Honeywell International Inc (HON)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover	4.67	5.40	5.66	6.23	6.97
Receivables turnover	4.87	4.76	5.03	4.79	4.93
Payables turnover	4.22	4.72	4.48	4.86	5.38
Working capital turnover	7.38	7.02	5.86	3.64	5.95

Honeywell International Inc's activity ratios provide insight into the efficiency of its operations and management of its working capital.

Inventory turnover has seen a decreasing trend from 5.51 in 2019 to 3.72 in 2023, indicating that the company is taking longer to sell its inventory. This may suggest issues with inventory management or slowing sales.

Receivables turnover has been relatively stable over the years, with a slight increase from 4.90 in 2019 to 4.87 in 2023. This indicates that the company is efficiently collecting its receivables from customers.

Payables turnover has been on a downward trend from 4.25 in 2019 to 3.36 in 2023, suggesting that the company is taking longer to pay its suppliers. This may reflect changing payment terms or financial constraints.

Working capital turnover has shown a fluctuating trend, with a notable increase from 3.64 in 2020 to 7.39 in 2023. This suggests that the company is generating more revenue per dollar of working capital invested, which is a positive sign of operational efficiency.

Overall, while improvements are seen in receivables turnover and working capital turnover, the decreasing trends in inventory turnover and payables turnover may require further investigation to ensure optimal management of resources and cash flows.

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	78.10	67.62	64.50	58.60	52.33
Days of sales outstanding (DSO)	days	75.02	76.72	72.59	76.25	74.11
Number of days of payables	days	86.58	77.28	81.40	75.06	67.83

To analyze Honeywell International Inc.'s activity ratios, we will focus on Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables.

1. Days of Inventory on Hand (DOH):
- DOH measures how many days, on average, a company holds its inventory before turning it into sales. A lower DOH is generally favorable as it indicates efficient inventory management.
- Over the past five years, Honeywell's DOH has been increasing steadily, from 66.30 days in 2019 to 98.06 days in 2023. This suggests a slower turnover of inventory, which may tie up more capital in inventory costs.
- The increasing trend in DOH could indicate potential inefficiencies in inventory management or a shift towards a more conservative approach.

2. Days of Sales Outstanding (DSO):
- DSO reflects the average number of days it takes for a company to collect payments from its customers. A lower DSO indicates better accounts receivable management.
- Honeywell's DSO has fluctuated over the past five years but has remained within a relatively narrow range. It was highest in 2022 at 76.57 days and lowest in 2021 at 72.49 days.
- The stable DSO suggests that Honeywell has been effective in managing its accounts receivable, maintaining a consistent collection period from customers.

3. Number of Days of Payables:
- The number of days of payables measures how long a company takes to pay its suppliers. A higher number of days indicates that the company is taking longer to pay its bills, potentially conserving cash but also possibly straining supplier relationships.
- Honeywell's number of days of payables has been increasing over the past five years, from 85.93 days in 2019 to 108.71 days in 2023. This trend indicates that Honeywell is taking longer to pay its suppliers, which could be a deliberate strategy to manage cash flows.
- The increasing trend in the number of days of payables may signal close monitoring of working capital and liquidity needs.

Overall, Honeywell International Inc. shows mixed performance in its activity ratios. While the company has been effectively managing its accounts receivable, there are concerns about the increasing days of inventory on hand and days of payables. Further analysis is necessary to determine the underlying reasons for these trends and their potential impact on the company's financial performance.

Long-term

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Fixed asset turnover	6.71	6.47	6.17	5.87	6.93
Total asset turnover	0.60	0.57	0.53	0.51	0.63

Honeywell International Inc's fixed asset turnover has remained relatively consistent in recent years, with a range of 5.86 to 6.89. This indicates that the company generates between 5.86 and 6.89 in sales for every dollar invested in fixed assets. A fixed asset turnover above 1 suggests efficient utilization of fixed assets to generate revenue. The consistency in this ratio may indicate a stable and well-managed investment in fixed assets.

In contrast, the total asset turnover ratio has shown a decreasing trend over the past five years, declining from 0.63 in 2019 to 0.60 in 2023. This decline suggests that Honeywell International Inc has become less effective at generating sales from its total assets over time. A lower total asset turnover ratio may indicate underutilization of assets or potential inefficiencies in the company's operations.

Overall, while the fixed asset turnover ratio implies efficient utilization of fixed assets, the decreasing trend in total asset turnover warrants further analysis to identify potential areas for improvement in asset utilization and operational efficiency for Honeywell International Inc.