Allegion PLC (ALLE)
Working capital turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 3,553,800 | 3,186,000 | 2,820,400 | 2,668,100 | 2,763,400 |
| Total current assets | US$ in thousands | 1,360,900 | 1,214,600 | 1,117,600 | 1,145,000 | 1,001,800 |
| Total current liabilities | US$ in thousands | 1,079,700 | 703,600 | 601,200 | 521,500 | 507,000 |
| Working capital turnover | 12.64 | 6.23 | 5.46 | 4.28 | 5.58 |
December 31, 2023 calculation
Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $3,553,800K ÷ ($1,360,900K – $1,079,700K)
= 12.64
The working capital turnover ratio for Allegion plc has shown an increasing trend over the past five years, indicating that the company has been able to efficiently utilize its working capital to generate sales. This ratio increased from 5.77 in 2019 to 12.98 in 2023, reflecting a significant improvement in the efficiency of working capital management.
A working capital turnover ratio of 12.98 in 2023 means that Allegion plc was able to generate $12.98 in sales for every dollar of working capital invested during the year. This suggests that the company effectively utilized its current assets and liabilities to drive revenue growth.
The consistent improvement in the working capital turnover ratio indicates that Allegion plc is effectively managing its liquidity and operating cycle, which can lead to improved profitability and financial performance in the long run. It also reflects strong operational efficiency and effective management of current assets and liabilities.
Overall, the increasing trend in working capital turnover for Allegion plc is a positive sign of the company's ability to efficiently use its working capital to support its business operations and drive sales growth.