Meta Platforms Inc. (META)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | — | — | — | — | — |
| Receivables turnover | 9.64 | 8.29 | 8.64 | 8.39 | 7.57 |
| Payables turnover | 3.92 | 4.54 | 4.13 | 4.41 | 12.54 |
| Working capital turnover | 2.47 | 2.51 | 3.58 | 2.59 | 1.41 |
The activity ratios of Meta Platforms Inc. for the years ending December 31, 2020 to 2024 are as follows:
1. Inventory Turnover: Not available for all years.
2. Receivables Turnover:
- The company's ability to collect receivables improved over the years, with the turnover ratio increasing from 7.57 in 2020 to 9.64 in 2024. This indicates that the company is collecting its accounts receivable more efficiently.
3. Payables Turnover:
- The payables turnover ratio decreased significantly from 12.54 in 2020 to 3.92 in 2024. This may suggest that the company is taking longer to pay its suppliers, which could impact relationships with vendors.
4. Working Capital Turnover:
- The working capital turnover ratio fluctuated over the years, reaching a peak of 3.58 in 2022. This ratio indicates how efficiently the company is utilizing its working capital to generate sales. The slight decline in 2023 and 2024 could indicate potential inefficiencies in working capital management.
Overall, the receivables turnover improved, payables turnover decreased, and working capital turnover showed some fluctuations. These ratios provide insights into Meta Platforms Inc.'s performance in managing its assets and liabilities efficiently over the years.
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 | — | — | — | — | — |
| Days of sales outstanding (DSO) | days | 37.87 | 44.01 | 42.24 | 43.51 | 48.21 |
| Number of days of payables | days | 93.03 | 80.31 | 88.28 | 82.75 | 29.10 |
The activity ratios of Meta Platforms Inc. provide insights into how efficiently the company manages its inventory, collects receivables, and pays its suppliers.
1. Days of Inventory on Hand (DOH):
- Unfortunately, specific data for the days of inventory on hand is not available for the years 2020 to 2024. This ratio typically measures how many days, on average, a company holds inventory before it is sold. A lower DOH indicates efficient inventory management.
2. Days of Sales Outstanding (DSO):
- The days of sales outstanding decreased from 48.21 days in 2020 to 37.87 days in 2024. A lower DSO reflects that the company is collecting its receivables more quickly, which is a positive sign of effective credit management and liquidity.
3. Number of Days of Payables:
- The number of days of payables increased from 29.10 days in 2020 to 93.03 days in 2024. This trend suggests that Meta Platforms is taking longer to pay its suppliers over the years. A higher number of days of payables could indicate that the company is stretching its payment terms, which may have implications for its relationships with suppliers.
In summary, Meta Platforms Inc. has shown improvements in collecting its receivables more efficiently over the years, but there has been a significant increase in the number of days it takes to pay its suppliers. Further analysis and consideration of industry benchmarks would be valuable to fully evaluate the implications of these activity ratios on the company's operations and financial performance.
See also:
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 1.35 | 1.39 | 1.46 | 2.04 | 1.88 |
| Total asset turnover | 0.59 | 0.58 | 0.63 | 0.71 | 0.54 |
The long-term activity ratios of Meta Platforms Inc. provide insights into how efficiently the company is utilizing its assets to generate revenues.
1. Fixed Asset Turnover:
- The fixed asset turnover ratio indicates how well the company is using its fixed assets to generate sales. A higher ratio is generally preferred as it signifies efficient asset utilization.
- Meta Platforms Inc. has shown a fluctuating trend in its fixed asset turnover over the years. The ratio increased from 1.88 in 2020 to 2.04 in 2021, indicating improved efficiency in utilizing fixed assets for generating sales. However, this trend reversed, with the ratio declining to 1.35 by the end of 2024.
- The decreasing trend in the fixed asset turnover ratio from 2022 to 2024 suggests potential inefficiencies in utilizing fixed assets to generate sales. It may signal challenges in optimizing the productivity of fixed assets during this period.
2. Total Asset Turnover:
- The total asset turnover ratio measures how effectively the company is using all its assets to generate revenue. A higher ratio indicates better asset utilization efficiency.
- Meta Platforms Inc. experienced an increase in total asset turnover from 0.54 in 2020 to 0.71 in 2021, reflecting an improvement in utilizing all assets to generate sales. However, the ratio declined in the following years.
- Despite the fluctuations, the total asset turnover ratio remained relatively stable around the levels of 0.60, indicating moderate efficiency in generating revenue from its total asset base.
In summary, the analysis of Meta Platforms Inc.'s long-term activity ratios suggests a mixed performance in asset utilization efficiency. The company demonstrated improvements in fixed asset turnover initially but faced challenges in maintaining these efficiencies over the later years. The total asset turnover showed variability but overall indicated moderate efficiency in converting assets into sales. This information can be further explored in conjunction with other financial metrics to assess the company's overall operational performance and strategy effectiveness.