Leggett & Platt Incorporated (LEG)
Payables turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 4,854,300 | 4,227,100 | 4,095,400 | 3,424,900 | 3,789,000 |
| Payables | US$ in thousands | 536,200 | 518,400 | 613,800 | 552,200 | 463,400 |
| Payables turnover | 9.05 | 8.15 | 6.67 | 6.20 | 8.18 |
December 31, 2023 calculation
Payables turnover = Cost of revenue ÷ Payables
= $4,854,300K ÷ $536,200K
= 9.05
The payables turnover ratio measures how efficiently a company manages its accounts payable by comparing the amount of purchases made on credit to the average accounts payable balance. A higher payables turnover ratio indicates that the company is paying off its suppliers more frequently within a given period.
Looking at the historical data for Leggett & Platt, Inc., we observe fluctuations in the payables turnover ratio over the past five years. In 2023, the payables turnover ratio decreased to 7.22 from 8.04 in 2022. This indicates that, on average, Leggett & Platt took longer to pay off its suppliers in 2023 compared to 2022.
In 2023, Leggett & Platt's payables turnover ratio of 7.22 means that the company paid off its accounts payable approximately 7.22 times during the year. This suggests that the company is efficient in managing its accounts payable by settling its outstanding obligations multiple times within the year.
However, it is important to note the trend over the five-year period, as the ratio fluctuated between 6.13 and 8.04. The variations in the payables turnover ratio could be due to changes in the company's purchasing strategies, negotiation terms with suppliers, or operational efficiency in managing payables.
In conclusion, while Leggett & Platt, Inc. has shown fluctuations in its payables turnover ratio over the years, the company generally appears to effectively manage its accounts payable by paying off its suppliers multiple times within a year. Further analysis and comparison with industry peers can provide more insights into the company's payables management efficiency.
Peer comparison
Dec 31, 2023