Goodyear Tire & Rubber Co (GT)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.22 | 4.48 | 3.71 | 3.81 | 4.80 |
| Receivables turnover | — | — | — | — | — |
| Payables turnover | — | — | — | — | — |
| Working capital turnover | 63.99 | 39.89 | 13.64 | 24.31 | 23.97 |
1. Inventory Turnover:
- Goodyear's inventory turnover has been fluctuating over the years, ranging from 3.71 to 4.80. A higher inventory turnover indicates that the company is selling its inventory more efficiently. The decreasing trend from 2020 to 2022 may indicate potential issues with managing inventory levels or demand for products, although the slight increase in 2024 is a positive sign.
2. Receivables Turnover:
- The data shows that the receivables turnover ratio is not available for any of the years provided. This may suggest that Goodyear does not provide credit sales or has a minimal accounts receivable balance, which could be a positive indicator of efficient cash collections.
3. Payables Turnover:
- Similar to receivables turnover, the payables turnover ratio is not provided for any year, indicating insufficient data to assess how quickly Goodyear is paying its suppliers.
4. Working Capital Turnover:
- The working capital turnover ratio measures how effectively a company is using its working capital to generate sales. Goodyear's working capital turnover has shown significant variation, with a notable decline in 2022 followed by a substantial increase in 2024. A higher ratio indicates that the company is generating more sales per dollar of working capital, which can be a positive sign of operational efficiency and financial health.
In conclusion, while Goodyear's inventory turnover and working capital turnover ratios provide some insights into its operational efficiency and utilization of resources, the unavailability of data for receivables and payables turnover limits a comprehensive analysis of the company's overall liquidity and working capital management. Understanding and monitoring these activity ratios can help provide a more holistic view of Goodyear Tire & Rubber Co's financial performance and operational effectiveness.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 86.51 | 81.52 | 98.41 | 95.81 | 76.02 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
Based on the provided data for Goodyear Tire & Rubber Co, we can analyze the activity ratios as follows:
1. Days of Inventory on Hand (DOH):
- The DOH measures how many days, on average, the company holds onto its inventory before selling it.
- In 2020, the DOH was 76.02 days, which increased to 95.81 days in 2021, further increasing to 98.41 days in 2022. This shows that the company is holding onto its inventory for a longer period in recent years.
- In 2023, the DOH decreased to 81.52 days, and then slightly increased to 86.51 days in 2024.
2. Days of Sales Outstanding (DSO):
- DSO measures how long it takes for the company to collect its accounts receivable.
- The data does not provide information on DSO for any of the years, indicating that the DSO information is not available for analysis.
3. Number of Days of Payables:
- This ratio shows the average number of days the company takes to pay its suppliers.
- Similar to DSO, the data does not include information on the number of days of payables for any of the years, indicating that this information is not available for analysis.
In summary, based on the provided data, Goodyear Tire & Rubber Co has shown an increase in its Days of Inventory on Hand over the years, but we lack the information to analyze the Days of Sales Outstanding and the Number of Days of Payables. Efficient management of inventory, receivables, and payables is essential for the company's working capital management and overall operational efficiency.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | — | — | 2.24 | 1.87 | 1.55 |
| Total asset turnover | 0.90 | 0.93 | 0.93 | 0.82 | 0.75 |
The fixed asset turnover ratio for Goodyear Tire & Rubber Co has shown a consistent improvement over the years, starting at 1.55 in 2020 and reaching 2.24 in 2022. This indicates that the company is generating more revenue from its fixed assets, such as manufacturing equipment and machinery, which is a positive sign of operational efficiency and asset utilization.
On the other hand, the total asset turnover ratio has fluctuated slightly but remained relatively stable. It increased from 0.75 in 2020 to 0.93 in 2022 before declining to 0.90 in 2024. This ratio measures the company's ability to generate sales from its total assets, including both fixed and current assets. The stable but slightly decreasing trend could suggest that while the company is maintaining a reasonable level of sales in relation to its total assets, there may be some inefficiencies or challenges affecting overall asset turnover efficiency.
Overall, the upward trend in fixed asset turnover is a positive indicator of improving efficiency in utilizing fixed assets to generate revenue. However, the slight decline in total asset turnover, while not drastic, may warrant further investigation to identify potential areas for improvement in overall asset utilization efficiency.