Ingersoll Rand Inc (IR)

Short-term

Turnover ratios

Ingersoll-Rand Inc's activity ratios provide valuable insights into the efficiency of the company's operations in managing its inventory, receivables, payables, and working capital over the past five years.

1. Inventory turnover: Ingersoll-Rand Inc's inventory turnover has shown a generally upward trend over the period, which indicates that the company is able to sell and replace its inventory more frequently. A higher inventory turnover ratio suggests efficient inventory management and could be a positive sign of effective sales and production processes.

2. Receivables turnover: The company's receivables turnover has fluctuated slightly but has remained relatively stable over the years. A higher receivables turnover ratio indicates that Ingersoll-Rand Inc is collecting its receivables more quickly, which is a positive indicator of its ability to efficiently convert sales into cash.

3. Payables turnover: The payables turnover ratio has also shown a slight upward trend, indicating that the company is taking longer to pay its suppliers. While a higher payables turnover ratio could suggest a potential strain on supplier relationships, it may also indicate that Ingersoll-Rand Inc is effectively managing its working capital by delaying payments.

4. Working capital turnover: The working capital turnover ratio has experienced fluctuations, but the overall trend shows an increasing pattern. A higher working capital turnover ratio implies that the company is generating more revenue per unit of working capital, which can be indicative of improved operational efficiency and effective utilization of resources.

Overall, the analysis of Ingersoll-Rand Inc's activity ratios highlights the company's ability to efficiently manage its inventory, receivables, payables, and working capital, which are crucial aspects of its operational performance and financial health.

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Average number of days

Ingersoll-Rand Inc's activity ratios highlight the efficiency of the company's inventory management, accounts receivable collection, and accounts payable payment processes over the past five years.

1. Days of inventory on hand (DOH):
- In 2023, Ingersoll-Rand reduced its days of inventory on hand to 91.49 days, indicating an improvement in managing its inventory levels more efficiently compared to the previous years.
- The decreasing trend in DOH from 2019 (119.08 days) to 2023 suggests that the company is managing its inventory more effectively, potentially leading to lower holding costs and improved cash flows.

2. Days of sales outstanding (DSO):
- The days of sales outstanding for Ingersoll-Rand decreased to 65.51 days in 2023, reflecting a quicker collection of accounts receivable compared to the previous years.
- The decreasing trend in DSO from 2019 (68.34 days) to 2023 indicates that the company is more efficient in collecting payments from customers, which can enhance cash flows and working capital management.

3. Number of days of payables:
- Ingersoll-Rand has been extending its payment periods to suppliers, with the number of days of payables increasing to 73.22 days in 2023.
- The increasing trend in the number of days of payables from 2019 (76.52 days) to 2023 suggests that the company is taking longer to pay its suppliers, potentially improving cash flow and working capital management.

Overall, the analysis of Ingersoll-Rand Inc's activity ratios indicates improvements in inventory management, accounts receivable collection, and accounts payable payment efficiency over the past five years, reflecting better working capital management and potential enhancement of cash flows.

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Long-term

Ingersoll-Rand Inc's long-term activity ratios show the efficiency with which the company generates sales based on its fixed assets and total assets.

The fixed asset turnover ratio has been consistently increasing over the years, indicating that the company has been able to generate more sales from its fixed assets efficiently. In 2023, the fixed asset turnover ratio reached 9.67, implying that for every dollar invested in fixed assets, the company generated $9.67 in sales, reflecting strong operational efficiency.

On the other hand, the total asset turnover ratio, which measures the company's ability to generate sales from all assets, including fixed and current, has also shown improvement over the years. In 2023, the total asset turnover ratio increased to 0.44, suggesting that Ingersoll-Rand Inc generated 44 cents in sales for every dollar of assets invested.

Overall, the increasing trend in both fixed asset turnover and total asset turnover ratios indicates that Ingersoll-Rand Inc has been effectively utilizing its assets to generate sales, demonstrating operational efficiency and effective management of its asset base over the years.