Take-Two Interactive Software Inc (TTWO)

Short-term

Turnover ratios

Take-Two Interactive Software Inc's activity ratios provide insights into how efficiently the company is managing its operating assets and liabilities.

1. Inventory Turnover:
- The inventory turnover ratio measures how many times a company sells and replaces its inventory during a period.
- The significant variation in Take-Two's inventory turnover over the years indicates fluctuations in inventory management.
- The sudden drop in 2020 followed by a sharp increase in 2022 and 2023 could suggest improved inventory management efficiency or strategic shifts in production and sales processes.

2. Receivables Turnover:
- The receivables turnover ratio indicates how many times a company collects its accounts receivable during a period.
- Take-Two's consistent receivables turnover ratios suggest the company is efficient in collecting payments from customers.
- The slight improvement in the receivables turnover ratio over the years indicates that the company is becoming more effective in managing its receivables.

3. Payables Turnover:
- The payables turnover ratio shows how many times a company pays its suppliers during a period.
- Take-Two's decreasing trend in payables turnover could imply that the company is taking longer to pay its suppliers, which may indicate a change in payment terms or cash flow management strategies.

4. Working Capital Turnover:
- The working capital turnover ratio measures how efficiently a company is using its working capital to generate sales.
- Take-Two's working capital turnover has decreased over the years, indicating a decline in the efficiency of utilizing working capital to generate revenue.
- This trend suggests a potential need for the company to review its working capital management strategies to improve operational efficiency.

Overall, the analysis of Take-Two Interactive Software Inc's activity ratios indicates varying levels of efficiency in managing its inventory, receivables, payables, and working capital over the years. The company may need to focus on optimizing these aspects to enhance its overall operational performance and financial health.

---

Average number of days

Take-Two Interactive Software Inc's activity ratios indicate how efficiently the company manages its inventory, collects its receivables, and pays its payables.

1. Days of Inventory on Hand (DOH): This ratio measures the average number of days it takes for the company to sell its inventory. In 2024, the DOH increased significantly to 69.64 days from 1.84 days in 2023, which suggests that Take-Two may be facing challenges in managing its inventory levels efficiently. A high DOH can lead to increased carrying costs and potential obsolescence.

2. Days of Sales Outstanding (DSO): DSO represents the average number of days it takes for the company to collect its accounts receivable. The trend for Take-Two shows improvements in DSO from 52.07 days in 2023 to 46.38 days in 2024. A lower DSO indicates that the company is collecting receivables more quickly, which is a positive sign for cash flow management.

3. Number of Days of Payables: This ratio reveals how long it takes for the company to pay its suppliers. The increase in the number of days of payables from 16.69 days in 2023 to 23.01 days in 2024 indicates that Take-Two is taking longer to settle its payables. While a longer payable period can provide short-term cash flow benefits, it may also strain relationships with suppliers if not managed carefully.

In summary, Take-Two Interactive Software Inc should focus on improving its inventory management efficiency to reduce the number of days inventory is held, while continuing its efforts to collect receivables promptly to optimize cash flow. Additionally, the company must monitor its payable days and strike a balance between extending payment terms and maintaining healthy supplier relationships.

---

Long-term

Take-Two Interactive Software Inc's long-term activity ratios show varying trends over the past five years. The fixed asset turnover ratio has been relatively stable, ranging from 13.01 to 23.39, indicating that the company generates between 13 to 23 times in revenue for every dollar invested in fixed assets.

On the other hand, the total asset turnover ratio has been more volatile, fluctuating from 0.34 to 0.62. This ratio reveals that the company generates revenue between 0.34 to 0.62 times for every dollar invested in total assets.

Overall, the fixed asset turnover indicates that Take-Two Interactive Software Inc efficiently utilizes its fixed assets to generate sales, while the total asset turnover ratio fluctuates, suggesting potential changes in how effectively the company is utilizing all its assets to generate revenue.