Eaton Corporation PLC (ETN)

Activity ratios

Short-term

Turnover ratios

	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
Inventory turnover	3.95	3.93	3.93	3.94	4.04	3.95	3.87	4.03	4.48	4.73	4.86	5.12	5.88	6.10	6.20	6.00	5.11	4.98	5.10	5.01
Receivables turnover	5.16	5.05	4.97	5.00	5.04	5.23	5.27	5.55	6.10	5.93	5.74	5.80	6.20	6.42	7.24	7.04	6.18	5.64	5.45	6.97
Payables turnover	4.39	4.48	4.52	4.55	4.51	4.61	4.43	4.67	4.75	5.11	5.22	5.66	6.24	7.15	8.18	7.88	6.78	6.31	6.41	6.38
Working capital turnover	5.88	6.58	6.11	6.94	8.62	10.58	—	—	67.27	12.79	21.72	5.35	5.46	6.45	7.03	5.58	5.90	6.38	5.85	10.95

The activity ratios of Eaton Corporation plc provide insight into the efficiency of the company in managing its inventory, receivables, payables, and working capital.

Inventory turnover remained relatively stable around 3.93 to 4.04 throughout 2022 and 2023, indicating that Eaton is efficiently managing its inventory by converting it into sales. A decreasing trend in inventory turnover could signal potential issues with stock management or slowing sales.

The receivables turnover ratio ranged from 5.01 to 5.39, showing that Eaton collects its accounts receivables approximately 5 times a year. A higher number indicates effective credit policies and collection procedures, contributing to better cash flow.

The payables turnover ratio fluctuated between 4.39 and 4.67, suggesting that Eaton takes approximately 4.39 to 4.67 times a year to pay its suppliers. A lower turnover may indicate relaxed payment terms, while a higher turnover could mean aggressive management of payables.

The working capital turnover ratio showed a declining trend from 10.69 in Q3 2022 to 5.91 in Q4 2023. This ratio measures the efficiency of generating revenue from working capital, and a decrease could imply a reduction in sales relative to the investment in working capital.

Overall, Eaton Corporation plc appears to be efficient in managing its inventory, receivables, and payables based on the activity ratios. However, monitoring the working capital turnover ratio is essential to ensure sustainable growth and efficient use of resources.

Average number of days

		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
Days of inventory on hand (DOH)	days	92.45	92.98	92.79	92.67	90.30	92.38	94.27	90.50	81.52	77.22	75.15	71.25	62.04	59.83	58.91	60.87	71.41	73.27	71.63	72.87
Days of sales outstanding (DSO)	days	70.69	72.34	73.42	73.06	72.35	69.75	69.27	65.77	59.83	61.56	63.58	62.94	58.86	56.82	50.42	51.84	59.09	64.67	66.97	52.40
Number of days of payables	days	83.20	81.51	80.70	80.17	80.87	79.14	82.45	78.22	76.80	71.40	69.97	64.51	58.45	51.04	44.64	46.32	53.82	57.84	56.95	57.20

Eaton Corporation plc's activity ratios reveal insights into the efficiency of its inventory management, accounts receivable collection, and accounts payable process.

- Days of Inventory on Hand (DOH) remained relatively stable in Q4 2023 compared to the previous quarters, indicating that the company is effectively managing its inventory levels without significant fluctuations. However, there was a slight increase compared to Q4 2022, which may suggest a potential buildup of inventory.

- Days of Sales Outstanding (DSO) increased in Q4 2023 compared to the previous quarter, indicating that Eaton Corporation plc is taking longer to collect payments from its customers. The increasing trend in DSO over the past few quarters may signify potential liquidity challenges or issues with credit policies.

- Number of Days of Payables decreased in Q4 2023 compared to the previous quarter, suggesting that the company is taking less time to pay its suppliers. This could indicate improved cash flow management or negotiation of more favorable payment terms with vendors.

Overall, Eaton Corporation plc should focus on optimizing its accounts receivable collection process to reduce DSO and closely monitor inventory levels to maintain efficiency in operations. Additionally, managing payables effectively can help in controlling cash outflows and enhancing working capital management.

Long-term

	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
Fixed asset turnover	6.55	6.74	6.69	6.61	6.54	6.73	6.64	6.57	6.56	6.65	6.27	6.08	6.08	6.34	6.60	7.07	6.07	6.14	6.12	7.75
Total asset turnover	0.60	0.60	0.59	0.60	0.59	0.58	0.58	0.58	0.59	0.59	0.52	0.52	0.57	0.60	0.63	0.67	0.65	0.67	0.67	0.85

Eaton Corporation plc's long-term activity ratios indicate the efficiency with which the company is utilizing its assets to generate revenue.

1. Fixed Asset Turnover: This ratio measures how effectively the company is using its fixed assets to generate sales. Eaton Corporation plc's fixed asset turnover ratio has been relatively stable, ranging between 6.38 and 6.80 over the past eight quarters. The consistently high fixed asset turnover of above 6 indicates that the company is efficiently utilizing its fixed assets to generate revenue.

2. Total Asset Turnover: This ratio measures the company's ability to generate sales from all its assets. Eaton Corporation plc's total asset turnover has also been stable, ranging between 0.56 and 0.61 over the same period. The total asset turnover ratio indicates that for every dollar of assets, the company generates between $0.56 and $0.61 in sales.

Overall, Eaton Corporation plc's long-term activity ratios suggest that the company is effectively utilizing both its fixed and total assets to generate revenue, demonstrating operational efficiency and effective asset management.