ABM Industries Incorporated (ABM)
Working capital turnover
| Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 8,014,100 | 7,765,500 | 6,200,000 | 5,943,000 | 6,447,500 |
| Total current assets | US$ in thousands | 1,710,700 | 1,561,200 | 1,401,200 | 1,441,900 | 1,275,400 |
| Total current liabilities | US$ in thousands | 1,217,900 | 1,353,200 | 1,285,800 | 986,900 | 902,400 |
| Working capital turnover | 16.26 | 37.33 | 53.73 | 13.06 | 17.29 |
October 31, 2023 calculation
Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $8,014,100K ÷ ($1,710,700K – $1,217,900K)
= 16.26
The working capital turnover ratio measures how efficiently a company uses its working capital to generate sales revenue. A higher ratio indicates better efficiency in utilizing working capital. ABM Industries Inc.'s working capital turnover for the past five years is as follows: 16.43 in 2023, 37.51 in 2022, 53.97 in 2021, 13.16 in 2020, and 17.41 in 2019.
The working capital turnover shows significant fluctuations over the years. In 2021, the ratio reached its peak at 53.97, signifying that ABM Industries Inc. was able to generate $53.97 in sales revenue for every $1 of working capital. This indicates efficient utilization of working capital to drive sales. However, the ratio dropped sharply to 13.16 in 2020, suggesting a significant decline in efficiency in capital utilization for generating sales.
The 2022 working capital turnover ratio improved to 37.51, indicating a better utilization of working capital, although not reaching the levels of 2021. This improvement might have been due to better management of the company's assets and liabilities to support revenue generation. The 2023 ratio of 16.43 is a significant decrease from 2022, indicating a relative inefficiency in using working capital to generate sales compared to the previous year.
Overall, the fluctuation in ABM Industries Inc.'s working capital turnover ratio suggests varying levels of efficiency in utilizing working capital to generate sales revenue over the past five years. Further analysis of the company's working capital management and sales strategies would be necessary to understand the reasons behind these fluctuations and to identify potential areas for improvement.
Peer comparison
Oct 31, 2023