Cognizant Technology Solutions Corp Class A (CTSH)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | — | — | — | — | — |
| Receivables turnover | 4.86 | 5.03 | 5.12 | 5.20 | 5.39 |
| Payables turnover | 49.54 | 49.45 | 45.72 | 43.44 | 37.37 |
| Working capital turnover | 5.04 | 4.64 | 4.96 | 4.85 | 5.03 |
The activity ratios of Cognizant Technology Solutions Corp Class A provide insights into how effectively the company is managing its assets and liabilities to generate sales.
1. Inventory Turnover: This ratio indicates how efficiently the company is managing its inventory. The data shows that the inventory turnover ratio was not provided for the years 2020 to 2024, which suggests that detailed information on the inventory turnover is not available or may not be significant for analysis in this case.
2. Receivables Turnover: This ratio reveals how quickly the company is collecting its accounts receivable. The decreasing trend in receivables turnover from 5.39 in 2020 to 4.86 in 2024 may suggest a slight delay in collecting payments from customers over the years. However, further analysis is needed to determine the impact on the company's cash flow and liquidity.
3. Payables Turnover: This ratio illustrates how rapidly the company is paying its suppliers. The increasing trend in payables turnover from 37.37 in 2020 to 49.54 in 2024 exhibits that the company is taking longer to pay its suppliers over the years. This may indicate improved working capital management or stronger bargaining power with suppliers.
4. Working Capital Turnover: This ratio reflects the efficiency of utilizing working capital to generate sales. The fluctuating trend in working capital turnover from 4.85 in 2021 to 5.04 in 2024 implies variations in the company's ability to convert its working capital into revenue. Further analysis is necessary to evaluate the reasons behind these fluctuations.
Overall, analyzing these activity ratios provides valuable insights into Cognizant Technology Solutions Corp Class A's operational efficiency and effectiveness in managing its assets and liabilities to support its revenue generation activities.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | — | — | — | — |
| Days of sales outstanding (DSO) | days | 75.07 | 72.59 | 71.32 | 70.15 | 67.66 |
| Number of days of payables | days | 7.37 | 7.38 | 7.98 | 8.40 | 9.77 |
Days of Inventory on Hand (DOH):
- The company's DOH data is not provided for the years 2020-2024, indicating that specific figures for the days of inventory on hand are not available. The absence of these values restricts the analysis related to inventory management efficiency and turnover.
Days of Sales Outstanding (DSO):
- The Days of Sales Outstanding have increased gradually over the years, from 67.66 days in 2020 to 75.07 days in 2024. This trend suggests that it is taking the company longer to collect payments from customers for sales made, which could impact its cash flow and liquidity position.
Number of Days of Payables:
- On the other hand, the number of days of payables has decreased consistently from 9.77 days in 2020 to 7.37 days in 2024. This decline indicates that the company is taking fewer days to pay off its outstanding obligations to suppliers, potentially improving its working capital management.
In summary, while the Days of Sales Outstanding have been increasing, showcasing a potential issue with receivables collection efficiency, the Number of Days of Payables has been on a decreasing trend, suggesting a more effective management of payables. However, the absence of DOH data limits a comprehensive analysis of the company's activity ratios.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 19.86 | 18.47 | 17.65 | 15.80 | 13.31 |
| Total asset turnover | 0.99 | 1.05 | 1.09 | 1.04 | 0.98 |
Cognizant Technology Solutions Corp Class A's long-term activity ratios exhibit a positive trend over the years. The fixed asset turnover ratio, which measures how efficiently the company utilizes its fixed assets to generate revenue, has shown a steady increase from 13.31 in 2020 to 19.86 in 2024. This indicates that the company is generating more revenue per dollar invested in fixed assets, reflecting improved efficiency in asset utilization.
Similarly, the total asset turnover ratio, which measures how effectively the company generates sales from its total assets, has also shown a generally increasing trend, reaching a peak of 1.09 in 2022. However, there was a slight dip in 2024 to 0.99. Despite the fluctuation, the company has displayed an overall ability to generate more revenue relative to its total asset base during the period under review.
Overall, these long-term activity ratios suggest that Cognizant Technology Solutions Corp Class A has been effective in optimizing its asset utilization and generating revenue from its asset base, which can contribute to improved financial performance and sustainable growth prospects in the long term.