Johnson Controls International PLC (JCI)
Payables turnover
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 25,690,000 | 24,604,000 | 21,642,000 | 22,322,000 | 23,366,000 |
| Payables | US$ in thousands | 4,268,000 | 4,368,000 | 3,746,000 | 3,120,000 | 3,582,000 |
| Payables turnover | 6.02 | 5.63 | 5.78 | 7.15 | 6.52 |
September 30, 2023 calculation
Payables turnover = Cost of revenue ÷ Payables
= $25,690,000K ÷ $4,268,000K
= 6.02
The payables turnover ratio measures how efficiently a company is managing its accounts payable by comparing the cost of goods sold (COGS) to the average accounts payable balance. A higher payables turnover ratio indicates that the company is paying its suppliers more frequently.
By analyzing the payables turnover ratios of Johnson Controls International plc over the past five years, we can observe the following trends:
1. Trend Analysis:
- In 2023, the payables turnover ratio increased to 4.18 from 4.00 in 2022, indicating an improvement in the efficiency of managing accounts payable compared to the previous year.
- However, the 2023 ratio was slightly lower than the 2021 ratio of 4.17, suggesting a marginal decline in payables turnover efficiency compared to the prior year.
- The most significant change occurred in 2020, where the payables turnover ratio decreased to 4.78 from 4.54 in 2019, signaling a less efficient management of accounts payable during that period.
2. Year-over-Year Comparison:
- Despite some fluctuations, the payables turnover ratios for Johnson Controls International plc have generally remained within a relatively narrow range between 4.00 to 4.78 over the past five years.
3. Industry Comparison:
- It would be beneficial to compare Johnson Controls International plc's payables turnover ratio with industry benchmarks or direct competitors to assess its performance relative to industry norms.
4. Interpretation:
- The increasing trend in the payables turnover ratio from 2022 to 2023 suggests that the company has been able to manage its accounts payable more efficiently by either extending the payment period or negotiating better terms with suppliers.
- The declining ratio in 2020 could indicate a potential change in the company's payment policies or challenges in managing supplier relationships during that period.
5. Further Analysis:
- It would be valuable to conduct a deeper analysis of Johnson Controls International plc's accounts payable process, supplier relationships, and working capital management to understand the factors influencing the payables turnover ratio fluctuations.
In conclusion, the analysis of Johnson Controls International plc's payables turnover ratios highlights both improvements and declines in the efficiency of managing accounts payable over the past five years. Further examination of the underlying factors and comparisons with industry standards will provide a more comprehensive understanding of the company's payables management performance.
Peer comparison
Sep 30, 2023