Alphabet Inc Class A (GOOGL)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | — | — | 47.27 | 94.82 | 116.39 |
| Receivables turnover | 6.67 | 6.37 | 6.99 | 6.40 | 5.82 |
| Payables turnover | 18.32 | 17.79 | 24.61 | 18.38 | 15.16 |
| Working capital turnover | 4.68 | 3.41 | 2.95 | 2.08 | 1.55 |
Alphabet Inc Class A's inventory turnover ratio has shown a gradual decline from 116.39 in December 2020 to 47.27 in December 2022. This may indicate that the company is holding onto its inventory for a longer period, which could tie up capital and potentially lead to obsolescence or storage costs.
On the other hand, the receivables turnover ratio has been relatively stable, showing a slight increase over the years from 5.82 in December 2020 to 6.67 in December 2024. This suggests that Alphabet Inc Class A is efficient in collecting payments from its customers, which is a positive sign for the company's liquidity and cash flow management.
The payables turnover ratio has exhibited some fluctuations but generally remained in a reasonable range. The ratio increased from 15.16 in December 2020 to 24.61 in December 2022 before decreasing slightly to 18.32 in December 2024. A higher payables turnover ratio indicates that Alphabet Inc Class A is taking longer to pay its suppliers, which may be beneficial for improving cash flow and working capital management.
Lastly, the working capital turnover ratio has shown a steady increase over the years, indicating that Alphabet Inc Class A is efficiently utilizing its working capital to generate sales. The ratio has risen from 1.55 in December 2020 to 4.68 in December 2024, reflecting the company's ability to generate revenue relative to its working capital investment.
In conclusion, while Alphabet Inc Class A's inventory turnover has declined, its receivables turnover and working capital turnover ratios have shown positive trends, demonstrating effective management of receivables and working capital. The payables turnover ratio fluctuated but generally remained at acceptable levels, indicating a balanced approach to managing payables.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | — | 7.72 | 3.85 | 3.14 |
| Days of sales outstanding (DSO) | days | 54.75 | 57.29 | 52.24 | 57.05 | 62.76 |
| Number of days of payables | days | 19.93 | 20.51 | 14.83 | 19.86 | 24.08 |
Alphabet Inc Class A's activity ratios, focusing on days of inventory on hand (DOH), days of sales outstanding (DSO), and number of days of payables, provide insights into the efficiency of the company's operations and management of working capital.
1. Days of Inventory on Hand (DOH):
- Alphabet Inc's DOH has shown an increasing trend over the analyzed years, from 3.14 days in 2020 to 7.72 days in 2022.
- A higher DOH value indicates that inventory is held for a longer period before being sold. This may suggest potential issues with inventory management or a slowing down of sales.
2. Days of Sales Outstanding (DSO):
- The DSO for Alphabet Inc has fluctuated over the years but generally decreased from 62.76 days in 2020 to 54.75 days in 2024.
- A lower DSO implies that the company is collecting revenue from sales more promptly, which is a positive sign of efficient accounts receivable management.
3. Number of Days of Payables:
- Alphabet Inc's number of days of payables has decreased steadily from 24.08 days in 2020 to 19.93 days in 2024.
- A lower number of days of payables suggests that the company is paying its suppliers more quickly, which could potentially strain cash flow but may also indicate good relationships with suppliers.
Overall, Alphabet Inc Class A's activity ratios indicate improvements in accounts receivable management and payment practices, but a potential challenge in inventory management that may require attention to optimize working capital efficiency.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 2.04 | 2.27 | 2.50 | 2.64 | 2.15 |
| Total asset turnover | 0.78 | 0.76 | 0.77 | 0.72 | 0.57 |
Alphabet Inc Class A has shown a positive trend in its fixed asset turnover ratio over the years, with an increase from 2.15 in 2020 to 2.64 in 2021, and then a slight decrease to 2.50 in 2022. The ratio declined further to 2.27 in 2023 before dropping to 2.04 in 2024.
On the other hand, the total asset turnover ratio for Alphabet Inc Class A has also been on an upward trajectory, rising from 0.57 in 2020 to 0.72 in 2021 and further increasing to 0.77 in 2022. The ratio remained relatively stable at 0.76 in 2023 and slightly improved to 0.78 in 2024.
Overall, the company's fixed asset turnover indicates how efficiently it is utilizing its fixed assets to generate revenue, while the total asset turnover reflects the efficiency of the company in generating sales from all its assets. The fluctuations in these ratios suggest changes in the company's operational efficiency and asset utilization over the years, which may be influenced by various internal and external factors impacting Alphabet Inc Class A's business operations.