Cognizant Technology Solutions Corp Class A (CTSH)

Payables turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cost of revenue	US$ in thousands	16,664,000	16,460,000	15,681,000	14,538,000	14,387,000
Payables	US$ in thousands	337,000	360,000	361,000	389,000	239,000
Payables turnover		49.45	45.72	43.44	37.37	60.20

December 31, 2023 calculation

Payables turnover = Cost of revenue ÷ Payables
= $16,664,000K ÷ $337,000K
= 49.45

The payables turnover ratio measures how efficiently a company is managing its trade payables by calculating the number of times a company pays off its average accounts payable balance in a specific period. Higher payables turnover ratios indicate that a company is paying off its suppliers more frequently.

Analyzing Cognizant Technology Solutions Corp.'s payables turnover over the past five years, we observe a fluctuating trend. The payables turnover ratio increased from 2019 to 2020, indicating that the company was paying off its suppliers more frequently during this period. This was followed by a substantial decrease in 2021, suggesting a possible extension in the payment period to suppliers. However, the ratio rebounded in 2022 and further improved in 2023, reaching the highest level in the period analyzed.

A high payables turnover ratio, as exhibited by Cognizant in 2023, could indicate that the company is effectively managing its accounts payable, maintaining good relationships with suppliers, and potentially benefiting from early payment discounts. However, it is important to consider industry norms and the company's specific business dynamics to draw meaningful conclusions from this ratio.

Overall, the upward trend in Cognizant's payables turnover ratio in recent years is indicative of improved efficiency in managing its trade payables, which could positively impact the company's working capital management and cash flow.