American Water Works (AWK)
Payables turnover
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 62,000 | 52,000 | 41,000 | 38,000 | 44,000 |
| Payables | US$ in thousands | 346,000 | 294,000 | 254,000 | 235,000 | 189,000 |
| Payables turnover | 0.18 | 0.18 | 0.16 | 0.16 | 0.23 |
December 31, 2024 calculation
Payables turnover = Cost of revenue ÷ Payables
= $62,000K ÷ $346,000K
= 0.18
The payables turnover ratio measures how efficiently American Water Works manages its trade credit obligations with suppliers. A lower payables turnover ratio may indicate that the company is taking longer to pay its suppliers, which could signal potential liquidity issues or strained relationships with vendors.
Based on the data provided, American Water Works' payables turnover has declined from 0.23 in 2020 to 0.16 in 2021 and has since remained stable at 0.16 in 2022, then slightly increased to 0.18 in both 2023 and 2024. This trend suggests that the company may be taking longer to pay its suppliers compared to the previous year, potentially impacting its working capital management.
It is important for American Water Works to closely monitor its payables turnover ratio to ensure timely payment of obligations while maintaining positive relationships with suppliers. A consistent or improving payables turnover ratio can indicate effective cash flow management and healthy supplier relations.
Peer comparison
Dec 31, 2024