Alphabet Inc Class C (GOOG)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | — | 47.27 | 94.82 | 116.39 | 71.97 |
| Receivables turnover | 6.37 | 6.99 | 6.40 | 5.82 | 5.89 |
| Payables turnover | 17.79 | 24.61 | 18.38 | 15.16 | 12.93 |
| Working capital turnover | 3.41 | 2.95 | 2.08 | 1.55 | 1.51 |
The activity ratios of Alphabet Inc provide insights into the efficiency of the company's use of its assets and management of its working capital.
The inventory turnover ratio indicates the number of times inventory is sold and replaced over a period. The decreasing trend from 2019 to 2021 followed by a slight increase in 2022 and missing data in 2023 suggests potential changes in inventory management or sales patterns.
The receivables turnover ratio measures how efficiently Alphabet Inc collects on its credit sales. The slight fluctuation in this ratio from 2019 to 2023 indicates a fairly consistent performance in managing receivables.
The payables turnover ratio reflects the speed at which the company pays its suppliers. The increasing trend from 2019 to 2022 with a decrease in 2023 could indicate a change in payment terms with suppliers.
The working capital turnover ratio assesses the efficiency of using working capital to generate sales. The increasing trend from 2019 to 2023 indicates improved efficiency in utilizing working capital to generate sales over the years.
In summary, Alphabet Inc has demonstrated relatively stable receivables turnover and improving working capital turnover, while experiencing fluctuations in inventory turnover and payables turnover, which may necessitate further investigation into its operational and supply chain 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 | — | 7.72 | 3.85 | 3.14 | 5.07 |
| Days of sales outstanding (DSO) | days | 57.29 | 52.24 | 57.05 | 62.76 | 62.00 |
| Number of days of payables | days | 20.51 | 14.83 | 19.86 | 24.08 | 28.23 |
To analyze Alphabet Inc's activity ratios, we will consider the days of inventory on hand (DOH), days of sales outstanding (DSO), and the number of days of payables.
The days of inventory on hand measure how long it takes for the company to sell its inventory. A lower DOH is generally favorable, indicating efficient inventory management. In 2023, the DOH data is not available, but in 2022, it increased to 7.72 days from 3.85 days in 2021. This suggests an increase in the time it takes to sell inventory.
The days of sales outstanding (DSO) represent the average number of days it takes the company to collect revenue after a sale. A lower DSO is preferred, as it indicates faster cash collection. In 2023, DSO increased to 56.95 days from 51.95 days in 2022, which signifies a longer collection period compared to the previous year.
The number of days of payables reflects the average number of days it takes for the company to pay its suppliers. A higher number of days is advantageous as it indicates extended payment terms. In 2023, the number of days of payables increased to 20.52 days from 14.83 days in 2022, suggesting a longer payment period to suppliers.
Overall, the trends in these activity ratios for Alphabet Inc indicate a potential decline in efficiency in managing inventory and collecting cash, while also extending payment terms to suppliers. It is important for the company to monitor and address these trends to ensure optimal working capital management and operational efficiency.
See also:
Alphabet Inc Class C Short-term (Operating) Activity Ratios
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 2.27 | 2.50 | 2.64 | 2.15 | 2.20 |
| Total asset turnover | 0.76 | 0.77 | 0.72 | 0.57 | 0.59 |
The fixed asset turnover ratio measures how efficiently a company utilizes its fixed assets to generate revenue, while the total asset turnover ratio indicates the efficiency of a company's use of all its assets in generating sales.
In 2023, the fixed asset turnover ratio decreased to 2.29 from 2.51 in 2022, suggesting a slight decrease in the efficiency of utilizing fixed assets to generate sales. However, the ratio remains relatively high, indicating that Alphabet Inc is still efficiently utilizing its fixed assets.
Meanwhile, the total asset turnover ratio remained relatively stable, decreasing slightly from 0.77 in 2022 to 0.76 in 2023. This indicates that Alphabet Inc is efficiently generating sales relative to its total assets.
Overall, both ratios suggest that Alphabet Inc has been effectively utilizing its assets to generate sales, with the slight decrease in the fixed asset turnover ratio possibly being a result of changes in the company's operating environment or investment strategies.