Ingersoll Rand Inc (IR)

Payables turnover

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Cost of revenue (ttm) US$ in thousands 4,065,000 4,022,000 3,975,600 3,952,600 3,993,900 3,923,000 3,863,800 3,744,900 3,590,700 3,530,800 3,401,100 3,297,400 3,163,900 3,010,000 2,881,800 2,832,200 2,640,600 1,964,600 1,657,300 1,335,200
Payables US$ in thousands 843,600 743,800 748,500 694,000 801,200 663,100 669,200 730,900 778,700 698,900 700,900 701,400 670,500 632,900 660,800 674,200 536,400 624,700 683,500 764,600
Payables turnover 4.82 5.41 5.31 5.70 4.98 5.92 5.77 5.12 4.61 5.05 4.85 4.70 4.72 4.76 4.36 4.20 4.92 3.14 2.42 1.75

December 31, 2024 calculation

Payables turnover = Cost of revenue (ttm) ÷ Payables
= $4,065,000K ÷ $843,600K
= 4.82

Payables turnover is a financial ratio that measures how efficiently a company is managing its accounts payable by evaluating the number of times a company pays its suppliers within a specific period. The payables turnover ratio for Ingersoll Rand Inc has shown an increasing trend from March 31, 2020, to December 31, 2024. The ratio increased from 1.75 in March 31, 2020, to 5.41 in September 30, 2024, indicating that the company is taking fewer days to pay its suppliers over time.

A higher payables turnover ratio generally suggests that a company is managing its accounts payable effectively and is able to pay its suppliers promptly. It may also indicate good relationships with suppliers and the ability to negotiate favorable payment terms. In the case of Ingersoll Rand Inc, the increasing trend in payables turnover indicates an improvement in the company's efficiency in managing its payables.

However, a very high payables turnover ratio may also suggest that a company is prioritizing the rapid payment of suppliers over other financial obligations, which could potentially strain its cash flow. Therefore, it is important for Ingersoll Rand Inc to strike a balance between paying suppliers promptly and maintaining adequate cash reserves for operational needs and future investments.