Fortive Corp (FTV)

Short-term

Turnover ratios

Fortive Corp has shown relatively stable inventory turnover ratios over the past five years, ranging from 8.63 to 9.41, indicating efficient management of inventory levels. The receivables turnover has exhibited a consistent upward trend, rising from 5.44 in 2021 to 6.62 in 2024, reflecting the company's effectiveness in collecting accounts receivable.

On the other hand, payables turnover has fluctuated over the same period, with a slight decrease from 8.55 in 2020 to 7.57 in 2024, suggesting some variability in the company's payment practices to suppliers. Working capital turnover has shown significant variability, with a notably high ratio of 17.68 in 2024, indicating a substantial amount of revenue generated for each dollar of working capital.

Overall, Fortive Corp appears to effectively manage its inventory and receivables, although there may be room for improvement in managing payables and ensuring the efficient utilization of working capital to drive revenue growth.

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Average number of days

Based on the provided data, let's analyze the activity ratios of Fortive Corp:

1. Days of Inventory on Hand (DOH):
- The DOH measures how many days, on average, inventory is held before being sold.
- Fortive Corp had a steady trend in managing its inventory efficiently over the years, with a slight increase from 2020 to 2021, followed by a decrease in 2024.
- In 2024, Fortive Corp managed to decrease its DOH to 38.78 days, indicating a more efficient inventory management strategy in that year.

2. Days of Sales Outstanding (DSO):
- The DSO represents the average number of days it takes for the company to collect revenue after making a sale.
- Fortive Corp's DSO decreased consistently from 2020 to 2024, indicating an improvement in its accounts receivable turnover and efficient collection of receivables.
- The decrease in DSO from 67.10 days in 2021 to 55.16 days in 2024 suggests that Fortive Corp is collecting its receivables at a faster rate, which is a positive sign for the company's cash flow management.

3. Number of Days of Payables:
- This ratio reflects how long it takes the company to pay its suppliers.
- Fortive Corp saw a fluctuating trend in the number of days of payables, with an increase from 2020 to 2022 and a decrease in 2024.
- The increase in 2022 and a subsequent decrease in 2024 could indicate changes in vendor payment terms or working capital management strategies.

Overall, Fortive Corp showed improvements in its activity ratios over the years, particularly in managing inventory and collecting accounts receivable more efficiently. These trends suggest that the company has been focusing on optimizing its working capital and operational efficiency.

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Long-term

Fortive Corp's long-term activity ratios indicate a positive trend in efficiency and asset utilization over the years. The Fixed Asset Turnover ratio has been steadily increasing from 10.67 in 2020 to 14.44 in 2024. This improvement suggests that Fortive is generating more revenue from its fixed assets, indicating effective management and utilization of these assets to generate sales.

Furthermore, the Total Asset Turnover ratio has also shown a positive trend, increasing from 0.28 in 2020 to 0.37 in 2024. This indicates that Fortive is efficiently using its total assets to generate sales, reflecting improved operational efficiency and effective utilization of resources to generate revenue.

Overall, the increasing trend in both Fixed Asset Turnover and Total Asset Turnover ratios for Fortive Corp suggests that the company is achieving higher levels of efficiency and effectiveness in utilizing its assets to generate revenue over the years. This may indicate improved operational performance and financial health for the company.