Ecolab Inc (ECL)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 9.03 | 7.12 | 7.53 | 8.15 | 12.15 |
| Receivables turnover | 5.12 | 5.00 | 4.90 | 4.82 | 5.16 |
| Payables turnover | 8.63 | 7.39 | 8.12 | 9.03 | 12.22 |
| Working capital turnover | 11.93 | 11.22 | 11.36 | 5.38 | 12.63 |
Ecolab, Inc.'s activity ratios provide insights into how efficiently the company manages its assets and operations.
1. Inventory Turnover: This ratio indicates how many times Ecolab's inventory is sold and replaced during the year. The trend shows a slight increase from 2019 to 2023, indicating that the company is selling its inventory at a faster rate.
2. Receivables Turnover: This ratio measures how efficiently Ecolab collects its accounts receivable. The company has maintained a relatively stable receivables turnover over the years, indicating effective management in collecting on sales.
3. Payables Turnover: Payables turnover shows how quickly Ecolab pays its suppliers. The decreasing trend from 2019 to 2023 might suggest that the company is taking longer to settle its payables, which could be an indicator of possible cash flow management strategies.
4. Working Capital Turnover: This ratio reflects how effectively Ecolab is utilizing its working capital to generate sales revenue. The significant increase in 2023 from the previous years indicates that the company is efficiently using its working capital to support its operations and increase sales.
Overall, Ecolab, Inc. has shown efficiency in managing its inventory, receivables, and working capital; however, the trend in payables turnover may warrant further investigation into the company's supplier relationships and cash flow management practices.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 40.41 | 51.27 | 48.45 | 44.78 | 30.05 |
| Days of sales outstanding (DSO) | days | 71.22 | 73.04 | 74.49 | 75.78 | 70.68 |
| Number of days of payables | days | 42.27 | 49.42 | 44.95 | 40.44 | 29.88 |
To analyze Ecolab, Inc.'s activity ratios, we will focus on the days of inventory on hand (DOH), days of sales outstanding (DSO), and number of days of payables over the five-year period from 2019 to 2023.
1. Days of Inventory on Hand (DOH):
- The days of inventory on hand have fluctuated over the period, ranging from 59.69 days in 2023 to 74.10 days in 2022.
- A decreasing trend in DOH indicates that Ecolab has been more efficient in managing its inventory levels and turning over its inventory quicker in recent years.
2. Days of Sales Outstanding (DSO):
- The days of sales outstanding have also varied, with a high of 75.61 days in 2020 to a low of 71.75 days in 2019.
- A decrease in DSO suggests that Ecolab has been collecting its accounts receivable more quickly, which is a positive sign of efficient credit and collection management.
3. Number of Days of Payables:
- Ecolab's number of days of payables has shown fluctuations, from 53.74 days in 2019 to 71.43 days in 2022.
- An increase in the number of days of payables may indicate that the company is taking longer to pay its suppliers, possibly to manage its working capital more effectively.
Overall, the trend in these activity ratios suggests that Ecolab has made improvements in managing its inventory, accounts receivable, and payables over the years. However, it's important to consider these ratios in conjunction with other financial metrics to get a complete picture of the company's operational efficiency and liquidity management.
See also:
Ecolab Inc Short-term (Operating) Activity Ratios
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 4.46 | 4.37 | 3.92 | 3.76 | 4.69 |
| Total asset turnover | 0.71 | 0.67 | 0.61 | 0.65 | 0.73 |
Ecolab, Inc.'s long-term activity ratios provide insights into the company's efficiency in generating sales from its fixed assets and total assets over the years.
The fixed asset turnover ratio has shown a general increasing trend from 3.77 in 2019 to 4.41 in 2023. This indicates that Ecolab has been able to generate more revenue from its fixed assets each year, which is a positive sign of efficient asset utilization. Higher fixed asset turnover suggests that the company is effectively utilizing its property, plant, and equipment to generate sales.
On the other hand, the total asset turnover ratio shows fluctuation over the years, with a decrease from 0.71 in 2019 to 0.70 in 2023. This ratio indicates how efficiently the company is using all its assets to generate sales. A decreasing trend in total asset turnover could suggest that the company may be becoming less effective in utilizing all its assets to generate revenue.
Overall, Ecolab's fixed asset turnover ratio is consistently higher than its total asset turnover ratio, indicating that the company is more efficient in generating sales from its fixed assets compared to its total assets. The increasing trend in fixed asset turnover implies improved efficiency in utilizing fixed assets to drive sales, which could potentially lead to better profitability and overall performance.