SPS Commerce Inc (SPSC)

Activity ratios

Short-term

Turnover ratios

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Inventory turnover — 2.93 2.98 2.98 2.90 2.94 2.96 2.94 2.96 2.96 2.83 2.75 2.66 2.65 2.66 2.66 2.61 2.59 2.47 2.40
Receivables turnover 11.46 11.39 10.95 10.86 11.43 11.73 10.35 10.32 11.15 10.35 9.16 9.31 9.31 9.97 8.59 9.44 8.85 9.24 8.57 9.05
Payables turnover 24.54 28.18 27.20 30.09 13.60 17.95 32.17 28.98 15.81 32.77 19.13 20.91 18.65 19.23 22.33 20.52 21.58 20.50 23.37 18.98
Working capital turnover 1.98 2.27 1.81 1.97 2.13 1.85 1.57 1.56 1.54 1.47 1.50 1.54 1.63 1.13 1.24 1.26 1.25 1.28 1.23 1.26

The analysis of SPS Commerce Inc.'s activity ratios reveals the following insights:

1. Receivables Turnover: The company's receivables turnover ratio has been relatively stable over the past eight quarters, ranging between 10.86 and 11.73. This indicates that SPS Commerce is efficient in collecting revenues from customers and converting credit sales into cash. A higher turnover ratio suggests a shorter time for the company to collect its accounts receivable, which is generally a positive sign for liquidity.

2. Payables Turnover: SPS Commerce's payables turnover ratio has shown significant variability, ranging from 13.60 to 32.17 over the same period. A high payables turnover ratio indicates that the company is paying its suppliers quickly, which could suggest favorable relationships with suppliers or potential discounts for prompt payments. The recent increase in the payables turnover ratio may indicate a more efficient management of its accounts payable.

3. Working Capital Turnover: The working capital turnover ratio for SPS Commerce has also exhibited fluctuations, varying between 1.56 and 2.27. A higher working capital turnover ratio generally indicates that the company is generating sales more efficiently with less capital investment in working capital. The fluctuations in this ratio may reflect changes in the company's operating efficiency or sales levels over the quarters analyzed.

Overall, SPS Commerce Inc. appears to have efficient operational processes in managing its receivables, payables, and working capital, as evidenced by the turnover ratios. However, it is essential for investors and stakeholders to monitor these ratios over time to assess the company's ongoing performance and financial health.

Average number of days

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Days of inventory on hand (DOH) days — 124.46 122.46 122.34 125.80 124.22 123.36 124.36 123.43 123.46 128.92 132.81 137.11 137.83 137.48 137.40 139.58 141.03 147.79 151.91
Days of sales outstanding (DSO) days 31.84 32.06 33.32 33.62 31.92 31.11 35.27 35.35 32.74 35.25 39.85 39.19 39.20 36.60 42.51 38.66 41.23 39.49 42.59 40.34
Number of days of payables days 14.88 12.95 13.42 12.13 26.84 20.34 11.35 12.60 23.09 11.14 19.08 17.45 19.57 18.98 16.34 17.79 16.91 17.81 15.62 19.23

In analyzing SPS Commerce Inc.'s activity ratios, we can observe the following trends:

1. Days of Inventory on Hand (DOH): Unfortunately, no data is provided for DOH across the given quarters, making it challenging to assess the efficiency of inventory management by measuring the number of days it takes for inventory to turn into sales.

2. Days of Sales Outstanding (DSO): DSO indicates the average number of days it takes for the company to collect revenue after making a sale. SPS Commerce Inc.'s DSO has been relatively stable over the quarters, ranging from a low of 31.11 days in Q3 2022 to a high of 35.35 days in Q1 2022. A lower DSO is generally preferred as it signifies a faster collections process and potentially better liquidity.

3. Number of Days of Payables: This ratio shows how long it takes for a company to pay its suppliers. SPS Commerce Inc.'s Days of Payables have fluctuated over the quarters, with the lowest being 11.35 days in Q2 2022 and the highest at 26.84 days in Q4 2022. A lower number of days of payables could indicate better working capital management, while a higher number might suggest possible cash flow issues.

Overall, a stable or decreasing trend in DSO along with a manageable number of days of payables would indicate effective management of accounts receivable and accounts payable by SPS Commerce Inc., potentially contributing to improved cash flow and overall financial health.

Long-term

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Fixed asset turnover 14.90 14.19 14.00 13.44 12.72 13.11 12.97 12.41 12.08 11.79 11.96 12.35 11.83 12.06 11.50 11.92 11.75 13.08 12.79 12.37
Total asset turnover 0.65 0.65 0.67 0.68 0.67 0.68 0.67 0.65 0.63 0.62 0.61 0.60 0.59 0.62 0.64 0.65 0.62 0.64 0.63 0.63

The long-term activity ratios of SPS Commerce Inc., as reflected in the fixed asset turnover and total asset turnover ratios, provide insights into the company's efficiency in utilizing its assets.

The fixed asset turnover ratio has been showing a consistent upward trend over the past quarters, indicating that SPS Commerce Inc. is generating more revenue relative to its investment in fixed assets. This suggests that the company has been effectively utilizing its long-term assets to generate sales revenue.

On the other hand, the total asset turnover ratio has remained relatively stable over the same period, with slight fluctuations quarter over quarter. This indicates that SPS Commerce Inc. has been consistently generating revenue in relation to its total assets.

Overall, the increasing trend in the fixed asset turnover ratio coupled with the stable total asset turnover ratio suggests that SPS Commerce Inc. is efficiently utilizing both its fixed and total assets to drive sales and generate revenue. This efficiency in asset utilization is a positive indicator of the company's operational performance and overall financial health.