Cintas Corporation (CTAS)

Working capital turnover

		May 31, 2024	Feb 29, 2024	Nov 30, 2023	Aug 31, 2023	May 31, 2023	Feb 28, 2023	Nov 30, 2022	Aug 31, 2022	May 31, 2022	Feb 28, 2022	Nov 30, 2021	Aug 31, 2021	May 31, 2021	Feb 28, 2021	Nov 30, 2020	Aug 31, 2020	May 31, 2020	Feb 29, 2020	Nov 30, 2019	Aug 31, 2019
Revenue (ttm)	US$ in thousands	9,596,620	9,309,430	9,089,960	8,885,310	8,706,250	8,509,840	8,287,180	8,041,620	7,777,990	7,547,600	7,361,590	7,193,700	7,040,620	6,826,590	6,884,740	6,996,000	7,085,120	7,259,270	7,130,950	7,005,470
Total current assets	US$ in thousands	3,185,210	3,031,000	3,036,740	2,987,530	2,938,460	2,910,160	2,893,170	2,747,790	2,631,980	2,686,740	2,655,470	2,477,670	2,843,310	2,978,560	3,102,770	2,666,180	2,309,700	2,497,710	2,490,290	2,289,820
Total current liabilities	US$ in thousands	1,828,520	1,273,900	1,357,600	1,168,840	1,230,060	1,388,260	1,553,740	1,599,540	1,432,890	2,623,490	2,177,930	2,269,040	1,934,080	1,270,360	1,508,470	1,093,350	885,195	1,066,650	1,297,250	1,122,880
Working capital turnover		7.07	5.30	5.41	4.89	5.10	5.59	6.19	7.00	6.49	119.33	15.42	34.48	7.74	4.00	4.32	4.45	4.97	5.07	5.98	6.00

May 31, 2024 calculation

Working capital turnover = Revenue (ttm) ÷ (Total current assets – Total current liabilities)
= $9,596,620K ÷ ($3,185,210K – $1,828,520K)
= 7.07

The working capital turnover ratio measures how efficiently a company is utilizing its working capital to generate revenue. A higher working capital turnover ratio indicates that the company is effectively managing its working capital to drive sales.

In the case of Cintas Corporation, the working capital turnover has fluctuated over the past few quarters, ranging from as low as 4.00 to as high as 119.33. The significant variation in the ratio suggests fluctuations in the company's ability to efficiently utilize its working capital to generate sales.

In general, a high working capital turnover ratio is preferred as it indicates that the company is efficiently utilizing its current assets to support revenue generation. However, it is important to note that an extremely high ratio, such as the one observed in the second quarter of 2022 (119.33), may be an outlier and should be investigated further to understand the underlying reasons.

Overall, Cintas Corporation should aim to maintain a stable and relatively high working capital turnover ratio to demonstrate efficient management of its working capital resources. Monitoring this ratio over time can provide insights into the company's operational efficiency and financial performance.