SPS Commerce Inc (SPSC)

Payables turnover

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cost of revenue	US$ in thousands	210,714	182,069	153,065	131,678	99,836
Payables	US$ in thousands	8,577	7,420	11,256	8,330	5,354
Payables turnover		24.57	24.54	13.60	15.81	18.65

December 31, 2024 calculation

Payables turnover = Cost of revenue ÷ Payables
= $210,714K ÷ $8,577K
= 24.57

To analyze SPS Commerce Inc's payables turnover over the five years provided:

1. Payables Turnover for December 31, 2020, was 18.65, indicating that the company converted its accounts payables nearly 18.65 times during that year. This suggests efficient management of payables and a shorter time to pay suppliers.

2. In December 31, 2021, the payables turnover decreased to 15.81. Although lower than the previous year, it still indicates a relatively strong ability to manage payables effectively.

3. By December 31, 2022, the payables turnover further declined to 13.60. The decrease may indicate potential delays in paying suppliers or changes in the company's payment terms.

4. However, by December 31, 2023, there was a notable increase in payables turnover to 24.54, suggesting a significant improvement in managing payables efficiently and potentially negotiating better terms with suppliers.

5. The trend continued into December 31, 2024, with a similar payables turnover ratio of 24.57, indicating sustained effectiveness in managing payables and liquidity.

Overall, the fluctuation in payables turnover over the years may reflect changes in the company's payment policies, cash flow management, or supplier relationships. The recent increase in payables turnover suggests that the company has been successful in optimizing its payables management strategies, which could positively impact the company's working capital and financial health.