Genpact Limited (G)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | — | — | 24.97 | 16.11 | 18.94 |
| Receivables turnover | 3.99 | 4.38 | 4.52 | 4.20 | 3.83 |
| Payables turnover | 104.77 | 79.16 | 103.68 | 173.84 | 104.39 |
| Working capital turnover | 7.81 | 6.46 | 6.56 | 6.79 | 5.49 |
Activity ratios provide insights into how efficiently a company is managing its assets and liabilities to generate revenue.
1. Receivables Turnover:
Genpact's receivables turnover has been relatively stable over the past five years, ranging from 3.85 to 4.53. This indicates that the company is able to collect its accounts receivable on average between 3.85 to 4.53 times per year. A higher turnover ratio suggests a more efficient collection process, reflecting positively on the company's liquidity and ability to convert sales into cash.
2. Payables Turnover:
The payables turnover ratio for Genpact has fluctuated significantly from 79.16 to 173.84, with a peak in 2020. A high payables turnover ratio may suggest that the company is efficiently managing its accounts payable by paying suppliers quickly. This can help maintain strong relationships with suppliers but may also indicate a need to manage cash flow effectively to meet payment obligations.
3. Working Capital Turnover:
The working capital turnover ratio measures how efficiently a company is utilizing its working capital to generate revenue. Genpact's working capital turnover ratio has shown an increasing trend over the past five years, indicating improved efficiency in utilizing its current assets to generate sales. A higher turnover ratio suggests that the company is effectively managing its working capital and generating a higher level of sales per unit of working capital invested.
In summary, Genpact's activity ratios indicate that the company has been relatively efficient in managing its receivables, payables, and working capital to drive revenue generation. However, fluctuations in payables turnover may require further analysis to understand the company's payment practices and cash flow management.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | — | 14.62 | 22.65 | 19.27 |
| Days of sales outstanding (DSO) | days | 91.42 | 83.34 | 80.81 | 86.95 | 95.22 |
| Number of days of payables | days | 3.48 | 4.61 | 3.52 | 2.10 | 3.50 |
Activity ratios provide insight into how efficiently a company is managing its assets and operations. Let's analyze the activity ratios of Genpact Ltd based on the data provided:
1. Days of Inventory on Hand (DOH):
Unfortunately, the data for Days of Inventory on Hand (DOH) is not available for any of the years listed. DOH measures how long it takes for a company to sell its inventory. A lower DOH is generally better as it indicates faster turnover of inventory and more efficient inventory management.
2. Days of Sales Outstanding (DSO):
For Genpact Ltd, Days of Sales Outstanding (DSO) has shown a decreasing trend from 94.79 days in 2019 to 91.01 days in 2023. DSO measures how long it takes a company to collect payment after making a sale. A lower DSO is favorable as it indicates quicker cash collection and better management of accounts receivable.
3. Number of Days of Payables:
The Number of Days of Payables has fluctuated over the years, ranging from 2.10 days in 2020 to 4.61 days in 2022. In 2023, it decreased to 3.48 days. This ratio reflects how long a company takes to pay its suppliers. A higher number of days of payables suggests that the company is taking longer to settle its obligations, which can sometimes indicate cash flow management strategies.
In summary, Genpact Ltd has shown improvement in its Days of Sales Outstanding (DSO) over the years, indicating better collection of payments from customers. The trend in the Number of Days of Payables has been more volatile, possibly reflecting changes in the company's payment practices with suppliers. Unfortunately, without data on Days of Inventory on Hand (DOH), it is challenging to assess the efficiency of inventory management. An in-depth analysis combining all three activity ratios would provide a comprehensive view of Genpact Ltd's operational efficiency.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 23.59 | 24.18 | 18.70 | 16.05 | 13.86 |
| Total asset turnover | 0.93 | 0.95 | 0.81 | 0.76 | 0.79 |
The fixed asset turnover ratio for Genpact Ltd has been on an increasing trend over the past five years, indicating that the company is generating more revenue relative to its investment in fixed assets. This suggests improved efficiency in utilizing its long-term assets to generate sales.
On the other hand, the total asset turnover ratio has also shown an overall increasing trend, albeit with fluctuations. This ratio reflects the company's ability to generate sales from all its assets, including current and long-term assets. The increase in total asset turnover indicates that Genpact is becoming more efficient in utilizing all its assets to generate revenue over the years.
Overall, both the fixed asset turnover and total asset turnover ratios suggest that Genpact Ltd is effectively managing its long-term assets to drive sales and improve operational efficiency.