Otis Worldwide Corp (OTIS)

Short-term

Turnover ratios

Activity ratios provide insights into how effectively a company manages its assets and liabilities to generate sales. Let's analyze the activity ratios of Otis Worldwide Corp based on the provided data:

1. Inventory Turnover:
- The inventory turnover measures how efficiently a company manages its inventory. Otis Worldwide Corp's inventory turnover has been fluctuating over the years but generally staying within the range of 3 to 3.6 times. This indicates that the company is selling and replenishing its inventory at a moderate pace.

2. Receivables Turnover:
- The receivables turnover ratio reveals how quickly a company collects its outstanding receivables. Otis Worldwide Corp's receivables turnover has shown some variability, hovering around 3.7 to 4.1 times over the years. This suggests that the company is effectively managing its credit sales and collecting payments from customers in a timely manner.

3. Payables Turnover:
- The payables turnover ratio demonstrates how efficiently a company pays its suppliers. Otis Worldwide Corp's payables turnover has been gradually decreasing, indicating that the company is taking longer to settle its payables with suppliers. However, a payables turnover above 1 suggests that the company is not overly reliant on trade credit.

4. Working Capital Turnover:
- The working capital turnover ratio measures how efficiently a company utilizes its working capital to generate sales. The data provided shows that Otis Worldwide Corp had a working capital turnover of 7.03 in 2021, suggesting that the company effectively utilized its working capital to generate revenue that year. However, the absence of data for other years makes it challenging to assess the trend over time.

In conclusion, based on the activity ratios analysis, Otis Worldwide Corp appears to be managing its assets and liabilities reasonably well, with efficient inventory and receivables management. However, a closer look at the payables turnover and working capital turnover ratios could provide more insights into the company's overall operational efficiency and liquidity management.

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Average number of days

To analyze Otis Worldwide Corp's activity ratios, we will focus on the following key metrics over the years provided in the JSON data:

1. Days of Inventory on Hand (DOH):
- In December 2020, the company held inventory for an average of 110.90 days, which decreased to 101.96 days by December 2024. This indicates that Otis has improved its management of inventory, reducing the number of days it takes to sell its inventory over the years.

2. Days of Sales Outstanding (DSO):
- The DSO ratio measures how long it takes for the company to collect payments after making a sale. Otis had a DSO of 100.25 days in December 2020, decreasing to 93.19 days by December 2024. This trend suggests that Otis has become more efficient in collecting payments from its customers over the years.

3. Number of Days of Payables:
- The days of payables metric shows how long a company takes to pay its suppliers. Otis had a number of days of payables of 244.51 days in December 2020, which increased to 343.95 days by December 2024. This indicates that the company is taking more time to pay its suppliers as the number of days of payables has increased significantly over the years.

In summary, Otis Worldwide Corp has demonstrated improvements in managing its inventory and collecting payments from customers efficiently. However, the company has increased the number of days it takes to pay its suppliers, which may have implications for its relationship with vendors and cash flow management.

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Long-term

Otis Worldwide Corp's long-term activity ratios indicate the efficiency of the company in utilizing its assets over the years. The fixed asset turnover ratio has shown a positive trend, increasing steadily from 16.32 in December 31, 2020, to 20.34 in December 31, 2024. This indicates that the company is generating more revenue per dollar invested in fixed assets, reflecting improved efficiency in utilizing its property, plant, and equipment.

On the other hand, the total asset turnover ratio fluctuated over the same period, starting at 1.18 in December 31, 2020, decreasing to 1.15 in 2021, then increasing to 1.39 in 2023 before decreasing again to 1.26 in 2024. This suggests that Otis Worldwide Corp experienced varying levels of revenue generated by total assets. The increase in 2022 and 2023 indicates improved efficiency in asset utilization, while the decrease in 2024 may need further investigation to determine the underlying reasons.

Overall, the increasing trend in fixed asset turnover ratio coupled with the fluctuating but generally stable total asset turnover ratio indicates that Otis Worldwide Corp has been efficient in managing its fixed assets to generate revenue, although there may be some variability in the utilization of total assets that requires further scrutiny.