Garmin Ltd (GRMN)

Payables turnover

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Cost of revenue (ttm) US$ in thousands 3,739,972 3,535,637 3,386,684 3,230,893 3,119,146 3,041,459 2,950,508 2,888,024 2,860,034 2,683,150 2,682,210 2,690,805 2,578,231 2,712,875 2,637,679 2,412,319 2,310,280 2,183,433 2,091,782 2,113,542
Payables US$ in thousands 359,365 374,025 331,938 243,087 253,790 268,030 253,803 208,796 212,417 268,674 319,732 298,992 370,048 318,604 303,947 250,789 258,885 235,467 193,216 200,281
Payables turnover 10.41 9.45 10.20 13.29 12.29 11.35 11.63 13.83 13.46 9.99 8.39 9.00 6.97 8.51 8.68 9.62 8.92 9.27 10.83 10.55

December 31, 2024 calculation

Payables turnover = Cost of revenue (ttm) ÷ Payables
= $3,739,972K ÷ $359,365K
= 10.41

The payables turnover ratio measures how efficiently a company manages its accounts payable by calculating how many times a company pays off its average accounts payable balance during a period.

Analyzing the payables turnover of Garmin Ltd over the last few years, we can see fluctuations in the ratio. The trend shows a general decline in the payables turnover ratio from 10.55 in March 2020 to 10.41 in December 2024, though with some variations in between.

A high payables turnover ratio indicates that the company is efficiently managing its payables by paying suppliers more frequently, which can be seen in the higher ratios observed in the earlier periods. Conversely, a decreasing payables turnover ratio may suggest that Garmin Ltd is taking longer to pay its suppliers, which could potentially strain relationships with suppliers or indicate cash flow issues.

The significant drop in the ratio from around 13.83 in March 2023 to 10.20 in June 2024 is worth noting as it may indicate a change in the company's payment practices or supplier relationships during that period.

Overall, a downward trend in payables turnover may warrant further investigation into Garmin Ltd's payment policies, supplier relationships, and cash flow management to ensure that the company is operating efficiently and effectively managing its working capital.