Cognizant Technology Solutions Corp Class A (CTSH)

Working capital turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Revenue	US$ in thousands	19,353,000	19,428,000	18,507,000	16,652,000	16,783,000
Total current assets	US$ in thousands	7,506,000	7,266,000	7,342,000	6,851,000	7,611,000
Total current liabilities	US$ in thousands	3,333,000	3,347,000	3,529,000	3,540,000	2,983,000
Working capital turnover		4.64	4.96	4.85	5.03	3.63

December 31, 2023 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $19,353,000K ÷ ($7,506,000K – $3,333,000K)
= 4.64

The working capital turnover ratio measures a company's ability to efficiently utilize its working capital to generate sales revenue. Cognizant Technology Solutions Corp. has demonstrated a fluctuating trend in its working capital turnover over the past five years. In 2023, the working capital turnover ratio decreased to 4.64 from 4.96 in 2022 but remained relatively stable compared to previous years.

A working capital turnover ratio of 4.64 indicates that, on average, Cognizant Technology Solutions Corp. generated $4.64 in sales for every $1 of working capital invested. This suggests that the company may not be managing its working capital as effectively in 2023 compared to the previous year. However, the ratio still remains above the 4.0 benchmark, implying that the company is efficiently utilizing its working capital to generate revenue.

It is important for Cognizant Technology Solutions Corp. to closely monitor its working capital turnover ratio, as a declining trend could indicate inefficiencies in managing working capital, potentially leading to liquidity issues or operational challenges. Conducting further analysis on the components of working capital and their impact on the ratio can provide valuable insights into the company's financial performance and efficiency in capital management.