ITT Inc (ITT)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.03 | 3.78 | 3.87 | 4.33 | 4.70 |
| Receivables turnover | 5.16 | 4.86 | 4.75 | 4.98 | 4.88 |
| Payables turnover | 5.20 | 4.98 | 5.15 | 5.00 | 5.53 |
| Working capital turnover | 6.83 | 4.00 | 4.59 | 3.48 | 2.37 |
ITT Inc's activity ratios provide insights into how efficiently the company is managing its assets and liabilities to generate revenue.
1. Inventory Turnover: ITT Inc's inventory turnover has been relatively stable over the years, decreasing from 4.70 in 2020 to 3.78 in 2023, before slightly increasing to 4.03 in 2024. This indicates that the company is selling its inventory less frequently, possibly due to slower sales or excess inventory levels.
2. Receivables Turnover: The receivables turnover for ITT Inc has shown a consistent pattern of improvement, from 4.88 in 2020 to 5.16 in 2024. This suggests that the company is collecting its receivables more efficiently, converting credit sales into cash at a faster rate.
3. Payables Turnover: The payables turnover ratio for ITT Inc fluctuated slightly over the years, ranging from 4.98 in 2023 to 5.53 in 2020. This indicates that the company is managing its accounts payable effectively, though there was a slight decrease in 2021 before recovering in subsequent years.
4. Working Capital Turnover: ITT Inc's working capital turnover has shown significant improvement, increasing from 2.37 in 2020 to 6.83 in 2024. This suggests that the company is generating more revenue per dollar of working capital employed, indicating improved efficiency in utilizing its resources.
Overall, these activity ratios reflect ITT Inc's ability to manage its inventory, receivables, payables, and working capital effectively to drive revenue generation and operational efficiency.
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 | 90.54 | 96.53 | 94.35 | 84.31 | 77.60 |
| Days of sales outstanding (DSO) | days | 70.67 | 75.07 | 76.82 | 73.28 | 74.76 |
| Number of days of payables | days | 70.20 | 73.31 | 70.88 | 73.06 | 66.04 |
The activity ratios of ITT Inc provide insights into how efficiently the company manages its inventory, receivables, and payables.
1. Days of Inventory on Hand (DOH) has increased from 77.60 days in 2020 to 90.54 days in 2024, indicating that ITT Inc is holding on to its inventory for a longer period. This may suggest issues such as overstocking, slowing sales, or inefficiencies in inventory management.
2. Days of Sales Outstanding (DSO) has fluctuated slightly, with a decrease from 74.76 days in 2020 to 70.67 days in 2024. A lower DSO indicates that the company is collecting its receivables more quickly, which is a positive sign of efficient credit management.
3. Number of Days of Payables has also shown fluctuations, ranging from 66.04 days in 2020 to 73.31 days in 2023. A higher number of days of payables can be an indication that ITT Inc is taking longer to pay its suppliers, potentially indicating a strain on supplier relationships. However, the decrease to 70.20 days in 2024 shows that the company may be improving its payables management.
Overall, ITT Inc should focus on optimizing its inventory levels to reduce DOH, continuing to improve its DSO, and balancing its payables to maintain strong supplier relations while managing cash flow effectively.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 6.29 | 5.85 | 5.67 | 5.43 | 4.72 |
| Total asset turnover | 0.77 | 0.83 | 0.79 | 0.78 | 0.58 |
ITT Inc has shown a consistent improvement in its fixed asset turnover ratio over the past five years, with the ratio increasing from 4.72 in 2020 to 6.29 in 2024. This trend indicates that the company is generating more revenue for each dollar invested in fixed assets, reflecting increased efficiency in utilizing its long-term assets.
In contrast, the total asset turnover ratio for ITT Inc has been somewhat volatile over the same period, peaking at 0.83 in 2023 but decreasing to 0.77 in 2024. This ratio measures the company's ability to generate sales from its total assets, including both fixed and current assets. The decrease in total asset turnover in 2024 may indicate that the company's total assets are not being utilized as effectively to generate sales compared to the previous year.
Overall, ITT Inc's improving fixed asset turnover ratio suggests efficiency in managing its long-term assets, while the fluctuating total asset turnover ratio warrants further analysis to understand the factors impacting the company's overall asset utilization efficiency.