Federal Signal Corporation (FSS)

Payables turnover

		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
Cost of revenue (ttm)	US$ in thousands	1,272,500	1,238,400	1,173,300	1,125,100	1,089,900	1,029,000	992,800	969,000	924,500	909,400	889,200	835,900	837,200	851,200	870,800	906,300	898,500	873,000	846,600	823,100
Payables	US$ in thousands	66,700	82,400	86,700	95,600	72,400	80,900	77,900	80,700	64,800	65,600	70,500	71,200	51,600	71,100	73,100	78,000	65,000	70,500	71,300	72,900
Payables turnover		19.08	15.03	13.53	11.77	15.05	12.72	12.74	12.01	14.27	13.86	12.61	11.74	16.22	11.97	11.91	11.62	13.82	12.38	11.87	11.29

December 31, 2023 calculation

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

The payables turnover ratio measures how many times a company pays off its accounts payable during a specific period, indicating the efficiency of its payables management. A higher payables turnover ratio suggests that the company is paying off its creditors more quickly.

Analyzing the payables turnover ratio of Federal Signal Corp. over the past eight quarters, we observe fluctuations in the ratio. In Q4 2023, the payables turnover ratio reached 19.08, which is the highest among the presented values. This indicates that the company was able to settle its accounts payable 19.08 times during that quarter.

The trend in the payables turnover over the quarters shows an overall increase, which suggests that Federal Signal Corp. has been managing its payables more efficiently. However, it is important to note that a very high payables turnover ratio may also indicate potential cash flow issues or strained relationships with suppliers if the company is paying too quickly.

Therefore, closely monitoring the payables turnover ratio, alongside other financial metrics, can provide valuable insights into Federal Signal Corp.'s liquidity management and vendor relationships.