Nordson Corporation (NDSN)
Working capital turnover
| Oct 31, 2024 | Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 2,688,450 | 2,568,040 | 2,568,450 | 2,336,130 | 2,088,460 |
| Total current assets | US$ in thousands | 1,275,030 | 1,229,310 | 1,132,970 | 1,164,840 | 1,020,610 |
| Total current liabilities | US$ in thousands | 528,477 | 582,089 | 834,203 | 445,394 | 363,089 |
| Working capital turnover | 3.60 | 3.97 | 8.60 | 3.25 | 3.18 |
October 31, 2024 calculation
Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $2,688,450K ÷ ($1,275,030K – $528,477K)
= 3.60
The working capital turnover ratio measures how efficiently a company utilizes its working capital to generate sales. Nordson Corporation's working capital turnover has fluctuated over the past five years, ranging from a low of 3.18 in 2020 to a high of 8.60 in 2022.
A higher working capital turnover ratio indicates that Nordson is more efficient in using its working capital to support sales. The significant increase in 2022 suggests that Nordson improved its working capital management that year, potentially by reducing excess inventory or extending payment terms to suppliers.
However, the decreasing trend in the following years, with the ratio dropping to 3.60 in 2024, may raise concerns about inefficiencies in managing working capital during those periods. It is important for Nordson to analyze the reasons behind these fluctuations and take corrective actions to improve its working capital turnover and overall efficiency.
Peer comparison
Oct 31, 2024