CTS Corporation (CTS)

Working capital turnover

Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Revenue US$ in thousands 550,422 586,869 512,925 424,066 468,999
Total current assets US$ in thousands 319,349 325,760 289,089 233,231 237,478
Total current liabilities US$ in thousands 97,039 112,532 114,066 104,932 96,948
Working capital turnover 2.48 2.75 2.93 3.31 3.34

December 31, 2023 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $550,422K ÷ ($319,349K – $97,039K)
= 2.48

The working capital turnover of CTS Corp. has shown a declining trend over the past five years. The ratio decreased from 3.34 in 2019 to 2.48 in 2023. This suggests that the company may be becoming less efficient in managing its working capital to generate sales revenue.

A working capital turnover ratio of less than 1 indicates that the company is not effectively utilizing its working capital to support its operations and generate sales. In this case, the ratios are consistently above 1, suggesting that CTS Corp. is using its working capital efficiently, though the decreasing trend raises concerns.

Overall, the decreasing trend in the working capital turnover ratio may indicate potential issues with inventory management, accounts receivable collection, or accounts payable management. It is crucial for the company to closely monitor and address these areas to improve efficiency in utilizing its working capital resources.