Federal Signal Corporation (FSS)

Payables turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cost of revenue	US$ in thousands	1,272,500	1,089,900	924,500	837,200	898,500
Payables	US$ in thousands	66,700	72,400	64,800	51,600	65,000
Payables turnover		19.08	15.05	14.27	16.22	13.82

December 31, 2023 calculation

Payables turnover = Cost of revenue ÷ Payables
= $1,272,500K ÷ $66,700K
= 19.08

The payables turnover ratio for Federal Signal Corp. has been fluctuating over the past five years. In 2023, the company had a payables turnover ratio of 19.08, which indicates that the company paid off its accounts payable approximately 19.08 times during the year.

Comparing this to previous years, we see an increasing trend in payables turnover since 2019 when the ratio was at 13.82. This improvement suggests that Federal Signal Corp. has been managing its accounts payable more efficiently over the years.

A higher payables turnover ratio is generally seen as positive as it indicates that the company is paying off its suppliers more frequently, potentially improving its supplier relations and liquidity position. However, an extremely high ratio may also suggest that the company is aggressively trying to manage its cash flow at the expense of supplier relationships.

Overall, Federal Signal Corp.'s increasing payables turnover ratio over the years reflects a positive trend in managing its payables effectively.