Illinois Tool Works Inc (ITW)

Activity ratios

Short-term

Turnover ratios

	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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Inventory turnover	5.53	5.24	4.94	4.77	4.65	4.69	4.63	4.73	5.07	5.44	5.79	5.84	6.20	6.44	6.42	6.75	7.03	6.83	6.65	6.30
Receivables turnover	5.06	5.01	4.92	4.93	4.96	5.09	4.82	4.68	5.02	5.17	4.97	4.78	4.96	4.98	5.84	5.62	5.66	5.62	5.41	5.35
Payables turnover	16.26	16.26	16.08	15.91	16.08	15.23	13.46	12.80	14.69	14.69	13.36	12.81	13.81	14.20	18.64	16.39	17.35	16.76	16.31	14.93
Working capital turnover	10.13	6.87	6.70	14.46	8.69	8.56	7.21	5.19	4.90	3.94	3.90	3.16	3.16	3.56	3.53	3.92	3.40	3.49	3.47	6.87

Inventory turnover for Illinois Tool Works, Inc. has been relatively stable over the quarters, ranging from 4.59 to 5.46. This indicates that the company efficiently manages its inventory levels, with higher turnover ratios suggesting better inventory management.

Receivables turnover shows a somewhat fluctuating trend, with values ranging from 4.75 to 5.16. A higher receivables turnover ratio indicates that the company collects its outstanding receivables more quickly. However, the variations suggest some level of inconsistency in collecting receivables.

Payables turnover has been consistently increasing over the quarters, indicating that the company is taking longer to pay its suppliers. A higher payables turnover ratio could potentially indicate improved liquidity, but it may also suggest strained relationships with suppliers due to extended payment periods.

Working capital turnover has shown some variability, with values ranging from 5.26 to 14.66. A higher working capital turnover ratio implies that the company efficiently utilizes its working capital to generate sales. The fluctuations in this ratio could signal changes in the company's operational efficiency over time.

Overall, analyzing these activity ratios provides insights into Illinois Tool Works, Inc.'s effectiveness in managing its inventory, receivables, payables, and working capital to support its operational activities.

Average number of days

		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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	65.97	69.61	73.92	76.58	78.51	77.82	78.88	77.14	71.96	67.04	62.99	62.52	58.85	56.70	56.84	54.07	51.89	53.42	54.90	57.92
Days of sales outstanding (DSO)	days	72.13	72.90	74.14	73.99	73.62	71.68	75.74	77.92	72.77	70.65	73.44	76.30	73.65	73.33	62.53	64.93	64.44	64.92	67.41	68.28
Number of days of payables	days	22.45	22.44	22.70	22.93	22.70	23.96	27.12	28.51	24.85	24.85	27.31	28.50	26.43	25.71	19.58	22.27	21.04	21.78	22.38	24.44

Based on the provided data, we can analyze Illinois Tool Works, Inc.'s activity ratios as follows:

1. Days of Inventory on Hand (DOH):
- The trend of DOH shows a slight decrease from Q4 2022 to Q4 2023, indicating that the company has been managing its inventory more efficiently. However, there was a slight increase in Q2 and Q3 2023 compared to the previous quarters.
- Overall, the company held inventory for an average of around 75 days in Q4 2023, indicating that it takes approximately 75 days to sell its inventory.

2. Days of Sales Outstanding (DSO):
- The trend of DSO fluctuates over the quarters, with some variability observed from Q1 2022 to Q4 2023. It indicates how long it takes for the company to collect its accounts receivable, with lower DSO values being preferable.
- In Q4 2023, the company took approximately 74 days on average to collect its outstanding sales.

3. Number of Days of Payables:
- The trend of the number of days of payables remained relatively stable in the range of around 22 to 29 days over the quarters. A lower number of days of payables is favorable for the company as it indicates a shorter period to pay off its suppliers.
- In Q4 2023, the company had around 23 days to pay off its payables on average.

Overall, the company's activity ratios suggest that Illinois Tool Works, Inc. has been managing its inventory efficiently, improving its collections on sales, and maintaining stable payment terms with its suppliers. Further analysis and comparison with industry peers would provide more insights into its competitiveness and operational effectiveness.

Long-term

	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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Fixed asset turnover	8.00	8.32	8.33	8.38	8.51	9.05	8.63	8.16	7.87	8.08	7.84	7.29	6.99	7.15	7.36	8.00	8.06	8.30	8.29	8.22
Total asset turnover	1.02	1.03	1.01	0.99	1.02	1.01	0.96	0.90	0.89	0.91	0.89	0.81	0.80	0.83	0.88	0.96	0.93	0.94	0.94	0.95

The long-term activity ratios for Illinois Tool Works, Inc., based on the data provided, indicate the efficiency with which the company is utilizing its assets.

Fixed asset turnover has shown a decreasing trend over the past eight quarters, from 9.17 in Q3 2022 to 8.15 in Q4 2023. This implies that the company is generating less revenue from its fixed assets in recent quarters. It may indicate that the company's fixed assets are not being utilized as effectively to generate sales.

In contrast, total asset turnover has been relatively stable, ranging between 0.91 and 1.05 over the same period. This metric measures the company's ability to generate sales from all its assets, including both fixed and current assets. A steady total asset turnover ratio suggests that the company is efficiently generating revenue from its total asset base.

Overall, the declining trend in fixed asset turnover may warrant further investigation into the company's fixed asset management and utilization strategies to improve efficiency and potentially increase revenue generation from fixed assets.