Illinois Tool Works Inc (ITW)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 5.52 | 5.46 | 4.59 | 5.01 | 6.20 |
| Receivables turnover | — | — | — | — | — |
| Payables turnover | — | — | — | — | — |
| Working capital turnover | 10.27 | 10.32 | 8.80 | 4.98 | 3.20 |
Illinois Tool Works Inc's activity ratios provide insights into how efficiently the company manages its assets and operations.
1. Inventory Turnover:
- The company's inventory turnover has shown a slight decline from 6.20 in 2020 to 5.52 in 2024. This indicates that the company is selling through its inventory at a slightly slower pace over the years. However, the ratio remains above 5, suggesting that Illinois Tool Works is effectively managing its inventory levels.
2. Receivables Turnover:
- Unfortunately, data for receivables turnover is not available for any of the years provided. This means that we do not have visibility into how quickly the company collects payments from its customers.
3. Payables Turnover:
- Similarly, data for payables turnover is unavailable for all years, preventing an assessment of how efficiently the company pays its suppliers.
4. Working Capital Turnover:
- The working capital turnover ratio has shown a significant increase from 3.20 in 2020 to 10.27 in 2024. This indicates that the company is generating more revenue relative to its working capital over the years, reflecting improved efficiency in utilizing its working capital to generate sales.
Overall, while inventory turnover has shown a slight decline, the significant improvement in working capital turnover suggests that Illinois Tool Works Inc has been able to enhance its operational efficiency and generate more revenue with less working capital. However, the absence of data for receivables and payables turnover limits a comprehensive analysis of the company's complete liquidity and efficiency in managing accounts receivable and accounts payable.
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 | 66.14 | 66.88 | 79.51 | 72.84 | 58.85 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
Based on the provided data for Illinois Tool Works Inc, the analysis of activity ratios reveals the following:
1. Days of Inventory on Hand (DOH):
- The company's inventory turnover has been fluctuating over the years. It was 58.85 days in 2020, increased to 72.84 days in 2021, further rose to 79.51 days in 2022, then decreased to 66.88 days in 2023, and finally settled at 66.14 days in 2024.
- A decreasing trend in the days of inventory on hand is generally considered positive as it indicates that the company is selling its inventory more efficiently.
2. Days of Sales Outstanding (DSO):
- Data for Days of Sales Outstanding was not provided, which makes it challenging to assess the efficiency of the company in collecting accounts receivable. Lower DSO values are generally favorable as they indicate quicker collection of receivables.
3. Number of Days of Payables:
- Similarly, information on the Number of Days of Payables was not provided, making it difficult to evaluate the company's payment cycle and relationship with suppliers. A longer payment period can indicate better cash flow management, but it may also strain relationships with suppliers.
In conclusion, while the information provided offers insights into the inventory turnover of Illinois Tool Works Inc, a complete analysis of the company's overall liquidity and operational efficiency would require additional data on DSO and payables turnover. Monitoring these activity ratios can help assess the company's efficiency in managing working capital and optimizing cash flow.
See also:
Illinois Tool Works Inc Short-term (Operating) Activity Ratios
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | — | — | 8.62 | 7.99 | 7.08 |
| Total asset turnover | 1.16 | 1.04 | 1.03 | 0.90 | 0.81 |
Illinois Tool Works Inc's long-term activity ratios reflect the company's efficiency in utilizing its assets to generate revenue.
The Fixed Asset Turnover ratio shows how effectively the company is utilizing its fixed assets to generate sales. The ratio has shown a positive trend, increasing from 7.08 in 2020 to 8.62 in 2022. This indicates that the company has been able to generate more revenue per dollar of fixed assets invested over the years.
On the other hand, the Total Asset Turnover ratio indicates how efficiently the company is using all its assets to generate sales. Illinois Tool Works Inc's Total Asset Turnover ratio has also improved over the years, increasing from 0.81 in 2020 to 1.16 in 2024. This suggests that the company has been successful in generating more sales for each dollar of total assets.
Overall, the increasing trend in both Fixed Asset Turnover and Total Asset Turnover ratios indicates that Illinois Tool Works Inc has been efficient in managing and utilizing its assets to drive revenue growth. This improvement reflects positively on the company's operational efficiency and asset utilization.
See also:
Illinois Tool Works Inc Long-term (Investment) Activity Ratios