Duolingo Inc (DUOL)

Short-term

Turnover ratios

Duolingo Inc's activity ratios provide insights into how efficiently the company is managing its assets and liabilities.

1. Inventory Turnover: The inventory turnover ratio measures how many times a company sells and replaces its inventory during a period. Duolingo had an inventory turnover of 2.84 at the end of December 2022, which decreased slightly to 2.73 by the end of March 2023 and then increased to 2.79 by June 2023. There is no data available for the subsequent periods. An increasing inventory turnover ratio generally indicates that the company is selling its inventory more quickly.

2. Receivables Turnover: The receivables turnover ratio reflects how efficiently a company collects payments from its customers. However, there is no data available for Duolingo's receivables turnover, indicating that the information related to this ratio is not disclosed or not applicable for the periods provided.

3. Payables Turnover: The payables turnover ratio shows how quickly a company pays its suppliers. Similar to receivables turnover, there is no data available for Duolingo's payables turnover, suggesting that information related to this ratio is not disclosed or not applicable for the periods provided.

4. Working Capital Turnover: The working capital turnover ratio measures how effectively a company is utilizing its working capital to generate revenue. Duolingo's working capital turnover ratio increased from 1.74 at the end of December 2020 to 1.10 by the end of December 2024. A higher working capital turnover ratio indicates that the company is generating more revenue for each unit of working capital employed.

Overall, based on the available data, Duolingo Inc has shown improvements in its inventory turnover and working capital turnover ratios, which may suggest enhanced operational efficiency and effective management of working capital.

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Average number of days

Based on the provided data, Duolingo Inc's activity ratios can be analyzed as follows:

1. Days of Inventory on Hand (DOH):
- Duolingo Inc's DOH was not available until December 31, 2022, when it stood at 128.63 days. There was a slight increase to 133.87 days by March 31, 2023, before dropping to 130.65 days by June 30, 2023. The DOH data was not available beyond September 30, 2023. A higher DOH indicates a longer time for inventory turnover, which may imply slower sales or inefficient inventory management.

2. Days of Sales Outstanding (DSO):
- The DSO data for Duolingo Inc was not available for any of the periods provided. DSO measures the average number of days it takes a company to collect payment on its sales. Lack of data for this ratio indicates that information on Duolingo's receivables turnover is unavailable.

3. Number of Days of Payables:
- The data for the number of days of payables was also not provided for Duolingo Inc for any of the periods listed. This ratio indicates the average number of days a company takes to pay its suppliers. The absence of data on payables turnover for Duolingo suggests a lack of information on the company's payment practices.

In conclusion, without complete data for DSO and the number of days of payables, a comprehensive analysis of Duolingo Inc's activity ratios, particularly in terms of receivables and payables turnover efficiency, is limited. It would be beneficial to have more detailed information on these ratios to assess the company's operational efficiency and liquidity management.

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Long-term

Based on the provided data, Duolingo Inc's fixed asset turnover ratio has shown fluctuations over the periods observed. The ratio was not available for December 31, 2020, and September 30, 2023, and beyond. However, for the rest of the periods, the fixed asset turnover ratio ranged from a low of 13.42 to a high of 35.19, indicating the company's ability to generate revenues relative to its investment in fixed assets.

On the other hand, the total asset turnover ratio, which measures Duolingo's efficiency in utilizing all assets to generate sales, has generally increased over time. Starting at 0.92 on December 31, 2020, the ratio reached 0.57 by December 31, 2024. This indicates that Duolingo has been more effective in generating sales revenue from its total asset base.

These ratios suggest that Duolingo has been managing its assets efficiently to generate revenue, with the total asset turnover showing a consistent improvement over the periods analyzed. The fluctuation in the fixed asset turnover ratio indicates changes in the efficiency of utilizing fixed assets to generate sales, which could be due to various factors such as changes in business operations, investments in new technologies, or expansion efforts.