Dow Inc (DOW)
Payables turnover
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cost of revenue (ttm) | US$ in thousands | 42,330,000 | 43,262,000 | 46,031,000 | 49,079,000 | 50,574,000 | 51,802,000 | 51,087,000 | 48,963,000 | 46,307,000 | 43,133,000 | 39,371,000 | 35,660,000 | 33,346,000 | 32,929,000 | 33,935,000 | 35,745,000 | 36,657,000 | |||
| Payables | US$ in thousands | 6,326,000 | 6,318,000 | 6,165,000 | 6,560,000 | 7,216,000 | 7,607,000 | 8,517,000 | 8,541,000 | 8,416,000 | 7,497,000 | 7,302,000 | 6,569,000 | 5,889,000 | 5,364,000 | 5,032,000 | 5,584,000 | 5,953,000 | 5,880,000 | 6,367,000 | 8,279,000 |
| Payables turnover | 6.69 | 6.85 | 7.47 | 7.48 | 7.01 | 6.81 | 6.00 | 5.73 | 5.50 | 5.75 | 5.39 | 5.43 | 5.66 | 6.14 | 6.74 | 6.40 | 6.16 |
December 31, 2023 calculation
Payables turnover = Cost of revenue (ttm) ÷ Payables
= $42,330,000K ÷ $6,326,000K
= 6.69
The payables turnover ratio measures how efficiently a company manages its accounts payable by comparing the cost of goods sold to the average accounts payable over a period. A higher payables turnover ratio indicates that the company is paying its suppliers more frequently, effectively managing its payables, and potentially taking advantage of early payment discounts.
Looking at Dow Inc's payables turnover, we observe fluctuations over the past eight quarters. The ratio ranged from a low of 5.45 in March 2022 to a high of 7.10 in March 2023. This indicates that the company's ability to manage its payable accounts has improved significantly over this period. The increasing trend from 2022 to 2023 suggests that Dow Inc is paying its suppliers more frequently, which could positively impact its working capital and cash flow management. However, it's important to note that a very high payables turnover could also indicate aggressive payment practices that may strain supplier relationships.
Overall, with a generally increasing payables turnover ratio, Dow Inc appears to be managing its accounts payable efficiently and effectively, potentially benefiting from improved cash flow and supplier relationships. However, it will be essential for the company to ensure that this trend does not compromise its supplier relationships or result in any negative consequences.
Peer comparison
Dec 31, 2023