Fastenal Company (FAST)
Payables turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 5,828,700 | 5,537,700 | 4,804,300 | 4,516,000 | 4,281,800 |
| Payables | US$ in thousands | 264,100 | 255,000 | 233,100 | 207,000 | 192,800 |
| Payables turnover | 22.07 | 21.72 | 20.61 | 21.82 | 22.21 |
December 31, 2023 calculation
Payables turnover = Cost of revenue ÷ Payables
= $5,828,700K ÷ $264,100K
= 22.07
The payables turnover ratio measures how efficiently a company is managing its accounts payable by comparing the cost of goods sold to its average accounts payable balance. A higher payables turnover indicates that the company is paying its suppliers more frequently and efficiently.
By analyzing Fastenal Co.'s payables turnover over the past five years, we can see that the ratio has been consistently high, ranging from 13.87 to 15.12. This suggests that Fastenal Co. is effectively managing its accounts payable and paying its suppliers in a timely manner.
The increasing trend in the payables turnover ratio from 2020 to 2023 indicates that the company has been improving its efficiency in managing its payables over time. This could be a result of better negotiation with suppliers, improved inventory management, or streamlined payment processes.
Overall, Fastenal Co.'s high and increasing payables turnover ratio reflects strong financial management practices and efficient working capital management. Investors and stakeholders can view this positively as it indicates effective utilization of resources and a healthy supplier relationship.
Peer comparison
Dec 31, 2023