ITT Inc (ITT)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 3.78 | 3.87 | 4.33 | 4.70 | 4.93 |
| Receivables turnover | 4.86 | 4.75 | 4.98 | 4.88 | 4.92 |
| Payables turnover | 4.98 | 5.15 | 5.00 | 5.53 | 5.83 |
| Working capital turnover | 4.00 | 4.59 | 3.48 | 2.37 | 3.21 |
Inventory turnover for ITT Inc has been gradually decreasing over the past five years, indicating that the company is holding inventory for a longer period before selling it. This could potentially lead to increased carrying costs and tying up of capital in inventory.
Receivables turnover has shown slight fluctuations but has remained relatively stable over the years. This indicates that ITT Inc efficiently collects payments from its customers, with a higher turnover ratio reflecting a shorter collection period.
Payables turnover has also been decreasing over the years, suggesting that ITT Inc is taking longer to pay its suppliers. While this may provide some short-term benefits in managing cash flow, it could strain relationships with suppliers in the long run.
Working capital turnover has fluctuated significantly, with a general increasing trend. This ratio measures how efficiently working capital is being utilized to generate sales. The recent increase in this ratio indicates that ITT Inc is becoming more efficient in utilizing its working capital to generate revenue.
Overall, ITT Inc should monitor its inventory management and payment practices to ensure optimal efficiency in its operating cycle and working capital utilization.
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 | 96.53 | 94.35 | 84.31 | 77.60 | 74.06 |
| Days of sales outstanding (DSO) | days | 75.07 | 76.82 | 73.28 | 74.76 | 74.17 |
| Number of days of payables | days | 73.31 | 70.88 | 73.06 | 66.04 | 62.66 |
Days of inventory on hand (DOH) measures how many days on average a company holds inventory before selling it. ITT Inc's DOH has been steadily increasing over the past five years, indicating that the company is taking longer to sell its inventory. This could be a sign of overstocking or slowing sales.
Days of sales outstanding (DSO) measures how long it takes a company to collect payment after making a sale. ITT Inc's DSO has been fluctuating slightly over the years but remains within a relatively stable range. A lower DSO would indicate that the company is collecting payments more quickly, potentially improving cash flow.
Number of days of payables measures how long it takes a company to pay its suppliers. ITT Inc's number of days of payables has been gradually increasing, indicating that the company is taking longer to settle its payables. This can be beneficial in the short term as it allows the company to hold onto cash longer, but it could strain relationships with suppliers in the long run.
Overall, ITT Inc's activity ratios suggest that the company may be facing challenges in managing its inventory effectively and could potentially work on improving cash flow by reducing the time it takes to sell inventory and collect payments while maintaining healthy relationships with suppliers.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 5.85 | 5.67 | 5.43 | 4.72 | 5.36 |
| Total asset turnover | 0.83 | 0.79 | 0.78 | 0.58 | 0.69 |
Long-term activity ratios provide insights into how efficiently a company utilizes its assets to generate revenue.
Fixed asset turnover measures the company's ability to generate sales revenue from its investments in fixed assets. ITT Inc's fixed asset turnover has shown a generally increasing trend over the years from 2019 to 2023, indicating that the company has been more effective in utilizing its fixed assets to generate sales. In 2023, the fixed asset turnover reached its peak at 5.85, suggesting that for every dollar invested in fixed assets, the company generated $5.85 in sales.
Total asset turnover, on the other hand, reflects how well the company generates sales revenue from all its assets. ITT Inc's total asset turnover has also shown improvement over the years, with the ratio increasing from 0.69 in 2019 to 0.83 in 2023. This indicates that the company has become more efficient in generating sales revenue from its total assets.
Overall, the increasing trend in both fixed asset turnover and total asset turnover ratios for ITT Inc demonstrates improved efficiency in utilizing its assets to drive revenue growth over the years.