GATX Corporation (GATX)

Short-term

Turnover ratios

The activity ratios of GATX Corporation provide insights into how efficiently the company manages its inventory, receivables, payables, and working capital.

1. Inventory Turnover: This ratio indicates how many times GATX Corporation's inventory was sold and replaced during the year. A higher turnover ratio is generally preferred as it signifies efficient management of inventory. The inventory turnover has decreased over the years, from 12.75 in 2020 to 3.38 in 2024. This suggests a decline in the company's ability to quickly sell its inventory.

2. Receivables Turnover: The receivables turnover ratio reflects the efficiency of GATX Corporation in collecting outstanding receivables from customers. A higher turnover ratio indicates quicker collection of receivables. The ratio has fluctuated over the years, peaking at 18.01 in 2021 and decreasing to 7.96 in 2024. This trend suggests a potential issue with the collection of receivables in recent years.

3. Payables Turnover: The absence of data for payables turnover indicates that information regarding how efficiently GATX Corporation is managing its trade payables is not available. It is essential for the company to monitor and manage its payables effectively to optimize cash flow and supplier relationships.

4. Working Capital Turnover: This ratio illustrates how well GATX Corporation utilizes its working capital to generate sales revenue. A higher turnover indicates more efficient utilization of working capital. The working capital turnover has varied slightly over the years, ranging from 2.25 in 2022 to 2.97 in 2020. This implies a relatively stable performance in terms of utilizing working capital to drive sales.

In summary, the analysis of GATX Corporation's activity ratios reveals mixed efficiency in managing inventory, receivables, and working capital. The company may need to focus on improving inventory turnover and receivables collection to enhance its overall operational efficiency. Additionally, monitoring payables turnover could provide further insights into the company's management of trade payables.

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Average number of days

GATX Corporation's activity ratios reflect the efficiency of its inventory management, accounts receivable collection, and payment of accounts payable.

1. Days of Inventory on Hand (DOH) measures how many days, on average, the company holds onto its inventory before selling it. From 2020 to 2024, the DOH has increased steadily, indicating a longer duration of holding inventory before generating revenue. The significant jump in 2024 to 108.03 days suggests a potential overstocking issue or a slowdown in inventory turnover.

2. Days of Sales Outstanding (DSO) indicates how long it takes, on average, for the company to collect payment for its sales. The DSO from 2020 to 2024 shows fluctuations but remains relatively stable, with a slight increase towards the end of the period. This implies a consistent accounts receivable collection process, although the uptick in 2024 to 45.84 days signals a potential delay in receiving payments from customers.

3. Number of Days of Payables reveals how long the company takes to pay its suppliers and vendors. The data provided shows that GATX Corporation did not have any payable days recorded from 2020 to 2024. This may indicate that the company tends to pay its payables promptly, or it could suggest a lack of detailed information on the payment terms.

Overall, GATX Corporation's activity ratios reflect a need for further analysis to understand the underlying factors influencing the changes observed, especially the significant increase in inventory holding days and accounts receivable collection days in 2024.

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Long-term

Long-term activity ratios provide insights into how efficiently a company is utilizing its assets to generate sales. Let's analyze GATX Corporation's long-term activity ratios based on the provided data:

1. Fixed Asset Turnover:
- The fixed asset turnover ratio for GATX Corporation has been declining gradually over the years, from 0.17 in 2020 to 0.15 in 2024.
- This indicates that the company is generating fewer sales relative to its investment in fixed assets over time.
- A decreasing fixed asset turnover may suggest inefficiencies in utilizing fixed assets to generate revenue.

2. Total Asset Turnover:
- The total asset turnover ratio for GATX Corporation shows a mixed trend, initially declining from 0.14 in 2020 to 0.12 in 2023, but then increasing slightly to 0.13 in 2024.
- The fluctuations in total asset turnover indicate varying levels of sales generated per dollar of total assets held by the company.
- The decrease followed by a slight increase may suggest some challenges in efficiently utilizing all assets to drive revenue growth.

In conclusion, GATX Corporation's long-term activity ratios demonstrate a declining trend in fixed asset turnover and a fluctuating trend in total asset turnover. These trends imply potential inefficiencies in asset utilization and may warrant further investigation into the company's operational and asset management strategies to enhance long-term performance.