Eaton Corporation PLC (ETN)
Working capital turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 23,107,000 | 20,562,000 | 20,114,000 | 18,008,000 | 21,230,000 |
| Total current assets | US$ in thousands | 11,675,000 | 8,746,000 | 7,511,000 | 9,178,000 | 8,728,000 |
| Total current liabilities | US$ in thousands | 7,747,000 | 6,360,000 | 7,212,000 | 5,881,000 | 5,132,000 |
| Working capital turnover | 5.88 | 8.62 | 67.27 | 5.46 | 5.90 |
December 31, 2023 calculation
Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $23,107,000K ÷ ($11,675,000K – $7,747,000K)
= 5.88
The working capital turnover ratio measures how efficiently Eaton Corporation plc is utilizing its working capital to generate sales revenue. A higher turnover ratio indicates that Eaton is effectively managing its working capital by quickly converting it into sales.
In this case, Eaton's working capital turnover has fluctuated over the past five years. The significant increase in 2021 to 65.65 suggests a remarkable efficiency in utilizing working capital to generate sales. This could be due to improved inventory management, faster receivables collection, or better payables management.
However, the sharp decrease in 2022 to 8.70 could be a result of various factors such as changes in company operations, industry dynamics, or economic conditions. It is important to investigate the reasons behind this fluctuation to assess the impact on Eaton's overall financial performance.
Overall, Eaton's working capital turnover ratio has shown some variability over the years, highlighting the importance of closely monitoring working capital management practices to ensure efficiency and profitability.
Peer comparison
Dec 31, 2023