Applied Industrial Technologies (AIT)
Working capital turnover
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 4,477,670 | 4,387,870 | 3,784,480 | 3,203,600 | 3,212,740 |
| Total current assets | US$ in thousands | 1,769,900 | 1,646,810 | 1,359,530 | 1,196,580 | 1,159,770 |
| Total current liabilities | US$ in thousands | 501,100 | 540,344 | 499,627 | 427,700 | 426,083 |
| Working capital turnover | 3.53 | 3.97 | 4.40 | 4.17 | 4.38 |
June 30, 2024 calculation
Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $4,477,670K ÷ ($1,769,900K – $501,100K)
= 3.53
The working capital turnover of Applied Industrial Technologies has gradually decreased over the past five years, indicating a decline in the efficiency of the company in utilizing its working capital to generate sales revenue. In particular, the ratio has decreased from 4.38 in 2020 to 3.53 in 2024.
A lower working capital turnover suggests that the company is taking longer to convert its working capital into sales, which may be a sign of inefficiency in managing its current assets and liabilities. This could be due to factors such as an increase in inventory levels, slower collection of accounts receivable, or an inadequate management of accounts payable.
Management should closely monitor and address the factors contributing to the declining working capital turnover to improve operational efficiency and ensure optimal utilization of the company's working capital resources.