Aspen Technology Inc (AZPN)

Short-term

Turnover ratios

Aspen Technology Inc's activity ratios provide insights into how efficiently the company manages its assets and liabilities to generate sales.

- Inventory turnover: The inventory turnover ratio shows how many times the company sells and replaces its inventory during the period. The significant increase in the inventory turnover from the last three quarters of the fiscal year 2023 indicates that Aspen Technology has improved its inventory management efficiency.

- Receivables turnover: The receivables turnover ratio measures how quickly the company collects cash from its credit sales. The fluctuation in this ratio suggests variations in the company's credit policies or the efficiency of its collections process. The increase in the receivables turnover in the recent quarters signals that Aspen Technology has been more successful in collecting payments from customers.

- Payables turnover: The payables turnover ratio indicates how efficiently the company manages its accounts payable. A higher payables turnover ratio suggests that Aspen Technology is paying its suppliers more frequently. The fluctuations in this ratio could reflect changes in the company's payment terms or vendor relationships.

- Working capital turnover: The working capital turnover ratio measures how effectively the company utilizes its working capital to generate revenue. The slight decrease in this ratio over the past few quarters could imply a decrease in sales relative to working capital, indicating potential inefficiencies in asset utilization.

Overall, Aspen Technology Inc's activity ratios show improvements in inventory management and receivables collection, while also highlighting fluctuations in payables management and working capital utilization. These metrics provide valuable insights into the company's operational efficiency and financial performance.

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Average number of days

The activity ratios for Aspen Technology Inc provide insights into the efficiency of the company's operations and management of its working capital.

Days of inventory on hand (DOH) reflects how many days, on average, it takes for the company to sell its inventory. A decreasing trend in DOH is generally positive as it indicates faster inventory turnover. In the latest period, the DOH is not available, which may suggest either a more real-time inventory management system or a change in reporting methodology.

Days of sales outstanding (DSO) measures the average number of days it takes for the company to collect its accounts receivable. A lower DSO is preferred as it indicates a quicker conversion of sales into cash. Aspen Technology Inc experienced fluctuating DSO over the periods, with the highest in March 2024 and notable improvements in September and December 2023.

Number of days of payables demonstrates how long it takes for the company to pay its suppliers. A higher number of days indicates a longer time for payment, potentially signaling better cash flow management. Aspen Technology Inc had a varying trend in payables days, with the lowest in March 2023 and the highest in June 2023.

Overall, Aspen Technology Inc should focus on managing its inventory efficiently to improve cash flow and optimize working capital. Reducing DSO further and balancing payables days may lead to enhanced liquidity and operational performance.

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Long-term

The fixed asset turnover ratio measures how efficiently a company utilizes its fixed assets to generate revenue. Aspen Technology Inc's fixed asset turnover has been relatively stable and consistently high over the reporting periods, with a range of 55.93 to 83.86. This indicates that Aspen is effectively using its fixed assets to generate sales.

Total asset turnover ratio measures how well a company utilizes its total assets to generate revenue. Aspen Technology Inc's total asset turnover has been low and relatively stable around 0.07 to 0.11, indicating the company's total assets are not generating significant sales compared to other companies in the same industry.

In conclusion, while Aspen Technology Inc is efficiently utilizing its fixed assets to generate sales, there is room for improvement in its overall utilization of total assets to generate revenue. Further analysis and potential strategic adjustments may be needed to enhance the company's overall asset efficiency.