Forward Air Corporation (FWRD)

Payables turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cost of revenue	US$ in thousands	489,942	565,906	501,436	941,249	1,087,240
Payables	US$ in thousands	45,430	50,094	44,837	38,371	25,411
Payables turnover		10.78	11.30	11.18	24.53	42.79

December 31, 2023 calculation

Payables turnover = Cost of revenue ÷ Payables
= $489,942K ÷ $45,430K
= 10.78

The payables turnover ratio is a liquidity metric used to assess how efficiently a company is managing its accounts payable. A higher payables turnover ratio indicates that the company is paying its suppliers more frequently within a given period.

Analyzing Forward Air Corporation's payables turnover ratio over the past five years, we observe a fluctuating trend. In 2019, the payables turnover ratio was 42.79, indicating that the company paid its suppliers approximately 42.79 times during that year. This exceptionally high ratio suggests that Forward Air Corporation was efficiently managing its accounts payable by paying suppliers more frequently.

Subsequently, there was a significant decrease in the payables turnover ratio in 2020 to 24.53, which still indicates a relatively high turnover of payables. The ratio further decreased in 2021 to 11.18 before slightly increasing to 11.30 in 2022. Lastly, as of December 31, 2023, the payables turnover ratio stands at 10.78.

The decreasing trend from 2019 to 2023 suggests that Forward Air Corporation may be taking longer to pay its suppliers, which could be due to various reasons such as changes in supplier agreements, negotiating better payment terms, or managing working capital differently. However, it is important to note that a lower payables turnover ratio could also indicate potential liquidity issues or challenges in managing vendor relationships. Further analysis and comparison with industry averages or competitors' ratios would provide deeper insights into the efficiency of Forward Air Corporation's payables management.