Eaton Corporation PLC (ETN)
Payables turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 14,762,000 | 13,865,000 | 13,293,000 | 12,408,000 | 14,338,000 |
| Payables | US$ in thousands | 3,365,000 | 3,072,000 | 2,797,000 | 1,987,000 | 2,114,000 |
| Payables turnover | 4.39 | 4.51 | 4.75 | 6.24 | 6.78 |
December 31, 2023 calculation
Payables turnover = Cost of revenue ÷ Payables
= $14,762,000K ÷ $3,365,000K
= 4.39
Eaton Corporation plc's payables turnover has shown a decreasing trend over the past five years, with the ratio declining from 6.78 in 2019 to 4.39 in 2023. This indicates that the company's ability to efficiently manage its accounts payable has weakened over time. A lower payables turnover ratio suggests that the company is taking longer to pay off its suppliers, which could potentially strain supplier relationships or lead to missed discount opportunities.
It is important for Eaton Corporation plc to closely monitor and address the reasons behind the decreasing payables turnover ratio to ensure effective working capital management. This may involve negotiating better payment terms with suppliers, streamlining the accounts payable process, or implementing more efficient cash flow management practices. By improving payables turnover, the company can enhance its overall liquidity and financial health.
Peer comparison
Dec 31, 2023