Goodyear Tire & Rubber Co (GT)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 5.45 | 4.36 | 4.59 | 6.00 | 4.96 |
| Receivables turnover | 7.12 | 7.80 | 7.15 | 7.09 | 7.44 |
| Payables turnover | 4.66 | 4.15 | 3.98 | 4.38 | 4.86 |
| Working capital turnover | 38.68 | 13.35 | 23.75 | 23.32 | 22.32 |
Goodyear Tire & Rubber Co.'s activity ratios illustrate the efficiency of the company in managing various aspects of its operations.
1. Inventory Turnover:
The inventory turnover ratio has fluctuated over the years, ranging from 3.71 to 4.80. In 2023, the ratio stands at 4.48, indicating that the company sold its inventory 4.48 times during the year. This signifies that Goodyear is efficient in managing its inventory levels, although there has been some variability in recent years.
2. Receivables Turnover:
The receivables turnover ratio has also shown variation over the last five years, with values between 7.29 and 7.97. In 2023, the ratio is 7.35, suggesting that Goodyear collects its receivables approximately 7.35 times during the year. This implies that the company has been effective in collecting payments from its customers in a timely manner.
3. Payables Turnover:
The payables turnover ratio for Goodyear has ranged from 3.30 to 3.99 in the last five years. At 3.83 in 2023, the ratio indicates that the company pays its suppliers approximately 3.83 times in a year. This metric reflects the relationship between Goodyear and its suppliers, showing how quickly the company settles its payables.
4. Working Capital Turnover:
The working capital turnover ratio has shown significant variability, with values ranging from 13.64 to 39.89. In 2023, the ratio is notably high at 39.89, suggesting that Goodyear generates $39.89 in revenue for every dollar of working capital invested. This implies efficient utilization of working capital to generate sales.
Overall, analyzing these activity ratios provides insights into Goodyear Tire & Rubber Co.'s operational efficiency and management of assets and liabilities.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 66.99 | 83.73 | 79.44 | 60.86 | 73.58 |
| Days of sales outstanding (DSO) | days | 51.23 | 46.81 | 51.03 | 51.49 | 49.06 |
| Number of days of payables | days | 78.37 | 87.98 | 91.68 | 83.24 | 75.05 |
Activity ratios are used to measure how efficiently a company manages its resources and assets. Let's analyze the activity ratios of Goodyear Tire & Rubber Co. based on the provided data:
1. Days of Inventory on Hand (DOH):
- The DOH for Goodyear Tire & Rubber Co. has fluctuated over the years, ranging from a low of 76.02 days in 2020 to a high of 98.41 days in 2022. In 2023, the DOH was 81.52 days. This ratio indicates the average number of days it takes for the company to sell its inventory. A lower DOH is generally preferable as it implies faster inventory turnover, but it should be balanced to avoid stockouts. Goodyear has shown some variability in managing its inventory levels efficiently.
2. Days of Sales Outstanding (DSO):
- The DSO for Goodyear Tire & Rubber Co. has also shown some variation, with the lowest DSO of 45.79 days in 2022 and the highest of 50.09 days in 2020. In 2023, the DSO was 49.68 days. This ratio represents the average number of days it takes for the company to collect its accounts receivable. A lower DSO indicates faster collection of receivables and better cash flow management. Goodyear has been relatively consistent in collecting its receivables promptly.
3. Number of Days of Payables:
- The days of payables for Goodyear Tire & Rubber Co. ranged from 91.49 days in 2019 to 110.58 days in 2021. In 2023, the number of days of payables was 95.37 days. This ratio measures how long the company takes to pay its suppliers. A higher number of days of payables can indicate better cash flow management, but it could also signal strained supplier relationships. Goodyear has maintained a balance in its payment practices over the years.
In conclusion, Goodyear Tire & Rubber Co. has demonstrated varying levels of efficiency in managing its inventory, collecting receivables, and paying its suppliers. Continual monitoring and improvement in these activity ratios can help the company optimize its working capital and overall operational performance.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 2.35 | 1.05 | 0.89 | 0.67 | 0.83 |
| Total asset turnover | 0.90 | 0.91 | 0.80 | 0.73 | 0.84 |
The fixed asset turnover ratio for Goodyear Tire & Rubber Co. has fluctuated over the past five years, ranging from a low of 1.74 in 2020 to a high of 2.51 in 2022. This ratio indicates that the company generated $2.36 in sales for every dollar of fixed assets in 2023. A higher fixed asset turnover ratio generally suggests that the company is efficiently utilizing its fixed assets to generate revenue.
On the other hand, the total asset turnover ratio has remained relatively stable over the same period, consistently around 0.93 in 2022 and 2023, showing an improvement from 0.75 in 2020. This ratio indicates that the company generated $0.93 in sales for every dollar of total assets in 2023. A higher total asset turnover ratio suggests that the company is efficiently using its total assets to generate sales.
In conclusion, while the fixed asset turnover ratio has shown fluctuations over the years, the total asset turnover ratio has remained more consistent and improved slightly. This indicates that Goodyear Tire & Rubber Co. has been effectively utilizing both its fixed assets and total assets to generate sales, with potential room for further improvement in efficiency.