Progress Software Corporation (PRGS)

Short-term

Turnover ratios

Progress Software Corporation's activity ratios provide insights into how efficiently the company manages its resources. Let's delve into the analysis:

1. Inventory Turnover:
- In 2021, the inventory turnover ratio was 22.09, indicating that the company sold its inventory 22.09 times during the year. This high turnover suggests efficient inventory management.
- However, in 2022, the ratio decreased to 18.74, implying a slightly lower rate of inventory turnover. The company may have experienced changes in demand or inventory management practices.

2. Receivables Turnover:
- Progress Software Corporation's receivables turnover ratio increased from 5.26 in 2020 to 6.15 in 2022. This indicates that the company is collecting its receivables more efficiently.
- However, there was a slight decrease in 2024 to 4.61, which could suggest a longer collection period for receivables. It is essential for the company to monitor and manage its accounts receivable effectively.

3. Payables Turnover:
- The payables turnover ratio improved consistently from 6.23 in 2020 to 10.23 in 2023, demonstrating that the company is paying its suppliers at a faster rate.
- The slight decrease to 9.38 in 2024 indicates a slower turnover of payables. Progress Software Corporation may need to review its payment terms and relationships with suppliers.

4. Working Capital Turnover:
- The working capital turnover ratio provides insights into how effectively the company utilizes its working capital to generate revenue.
- Progress Software Corporation had a significantly high ratio of 35.71 in 2021, indicating efficient utilization of working capital.
- However, the ratio dropped to 5.57 in 2022, suggesting a decline in the efficiency of working capital utilization. This could be a point of concern for the company's management.

In conclusion, Progress Software Corporation's activity ratios reflect varying levels of efficiency in managing inventory, receivables, payables, and working capital over the years. It is essential for the company to monitor these ratios closely and make adjustments to improve operational efficiency and financial performance.

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Average number of days

Progress Software Corporation's activity ratios provide insights into how efficiently the company manages its resources and operations.

1. Days of Inventory on Hand (DOH):
- In 2021, the company held inventory for an average of 16.52 days, which increased to 19.48 days in 2022.
- The DOH indicates the number of days it takes for the company to sell its inventory. A higher DOH suggests slower inventory turnover, potentially tying up capital and increasing storage costs.
- The absence of data for 2020, 2023, and 2024 makes it difficult to assess the trend over time effectively.

2. Days of Sales Outstanding (DSO):
- DSO measures how quickly the company collects payments from its customers.
- Progress Software Corporation's DSO decreased from 69.38 days in 2020 to 59.32 days in 2022 before increasing to 79.25 days in 2024.
- A decreasing DSO is generally positive as it indicates faster collection of accounts receivable, improving cash flow. However, the significant increase in 2024 may raise concerns about credit policies or customer payment delays.

3. Number of Days of Payables:
- The company's days of payables decreased from 58.63 days in 2020 to 35.85 days in 2022 before slightly increasing to 38.91 days in 2024.
- A lower number of days of payables suggests that Progress Software Corporation is paying its suppliers more quickly.
- While managing payables efficiently can strengthen vendor relationships, excessively short payment periods may strain the company's cash position.

In summary, Progress Software Corporation showed mixed results in its activity ratios over the years. It is essential for the company to balance inventory management, accounts receivable collection, and payables turnover to ensure optimal working capital utilization and operational efficiency.

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Long-term

Progress Software Corporation's fixed asset turnover has shown a consistent upward trend over the five-year period from 2020 to 2024, increasing from 14.83 to 54.81. This indicates that the company has been able to generate significantly more revenue relative to its investment in fixed assets, reflecting improved efficiency in utilizing these assets.

On the other hand, the total asset turnover ratio has fluctuated slightly but remained relatively stable over the same period, ranging from 0.30 to 0.43. This suggests that the company's ability to generate sales from its total assets has been fairly consistent, with a slight decrease observed in 2024.

Overall, the increasing trend in fixed asset turnover bodes well for Progress Software Corporation, indicating that the company is effectively leveraging its fixed assets to drive revenue growth. However, the stability in total asset turnover implies that the company may need to focus on optimizing the utilization of its total assets to further improve its overall operational efficiency.