Federal Signal Corporation (FSS)

Working capital turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Revenue	US$ in thousands	1,722,700	1,434,800	1,213,200	1,130,800	1,221,300
Total current assets	US$ in thousands	570,200	531,400	431,000	405,500	360,700
Total current liabilities	US$ in thousands	195,800	180,500	170,400	148,400	160,200
Working capital turnover		4.60	4.09	4.66	4.40	6.09

December 31, 2023 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $1,722,700K ÷ ($570,200K – $195,800K)
= 4.60

Federal Signal Corp.'s working capital turnover has fluctuated over the past five years. The ratio indicates how efficiently the company is utilizing its working capital to generate sales revenue. A higher working capital turnover ratio suggests that the company is effectively managing its working capital to support sales activities.

In 2020, the working capital turnover was 4.40, showing a moderate level of efficiency in utilizing working capital to generate sales. The ratio increased in 2021 to 4.66, indicating an improvement in the company's ability to convert working capital into sales revenue. However, in 2022, the ratio dipped slightly to 4.09, suggesting a slight decrease in efficiency compared to the previous year.

In 2023, Federal Signal Corp.'s working capital turnover ratio increased to 4.60, indicating a recovery in the efficiency of working capital utilization. Despite the fluctuation in the ratio over the years, it is noteworthy that the company has generally maintained a solid level of working capital turnover, demonstrating efficient management of its working capital to support sales activities.

Overall, Federal Signal Corp. has shown varying levels of efficiency in converting its working capital into sales revenue in recent years, with the company's ability to effectively manage its working capital for sales generation improving in 2021 and 2023 compared to the years prior.