Frontdoor Inc (FTDR)
Payables turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 895,000 | 952,000 | 818,000 | 758,000 | 687,000 |
| Payables | US$ in thousands | 76,000 | 80,000 | 66,000 | 55,000 | 48,000 |
| Payables turnover | 11.78 | 11.90 | 12.39 | 13.78 | 14.31 |
December 31, 2023 calculation
Payables turnover = Cost of revenue ÷ Payables
= $895,000K ÷ $76,000K
= 11.78
The payables turnover ratio measures how efficiently a company is managing its accounts payable by evaluating how many times during a period the company pays off its suppliers. A higher payables turnover ratio indicates that the company is paying its vendors more frequently.
Frontdoor Inc. has shown a decreasing trend in payables turnover over the past five years, dropping from 14.31 in 2019 to 11.78 in 2023. This suggests that the company is taking longer to pay off its suppliers in more recent years.
A decreasing payables turnover ratio can indicate that the company is taking advantage of extended payment terms with its suppliers or facing liquidity issues that are causing delays in settling its payables. This could potentially strain relationships with suppliers if payment terms are not being met promptly.
It is essential for Frontdoor Inc. to monitor and analyze its payables turnover ratio to ensure effective management of its accounts payable and maintain strong supplier relationships for the long-term sustainability of the business.
Peer comparison
Dec 31, 2023