DigitalOcean Holdings Inc (DOCN)

Short-term

Turnover ratios

Inventory turnover: The inventory turnover ratio for DigitalOcean Holdings Inc is not provided in the data table for the years 2021, 2022, or 2023. This ratio helps evaluate how efficiently a company is managing its inventory by indicating the number of times inventory is sold and replaced within a specific period.

Receivables turnover: The receivables turnover ratio has been relatively stable over the last three years, with values of 11.14 in 2023, 10.71 in 2022, and 10.82 in 2021. This ratio indicates how many times during a year the company collects its average accounts receivable balance. A higher turnover ratio suggests that the company efficiently collects its outstanding receivables.

Payables turnover: The payables turnover ratio has shown significant fluctuations over the three years, with a sharp increase to 71.76 in 2023 from 10.03 in 2022 and 13.48 in 2021. This ratio reflects how efficiently the company is managing its accounts payable by measuring how quickly it pays its suppliers. A high turnover ratio could suggest that the company is paying its creditors more quickly.

Working capital turnover: The working capital turnover ratio has improved consistently over the three years, with values of 2.23 in 2023, 0.74 in 2022, and 0.25 in 2021. This ratio measures how effectively the company manages its working capital to generate sales. A higher turnover ratio indicates that the company is efficiently utilizing its working capital to generate revenue.

Overall, the analysis of DigitalOcean Holdings Inc's activity ratios reveals strengths and areas for improvement in managing inventory, accounts receivable, accounts payable, and working capital to drive operational efficiency and financial performance.

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Average number of days

Days of inventory on hand (DOH) could not be calculated due to missing data in the table for all three years.

Days of sales outstanding (DSO) decreased from 34.09 days in 2022 to 32.76 days in 2023, indicating that DigitalOcean Holdings Inc collected its accounts receivable more efficiently in 2023 compared to the previous year. A lower DSO is generally favorable as it signifies a shorter average collection period for receivables.

The number of days of payables decreased significantly from 36.41 days in 2022 to 5.09 days in 2023. This implies that the company paid its payables much faster in 2023. The drastic reduction in days of payables could be an intentional strategy by the company to manage its working capital more effectively or negotiate better terms with its suppliers.

Overall, the improvements in days of sales outstanding and days of payables suggest that DigitalOcean Holdings Inc managed its working capital more efficiently in 2023, which can positively impact its liquidity and cash flow position.

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Long-term

The long-term activity ratios of DigitalOcean Holdings Inc indicate the efficiency with which the company utilizes its assets to generate revenue. The fixed asset turnover has improved over the past three years, increasing from 1.72 in 2021 to 2.27 in 2023. This suggests that the company is generating more revenue per dollar invested in fixed assets, indicating improved efficiency in utilizing its long-term assets.

On the other hand, the total asset turnover ratio has also shown significant improvement, rising from 0.20 in 2021 to 0.47 in 2023. This indicates that DigitalOcean is generating more sales relative to its total assets, reflecting an enhanced overall efficiency in asset utilization.

Overall, both the fixed asset turnover and total asset turnover ratios have exhibited positive trends over the past three years, signaling improved efficiency in utilizing long-term assets to generate revenue. This improvement reflects positively on the company's operational performance and indicates effective management of its assets to drive sales growth.