Smith AO Corporation (AOS)
Working capital turnover
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 3,818,100 | 3,840,800 | 3,744,500 | 3,534,600 | 2,888,000 |
| Total current assets | US$ in thousands | 1,392,900 | 1,500,300 | 1,633,700 | 1,752,600 | 1,618,000 |
| Total current liabilities | US$ in thousands | 897,200 | 945,300 | 934,200 | 1,118,800 | 886,300 |
| Working capital turnover | 7.70 | 6.92 | 5.35 | 5.58 | 3.95 |
December 31, 2024 calculation
Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $3,818,100K ÷ ($1,392,900K – $897,200K)
= 7.70
Smith AO Corporation's working capital turnover has shown a consistently increasing trend over the last five years. The turnover ratio increased from 3.95 in December 31, 2020, to 7.70 in December 31, 2024. This indicates that the company has been able to efficiently utilize its working capital to generate sales revenue.
A higher working capital turnover ratio generally signifies that the company is managing its working capital effectively, ensuring that its current assets are being used efficiently to generate sales. This can be a positive indicator of the company's operational efficiency and financial health.
However, it's important to note that a very high turnover ratio could also indicate that the company is maintaining very low levels of working capital, which could potentially lead to liquidity issues. Therefore, it is essential for the company to strike a balance between optimizing working capital turnover and ensuring adequate liquidity to sustain operations.
Overall, the increasing trend in Smith AO Corporation's working capital turnover ratio over the last five years suggests a positive performance in terms of managing its working capital efficiently to drive sales growth.
Peer comparison
Dec 31, 2024