3M Company (MMM)

Payables turnover

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cost of revenue	US$ in thousands	14,447,000	14,983,000	19,232,000	18,795,000	16,605,000
Payables	US$ in thousands	2,660,000	2,776,000	3,183,000	2,994,000	2,561,000
Payables turnover		5.43	5.40	6.04	6.28	6.48

December 31, 2024 calculation

Payables turnover = Cost of revenue ÷ Payables
= $14,447,000K ÷ $2,660,000K
= 5.43

The payables turnover ratio for 3M Company has been gradually declining over the five-year period from December 31, 2020, to December 31, 2024. This ratio indicates the company's ability to efficiently manage its accounts payable by measuring how many times a company pays off its average accounts payable balance during a specific period.

The payables turnover ratio shows a slight decrease from 6.48 in 2020 to 5.43 in 2024. A decreasing payables turnover ratio could suggest that 3M is taking longer to pay its suppliers and is potentially experiencing liquidity issues or facing challenges in managing its working capital efficiently. It may also indicate a change in the company's payment terms with its suppliers or an increase in the average accounts payable balance.

Overall, analyzing the payables turnover ratio can provide insights into 3M Company's financial health, operational efficiency, and relationship with its suppliers. It is crucial for the company to closely monitor and manage its payables turnover ratio to ensure optimal cash flow management and maintain good supplier relationships.