Electronic Arts Inc (EA)

Short-term

Turnover ratios

Electronic Arts Inc's activity ratios provide insight into how efficiently the company manages its resources.

1. Receivables Turnover:
- The receivables turnover ratio indicates how many times a company collects its accounts receivable during a period.
- Electronic Arts Inc's receivables turnover has fluctuated over the periods provided, ranging from 5.94 to 15.26 times.
- A higher turnover ratio suggests that Electronic Arts is collecting its accounts receivables more quickly, which is generally favorable, indicating effective credit policies and efficient collection processes.

2. Payables Turnover:
- The payables turnover ratio measures how efficiently a company pays its suppliers.
- Electronic Arts Inc's payables turnover has varied significantly between periods, from 8.24 to 29.05 times.
- A higher turnover ratio indicates that the company is managing its payables effectively, possibly taking advantage of credit terms to maximize cash flow.

3. Working Capital Turnover:
- The working capital turnover ratio reveals how effectively a company uses its working capital to generate sales.
- Electronic Arts Inc's working capital turnover has shown a mixed trend, ranging from 1.20 to 10.96 times.
- A higher turnover ratio indicates that the company is generating more sales with less working capital, suggesting efficient management of resources.

Overall, Electronic Arts Inc's activity ratios reflect fluctuations in its efficiency in managing inventory, receivables, payables, and working capital. Continued monitoring and analysis of these ratios can help assess the company's operational performance and financial health over time.

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Average number of days

Based on the activity ratios provided for Electronic Arts Inc over the past eight quarters, we can observe the following trends:

1. Days of Sales Outstanding (DSO): DSO represents the average number of days it takes for the company to collect payment after making a sale. A lower DSO indicates more efficient collections. Electronic Arts Inc has shown fluctuations in DSO over the quarters, with a range from as low as 24.89 days to as high as 61.46 days. There seems to be some seasonality in collections, with shorter DSO in the first and third quarters compared to longer DSO in the second and fourth quarters.

2. Days of Inventory on Hand (DOH): DOH measures how long a company holds inventory before selling it. The absence of data for DOH implies that this metric was not available for analysis.

3. Number of Days of Payables: This measure reflects how quickly the company pays its suppliers. A higher number of days of payables indicates that the company takes longer to pay its suppliers, effectively managing its cash flow. Electronic Arts Inc shows variability in payables days, ranging from as low as 12.57 days to as high as 44.31 days. The company seems to have extended its payables duration in some quarters, potentially to optimize working capital management.

In conclusion, Electronic Arts Inc demonstrates mixed performance in its activity ratios, with fluctuations in collection efficiency and payment terms. Further analysis would be needed to understand the specific factors driving these changes and assess the overall effectiveness of the company's working capital management.

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Long-term

The fixed asset turnover ratio for Electronic Arts Inc has been relatively stable over the past several quarters, ranging from 11.22 to 14.01. This indicates that the company generates between approximately 11 to 14 times in sales revenue for every dollar invested in fixed assets. A higher fixed asset turnover ratio suggests better efficiency in utilizing assets to generate sales.

On the other hand, the total asset turnover ratio has also been relatively consistent, fluctuating between 0.42 to 0.58. This ratio reflects how efficiently the company is generating sales from all its assets. A total asset turnover ratio of less than 1 indicates that Electronic Arts Inc generates less than one dollar of sales for every dollar invested in assets.

Overall, the fixed asset turnover remains high, indicating efficient use of fixed assets. However, the total asset turnover ratio is relatively low, suggesting that the company may not be effectively utilizing its total assets to generate sales. It may be worthwhile for Electronic Arts Inc to focus on improving its overall asset efficiency to enhance its financial performance.