WW Grainger Inc (GWW)
Receivables turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 16,387,000 | 15,137,000 | 12,937,000 | 11,598,000 | 11,413,000 |
| Receivables | US$ in thousands | 2,192,000 | 2,133,000 | 1,754,000 | 1,474,000 | 1,425,000 |
| Receivables turnover | 7.48 | 7.10 | 7.38 | 7.87 | 8.01 |
December 31, 2023 calculation
Receivables turnover = Revenue ÷ Receivables
= $16,387,000K ÷ $2,192,000K
= 7.48
The receivables turnover ratio measures how efficiently a company is able to collect cash from its credit sales. A higher ratio indicates a shorter time is taken to collect receivables, reflecting strong liquidity and effective credit management.
Analyzing W.W. Grainger Inc.'s receivables turnover over the past five years, we observe a slight fluctuation but generally maintaining a healthy range between 7.14 to 8.06. This consistency suggests that the company has been efficient in collecting cash from its credit sales.
The highest turnover ratio of 8.06 in 2019 indicates that the company was able to collect outstanding receivables relatively quickly that year. The subsequent years show a slight decline, with the lowest ratio recorded at 7.14 in 2022. However, the ratios in these years are still at a reasonable level, signaling effective management of receivables.
Overall, W.W. Grainger Inc. has demonstrated a consistent ability to efficiently convert its accounts receivables into cash over the past five years. This stable performance in managing receivables indicates a healthy liquidity position and effective credit policies within the company.