lower efficiency. It is essential for the company to closely monitor and optimize its working capital management practices to maintain a healthy balance between liquidity and operational efficiency.