Archrock Inc (AROC)

Working capital turnover

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Revenue US$ in thousands 1,172,300 889,048 784,803 703,584 775,926
Total current assets US$ in thousands 233,122 213,157 231,960 186,570 182,011
Total current liabilities US$ in thousands 188,604 152,143 148,571 125,254 111,692
Working capital turnover 26.33 14.57 9.41 11.47 11.03

December 31, 2024 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $1,172,300K ÷ ($233,122K – $188,604K)
= 26.33

The working capital turnover of Archrock Inc has shown a fluctuating trend over the past five years, starting at 11.03 in December 2020 and peaking at 26.33 in December 2024. The ratio measures how efficiently the company is utilizing its working capital to generate sales revenue. A higher working capital turnover indicates that the company is effectively managing its current assets and liabilities to support its operations.

The significant increase in the working capital turnover from 2022 to 2024 suggests that Archrock Inc has improved its efficiency in using its working capital to generate revenue. This may be attributed to better inventory management, more effective accounts receivable collection, or more stringent control over accounts payable.

It is important for the company to maintain a balance between liquidity and operational efficiency to ensure sustainable growth. Further analysis of the components of working capital and the underlying factors contributing to the fluctuation in the working capital turnover ratio would provide more insights into the financial health and operational effectiveness of Archrock Inc.