SPS Commerce Inc (SPSC)

Working capital turnover

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Revenue US$ in thousands 637,765 536,910 450,875 385,276 312,630
Total current assets US$ in thousands 381,907 401,441 322,814 352,443 271,356
Total current liabilities US$ in thousands 146,684 130,669 110,642 102,872 80,132
Working capital turnover 2.71 1.98 2.13 1.54 1.63

December 31, 2024 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $637,765K ÷ ($381,907K – $146,684K)
= 2.71

The working capital turnover ratio for SPS Commerce Inc has shown fluctuating trends over the years. It increased from 1.63 in December 31, 2020, to 2.13 in December 31, 2022, indicating an improvement in the company's efficiency in utilizing its working capital to generate sales. However, it slightly decreased to 1.54 in December 31, 2021, before rebounding to 1.98 in December 31, 2023, and further increasing to 2.71 in December 31, 2024.

The upward trajectory observed in recent years suggests that SPS Commerce Inc has been effectively managing its working capital resources to drive sales growth. A higher working capital turnover ratio typically indicates that the company is efficiently utilizing its current assets to support revenue generation. This may be attributed to effective inventory management, streamlined accounts receivable collection processes, and optimal cash flow management.

Overall, the increasing trend in working capital turnover for SPS Commerce Inc reflects positively on the company's operational efficiency and ability to convert its working capital into revenue-generating activities.