Abbott Laboratories (ABT)

Working capital turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Revenue	US$ in thousands	39,431,000	43,093,000	42,541,000	34,070,000	31,164,000
Total current assets	US$ in thousands	22,670,000	25,224,000	24,239,000	20,441,000	15,667,000
Total current liabilities	US$ in thousands	13,841,000	15,489,000	13,105,000	11,907,000	10,863,000
Working capital turnover		4.47	4.43	3.82	3.99	6.49

December 31, 2023 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $39,431,000K ÷ ($22,670,000K – $13,841,000K)
= 4.47

The working capital turnover ratio for Abbott Laboratories has shown fluctuating trends over the past five years, ranging from a high of 6.64 in 2019 to a low of 3.87 in 2021, with slight improvements in 2022 and 2023. A higher working capital turnover ratio indicates that the company is efficiently utilizing its working capital to generate sales revenue.

In this case, the company has generally maintained a healthy working capital turnover ratio above 4, indicating effective management of working capital to support its operations. The ratio suggests that Abbott Laboratories is able to efficiently convert its working capital investment into sales, which can be attributed to effective inventory management, accounts receivable collection, and accounts payable management.

However, the fluctuations in the ratio over the years may also indicate changes in the company's operating cycle, changes in its sales volume, or adjustments in its working capital management strategies. It is important for the company to continue monitoring and optimizing its working capital turnover to ensure efficient utilization of resources and to support sustainable growth.