Meta Platforms Inc. (META)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | — | — | — | — | — |
| Receivables turnover | 8.29 | 8.64 | 8.39 | 7.57 | 7.41 |
| Payables turnover | 4.54 | 4.13 | 4.41 | 12.54 | 9.37 |
| Working capital turnover | 2.51 | 3.58 | 2.59 | 1.41 | 1.38 |
Inventory turnover is not provided in the table, but we can analyze other activity ratios for Meta Platforms Inc based on the data provided.
Receivables turnover indicates how efficiently the company is collecting its accounts receivables. The higher the ratio, the better, as it shows that the company is able to collect its receivables quickly. Meta Platforms Inc has maintained a relatively stable receivables turnover ratio over the years, averaging around 8 times per year. This indicates that the company has been able to efficiently collect its receivables.
Payables turnover reflects how quickly the company is paying its suppliers and vendors. A higher payables turnover ratio indicates that the company is paying its bills more quickly. Meta Platforms Inc had a decreasing trend in payables turnover from 2020 to 2022 but then saw an increase in 2023. The significant decrease in 2020 may indicate a change in payment terms with suppliers. However, overall, the payables turnover ratio is within a reasonable range, implying the company manages its payables effectively.
Working capital turnover measures how effectively a company is utilizing its working capital to generate revenue. A higher working capital turnover ratio indicates that the company is efficient in using its working capital to generate sales. Meta Platforms Inc has shown fluctuations in its working capital turnover over the years, with a notable increase in 2022 and a decrease in 2023. The recent decrease in 2023 could suggest that the company may need to optimize its working capital management for improved efficiency.
In conclusion, Meta Platforms Inc has demonstrated efficient management of receivables and payables turnover, while showing some variability in its working capital turnover. Monitoring these activity ratios helps assess the company's operational efficiency and working capital management strategy.
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 | — | — | — | — | — |
| Days of sales outstanding (DSO) | days | 44.01 | 42.24 | 43.51 | 48.21 | 49.23 |
| Number of days of payables | days | 80.31 | 88.28 | 82.75 | 29.10 | 38.96 |
Days of Inventory on Hand (DOH) is not provided in the data table for Meta Platforms Inc, so we are unable to analyze its inventory turnover efficiency based on this metric.
Days of Sales Outstanding (DSO) for Meta Platforms Inc has shown a relatively stable trend over the past five years, ranging from 42.15 days to 49.14 days. A lower DSO indicates that the company is collecting its accounts receivable more quickly, which is a positive sign of efficient revenue collection.
The Number of Days of Payables for Meta Platforms Inc has varied significantly over the same period, ranging from 29.10 days to 72.14 days. A higher number of days of payables suggests that the company is taking longer to pay its suppliers, potentially indicating a cash flow advantage but may also signal strained supplier relationships if excessively high.
Overall, it is important for Meta Platforms Inc to strike a balance between collecting receivables promptly and managing payables effectively to optimize its cash conversion cycle and overall liquidity position. Monitoring these activity ratios can provide insights into the company's operational efficiency and working capital management strategies.
See also:
Meta Platforms Inc. 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 | 1.39 | 1.46 | 2.04 | 1.88 | 2.00 |
| Total asset turnover | 0.58 | 0.63 | 0.71 | 0.54 | 0.53 |
The fixed asset turnover ratio for Meta Platforms Inc has shown a decreasing trend over the past five years, indicating a decline in the efficiency of generating sales from its fixed assets. Despite this decrease, the company still maintains a relatively healthy turnover ratio, with a value of 1.40 for the year ending December 31, 2023.
On the other hand, the total asset turnover ratio has also been decreasing over the same period, reflecting a reduction in the company's overall efficiency in utilizing its total assets to generate revenue. The ratio stood at 0.59 for the year ending December 31, 2023, indicating that Meta Platforms Inc generated $0.59 in sales for every dollar of total assets during that year.
Overall, the declining trend in both the fixed asset turnover and total asset turnover ratios suggests that Meta Platforms Inc may need to focus on improving the efficient utilization of its assets to enhance its revenue generation capabilities in the long term.