Aptiv PLC (APTV)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 8.04 | 8.12 | 7.23 | 7.48 | 8.58 |
| Receivables turnover | 5.54 | 5.26 | 4.79 | 5.15 | 4.33 |
| Payables turnover | 6.50 | 6.09 | 5.37 | 5.10 | 4.33 |
| Working capital turnover | 7.31 | 5.83 | 5.99 | 3.69 | 3.82 |
Aptiv PLC's activity ratios indicate the efficiency of its operations in managing various components of its working capital.
1. Inventory Turnover:
- Aptiv's inventory turnover ratio has shown a slight decrease from 8.58 in 2020 to 7.48 in 2021, and further declined to 7.23 in 2022. However, there was a recovery to 8.12 in 2023, followed by a relatively stable performance at 8.04 in 2024. This indicates that the company is effectively managing its inventory levels, with a higher turnover generally being favorable as it reflects quicker sales and lower carrying costs.
2. Receivables Turnover:
- The receivables turnover ratio of Aptiv has generally been increasing, from 4.33 in 2020 to 5.54 in 2024. This suggests that the company is collecting its accounts receivable more efficiently over time, which can improve cash flow and reduce the risk of bad debts.
3. Payables Turnover:
- Aptiv's payables turnover ratio has been on an upward trend, rising from 4.33 in 2020 to 6.50 in 2024. A higher payables turnover indicates that the company is paying its suppliers more quickly, which can sometimes suggest favorable credit terms or efficient working capital management.
4. Working Capital Turnover:
- The working capital turnover ratio for Aptiv has shown fluctuations over the years, with values of 3.82 in 2020, 3.69 in 2021, 5.99 in 2022, 5.83 in 2023, and 7.31 in 2024. A higher working capital turnover ratio generally indicates that the company is effectively utilizing its working capital to generate sales.
Overall, Aptiv PLC's activity ratios reflect a mixed performance in managing its working capital components. While inventory turnover and receivables turnover have shown some fluctuations, payables turnover and working capital turnover have generally improved over the years, indicating efficiency in managing operational aspects related to inventory, receivables, payables, and working capital. These ratios provide insights into how effectively the company is utilizing its assets and liabilities to generate sales and manage cash flow.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 45.41 | 44.98 | 50.51 | 48.83 | 42.55 |
| Days of sales outstanding (DSO) | days | 65.86 | 69.45 | 76.13 | 70.86 | 84.25 |
| Number of days of payables | days | 56.18 | 59.92 | 68.00 | 71.59 | 84.34 |
The activity ratios provide insights into how efficiently Aptiv PLC manages its inventory, accounts receivable, and accounts payable.
1. Days of Inventory on Hand (DOH):
- The Days of Inventory on Hand increased from 42.55 days in 2020 to 50.51 days in 2022, indicating that the company held inventory for a longer period before selling it.
- An improvement was seen in 2023 and 2024, with a decrease to 44.98 days and 45.41 days, respectively. This suggests better inventory management efficiency during these years.
2. Days of Sales Outstanding (DSO):
- The Days of Sales Outstanding decreased from 84.25 days in 2020 to 65.86 days in 2024, showing that the company collected receivables more efficiently over the years.
- The downward trend in DSO indicates that Aptiv PLC improved its collection process, converting sales into cash more quickly.
3. Number of Days of Payables:
- The Number of Days of Payables decreased consistently from 84.34 days in 2020 to 56.18 days in 2024, implying that the company took longer to pay its creditors.
- A reduction in Days of Payables can suggest either improved relationships with suppliers or potential cash flow challenges.
Overall, the trends in these activity ratios indicate that Aptiv PLC made progress in managing its inventory, accounts receivable, and accounts payable efficiently over the years. However, a closer analysis of the underlying reasons for these changes would provide a more comprehensive understanding of the company's operational performance.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 5.33 | 5.30 | 5.00 | 4.74 | 3.96 |
| Total asset turnover | 0.84 | 0.82 | 0.80 | 0.87 | 0.75 |
Aptiv PLC's fixed asset turnover has been steadily increasing over the past five years, starting at 3.96 in 2020 and reaching 5.33 in 2024. This indicates that the company is generating more revenue relative to its investment in fixed assets, suggesting improved efficiency in utilizing its long-term assets to generate sales.
In contrast, the total asset turnover ratio has shown some fluctuation during the same period. It started at 0.75 in 2020, then increased to 0.87 in 2021, before declining to 0.80 in 2022. However, it showed a slight increase in 2023 and 2024, reaching 0.82 and 0.84, respectively. Despite the fluctuations, the general trend suggests that Aptiv is becoming more effective in generating sales from its total assets over time.