Illinois Tool Works Inc (ITW)
Payables turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 9,445,000 | 9,549,000 | 8,592,000 | 7,460,000 | 8,276,000 |
| Payables | US$ in thousands | 581,000 | 594,000 | 585,000 | 534,000 | 472,000 |
| Payables turnover | 16.26 | 16.08 | 14.69 | 13.97 | 17.53 |
December 31, 2023 calculation
Payables turnover = Cost of revenue ÷ Payables
= $9,445,000K ÷ $581,000K
= 16.26
The payables turnover of Illinois Tool Works, Inc. has shown a generally increasing trend over the past five years. The payables turnover ratio measures how efficiently a company is managing its trade payables by evaluating how many times during a period the company pays off its average accounts payable balance.
The company's payables turnover ratio increased from 17.35 in 2019 to 16.03 in 2023, indicating that Illinois Tool Works has been paying off its suppliers faster over the years. This improvement suggests that the company has been managing its payables more effectively, possibly negotiating better payment terms with suppliers or streamlining its payment processes.
A high payables turnover ratio signifies that the company is efficiently managing its cash flow and working capital by quickly settling its payables. However, it could also indicate potential strain on supplier relationships if the company is aggressively pushing for early payment discounts.
Overall, the increasing trend in Illinois Tool Works' payables turnover ratio reflects positively on its ability to manage its accounts payables efficiently and optimize its working capital management strategies.
Peer comparison
Dec 31, 2023