Duolingo Inc (DUOL)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|
| Inventory turnover | — | 2.84 | — |
| Receivables turnover | 5.97 | 7.91 | 7.56 |
| Payables turnover | 58.07 | 84.48 | 8.85 |
| Working capital turnover | 0.86 | 0.72 | 0.50 |
Inventory turnover:
- The inventory turnover ratio measures how efficiently a company manages its inventory by showing how many times a company sells and replaces its inventory over a period.
- Duolingo Inc did not provide inventory turnover data for 2023 and 2021, but in 2022, the company had an inventory turnover ratio of 2.84, indicating that on average, its inventory was sold and replaced approximately 2.84 times during the year.
Receivables turnover:
- The receivables turnover ratio reflects how many times a company collects its accounts receivable during a period, indicating how quickly the company is able to convert credit sales into cash.
- Duolingo Inc's receivables turnover decreased from 7.91 in 2022 to 5.97 in 2023, suggesting that the company took longer to collect its accounts receivable in 2023.
Payables turnover:
- The payables turnover ratio measures how efficiently a company pays its suppliers by showing how many times a company pays off its accounts payable during a period.
- Duolingo Inc's payables turnover decreased significantly from 84.48 in 2022 to 58.07 in 2023, indicating that the company took longer to pay its suppliers in 2023 compared to the previous year.
Working capital turnover:
- The working capital turnover ratio indicates how efficiently a company utilizes its working capital to generate sales revenue.
- Duolingo Inc's working capital turnover increased from 0.72 in 2022 to 0.86 in 2023, showing an improvement in the company's ability to use its working capital effectively to support its operations and generate revenue.
Overall, from the activity ratios analysis, it is observed that there were fluctuations and changes in Duolingo Inc's efficiency in managing its inventory, collecting receivables, paying payables, and utilizing working capital from 2022 to 2023. Further investigation into the reasons behind these changes would be necessary to understand the company's operational performance in more detail.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | 128.63 | — |
| Days of sales outstanding (DSO) | days | 61.15 | 46.16 | 48.27 |
| Number of days of payables | days | 6.29 | 4.32 | 41.24 |
Days of Inventory on Hand (DOH) measures how efficiently Duolingo manages its inventory. In 2023, the company did not provide the specific number of days its inventory is held, while in 2022, inventory was held for approximately 128.63 days. This indicates that Duolingo may have an excess of inventory or faces challenges in selling its goods quickly.
Days of Sales Outstanding (DSO) reflects how long it takes for Duolingo to collect payment after making a sale. A lower DSO is generally more favorable, as it indicates faster payment collection. In 2023, the DSO increased to 61.15 days from 46.16 days in 2022, suggesting a slowdown in receivables collection efficiency.
The Number of Days of Payables shows how long Duolingo takes to pay its suppliers. A higher number of days indicates a longer time to pay, which can be advantageous for cash flow management. In 2023, Duolingo's payables period increased to 6.29 days from 4.32 days in 2022, implying the company takes longer to settle its payables.
Overall, based on these activity ratios, Duolingo may need to address its excess inventory holding periods, work on improving receivables collection efficiency, and evaluate its payables strategy to optimize its working capital management.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|
| Fixed asset turnover | 45.04 | 28.49 | 30.54 |
| Total asset turnover | 0.56 | 0.49 | 0.38 |
The fixed asset turnover ratio for Duolingo Inc has shown an improving trend over the past three years, increasing from 30.54 in 2021 to 45.04 in 2023. This indicates that the company generated $45.04 in revenue for every dollar invested in fixed assets in 2023, reflecting increased efficiency in utilizing its long-term assets to generate sales.
On the other hand, the total asset turnover ratio has also been on an upward trajectory, rising from 0.38 in 2021 to 0.56 in 2023. This signifies that the company generated $0.56 in revenue for every dollar of total assets in 2023. The increasing total asset turnover ratio suggests that Duolingo has been more effective in utilizing its total assets to generate sales over the years.
Overall, the upward trend in both fixed asset turnover and total asset turnover ratios indicates that Duolingo Inc has been improving its efficiency in utilizing its long-term assets to generate revenue, which is a positive sign for the company's long-term operational performance and asset management.