Cognizant Technology Solutions Corp Class A (CTSH)
Activity ratios
Short-term
Turnover ratios
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Inventory turnover | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Receivables turnover | 5.03 | 5.10 | 5.16 | 5.22 | 5.12 | 5.25 | 5.09 | 5.17 | 5.20 | 5.10 | 5.09 | 5.21 | 5.39 | 5.37 | 5.22 | 5.25 | 5.15 | 4.84 | 4.86 | 4.83 |
| Payables turnover | 49.45 | 51.64 | 52.30 | 49.60 | 45.72 | 44.56 | 45.68 | 40.74 | 43.44 | 43.75 | 42.68 | 41.90 | 37.37 | 34.47 | 39.80 | 48.97 | 47.62 | 34.54 | 22.76 | 12.17 |
| Working capital turnover | 4.64 | 4.94 | 4.98 | 4.97 | 4.96 | 4.73 | 4.97 | 4.87 | 4.85 | 4.87 | 5.33 | 4.88 | 5.03 | 3.15 | 3.15 | 3.10 | 3.63 | 3.72 | 3.76 | 3.16 |
Cognizant Technology Solutions Corp.'s activity ratios indicate the efficiency with which the company manages its assets and liabilities.
The receivables turnover ratio shows that the company collects its accounts receivable approximately 5 times a year on average. This ratio has been consistent over the past 8 quarters, ranging between 5.03 and 5.25. A stable receivables turnover ratio suggests that Cognizant has efficient credit and collection policies in place.
The payables turnover ratio demonstrates how quickly the company pays its suppliers. Cognizant's payables turnover ratio has been increasing steadily from 30.30 in Q1 2022 to 39.18 in Q3 2023. A higher payables turnover ratio indicates that the company is taking longer to pay its suppliers, potentially improving its cash flow and working capital management.
The working capital turnover ratio measures how well the company utilizes its working capital to generate sales. Cognizant's working capital turnover has been relatively stable, fluctuating between 4.64 and 4.98 over the past 8 quarters. A higher working capital turnover ratio indicates that the company efficiently utilizes its working capital to support its operations and generate revenue.
Overall, Cognizant Technology Solutions Corp.'s activity ratios suggest that the company effectively manages its receivables, payables, and working capital to drive operational efficiency and maintain a healthy financial position.
Average number of days
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Days of sales outstanding (DSO) | days | 72.59 | 71.50 | 70.67 | 69.90 | 71.32 | 69.47 | 71.76 | 70.62 | 70.15 | 71.52 | 71.67 | 70.10 | 67.66 | 67.94 | 69.88 | 69.55 | 70.81 | 75.47 | 75.09 | 75.51 |
| Number of days of payables | days | 7.38 | 7.07 | 6.98 | 7.36 | 7.98 | 8.19 | 7.99 | 8.96 | 8.40 | 8.34 | 8.55 | 8.71 | 9.77 | 10.59 | 9.17 | 7.45 | 7.67 | 10.57 | 16.04 | 30.00 |
Days of inventory on hand (DOH) is not provided in the data, which may indicate that the company does not disclose this particular ratio or it may not be applicable or significant to its operations.
Days of sales outstanding (DSO) measures how long it takes for the company to collect revenue after making a sale. The trend shows a slight increase in DSO from Q1 2022 to Q3 2023, indicating that the company may be taking longer to collect its accounts receivable. This could potentially lead to cash flow issues if not managed effectively.
Number of days of payables measures how long it takes for the company to pay its suppliers. The trend shows a steady decrease in the number of days of payables from Q1 2022 to Q3 2023, which suggests that the company is paying its suppliers more quickly. While this may improve relationships with suppliers, it could also strain the company's cash reserves if payments are not timed effectively.
Overall, the activity ratios suggest that Cognizant Technology Solutions Corp. may be facing challenges in managing its working capital effectively, particularly in terms of collections and payments. Monitoring and improving these ratios could help the company optimize its cash flow and strengthen its financial position.
Long-term
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Fixed asset turnover | 18.47 | 18.54 | 17.84 | 17.62 | 17.65 | 17.53 | 17.17 | 16.17 | 15.80 | 15.19 | 14.21 | 13.46 | 13.31 | 12.76 | 12.46 | 12.78 | 12.82 | 12.62 | 12.31 | 12.42 |
| Total asset turnover | 1.05 | 1.07 | 1.08 | 1.07 | 1.09 | 1.12 | 1.12 | 1.09 | 1.04 | 1.04 | 1.03 | 1.01 | 0.98 | 0.89 | 0.92 | 0.97 | 1.04 | 1.05 | 1.06 | 1.01 |
Cognizant Technology Solutions Corp.'s long-term activity ratios, specifically the fixed asset turnover and total asset turnover, reveal interesting trends over the specified quarters.
The fixed asset turnover ratio measures how efficiently the company is using its fixed assets to generate revenue. From Q1 2022 to Q4 2023, the fixed asset turnover ranged from 16.17 to 18.54, indicating that the company is consistently utilizing its fixed assets effectively to generate revenue. The quarterly fluctuations are relatively minor, suggesting stability in the company's operational efficiency in utilizing its fixed assets over the period analyzed.
On the other hand, the total asset turnover ratio, which measures how efficiently the company is using all its assets to generate revenue, shows a slightly declining trend. From Q1 2022 to Q4 2023, the total asset turnover decreased from 1.09 to 1.05. This decline may indicate that the company is becoming less efficient in generating revenue from its total assets over the specified quarters.
Overall, Cognizant Technology Solutions Corp. has displayed a stable operational efficiency in utilizing its fixed assets, as evidenced by the consistent fixed asset turnover ratios. However, the declining trend in total asset turnover suggests a potential inefficiency in utilizing all assets to generate revenue, which could be an area warranting further investigation and improvement.