Cognizant Technology Solutions Corp Class A (CTSH)
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 | 5.03 | 5.12 | 5.20 | 5.39 | 5.15 |
| Payables turnover | 49.45 | 45.72 | 43.44 | 37.37 | 60.20 |
| Working capital turnover | 4.64 | 4.96 | 4.85 | 5.03 | 3.63 |
Inventory Turnover: The data for inventory turnover is missing for all years and hence cannot be analyzed.
Receivables Turnover: The receivables turnover ratio has been relatively stable over the past five years, fluctuating between 5.03 and 5.39. This indicates that Cognizant is efficient in collecting receivables, with an average collection period of approximately 72 days (365 days divided by the turnover ratio).
Payables Turnover: The payables turnover ratio has been increasing over the years, from 27.43 in 2020 to 37.58 in 2023. This suggests that Cognizant is taking longer to pay its suppliers, which may be indicative of stronger bargaining power or improved cash flow management.
Working Capital Turnover: The working capital turnover ratio has also shown a relatively stable trend over the years, ranging from 3.63 to 5.03. This ratio indicates how effectively Cognizant is using its working capital to generate revenue, with a higher ratio suggesting efficient utilization of resources.
In conclusion, Cognizant Technology Solutions Corp. has been efficient in managing its receivables and working capital turnover, while also extending its payables turnover over the years. These ratios provide insights into the company's operational efficiency and management of working capital.
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 | 72.59 | 71.32 | 70.15 | 67.66 | 70.81 |
| Number of days of payables | days | 7.38 | 7.98 | 8.40 | 9.77 | 6.06 |
Activity ratios provide insights into how efficiently a company manages its assets and liabilities. Let's analyze the activity ratios of Cognizant Technology Solutions Corp. based on the provided data.
1. Days of Inventory on Hand (DOH): Unfortunately, there is no data provided for this ratio across the years. The absence of this information makes it challenging to evaluate how effectively Cognizant manages its inventory levels.
2. Days of Sales Outstanding (DSO): DSO measures how long it takes for the company to collect revenue from credit sales. The trend shows a slight increase in DSO from 70.81 days in 2019 to 72.59 days in 2023. This indicates that Cognizant might be taking slightly longer to collect payments from its customers over the years.
3. Number of Days of Payables: This ratio illustrates how quickly a company pays its suppliers. From 8.20 days in 2019, the number of days of payables increased to 9.71 days in 2023. The trend suggests that Cognizant has been extending the time it takes to settle its payables to suppliers, which may indicate a more efficient management of working capital.
In conclusion, while the information on inventory management is lacking, there are indications that Cognizant Technology Solutions Corp. has experienced a slight increase in the collection period from customers but has improved its management of payables over the years. Overall, a more detailed analysis combining these ratios with other financial metrics would provide a comprehensive view of the company's operational efficiency.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 18.47 | 17.65 | 15.80 | 13.31 | 12.82 |
| Total asset turnover | 1.05 | 1.09 | 1.04 | 0.98 | 1.04 |
Cognizant Technology Solutions Corp. has demonstrated an improving trend in its fixed asset turnover ratio over the past five years, indicating the company's ability to generate higher sales relative to its investment in fixed assets. The fixed asset turnover ratio has steadily increased from 12.82 in 2019 to 18.47 in 2023, reflecting efficient utilization of its property, plant, and equipment to drive revenue growth.
In contrast, the total asset turnover ratio for Cognizant has fluctuated over the same period, with a slight decline from 1.04 in 2019 to 1.05 in 2023. This ratio measures the company's ability to generate sales revenue from its total asset base. Although the current total asset turnover is slightly higher than the ratio in 2019, it remains relatively stable compared to the fluctuation observed in the preceding years.
Overall, Cognizant Technology Solutions Corp. has shown strong efficiency in using its fixed assets to drive sales growth, as evidenced by the increasing trend in the fixed asset turnover ratio. However, the total asset turnover ratio has not shown significant improvement, indicating the need for further analysis to understand the overall effectiveness of the company's asset utilization strategy.