DigitalOcean Holdings Inc (DOCN)

Working capital turnover

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 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
Revenue (ttm) US$ in thousands 780,615 756,564 735,142 712,480 692,884 675,008 650,061 614,129 576,322 532,986 492,299 462,227 428,561
Total current assets US$ in thousands 541,718 552,006 543,723 515,813 502,994 471,459 642,069 698,612 945,991 908,356 1,231,130 1,611,900 1,770,060
Total current liabilities US$ in thousands 220,955 176,010 220,156 188,951 192,645 184,289 167,311 54,240 165,516 98,808 74,227 62,451 58,239
Working capital turnover 2.43 2.01 2.27 2.18 2.23 2.35 1.37 0.95 0.74 0.66 0.43 0.30 0.25

December 31, 2024 calculation

Working capital turnover = Revenue (ttm) ÷ (Total current assets – Total current liabilities)
= $780,615K ÷ ($541,718K – $220,955K)
= 2.43

Working capital turnover is a financial ratio that measures how efficiently a company is utilizing its working capital to generate sales revenue. A higher working capital turnover ratio indicates that the company is effectively managing its working capital and efficiently generating revenue from its operating activities.

Analyzing the working capital turnover of DigitalOcean Holdings Inc over the period from December 31, 2021, to December 31, 2024, we observe a positive trend in the ratio. The working capital turnover increased from 0.25 on December 31, 2021, to 2.43 on December 31, 2024. This indicates a significant improvement in the company's efficiency in utilizing its working capital to generate sales.

The gradual increase in the working capital turnover ratio suggests that DigitalOcean Holdings Inc has been able to optimize its working capital management over the period. The company has been able to generate more revenue relative to its investments in working capital, which reflects positively on its operational efficiency.

Overall, the increasing trend in DigitalOcean Holdings Inc's working capital turnover ratio demonstrates the company's improved ability to efficiently utilize its working capital resources to drive sales growth and enhance overall financial performance.