PACCAR Inc (PCAR)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 0.38 | 0.38 | 0.48 | 0.91 | 0.97 |
| Receivables turnover | — | — | — | — | — |
| Payables turnover | — | — | — | — | — |
| Working capital turnover | 2.62 | 2.81 | 12.02 | 2.59 | 3.37 |
Paccar Inc.'s activity ratios provide insights into how efficiently the company manages its inventory, receivables, payables, and working capital.
1. Inventory turnover: This ratio measures how many times a company's inventory is sold and replaced in a given period. Paccar's inventory turnover has shown a slight decline from 17.84 in 2019 to 10.45 in 2023. This could indicate a decrease in the efficiency of managing inventory levels. However, the current level is still relatively high, suggesting that Paccar is turning over its inventory efficiently.
2. Receivables turnover: This ratio measures how many times a company collects its accounts receivable during a period. Paccar's receivables turnover has fluctuated over the years, reaching a low of 1.44 in 2020 and a high of 1.91 in 2019. The current ratio of 1.78 indicates that the company collects its receivables about 1.78 times a year, which is moderate.
3. Payables turnover: This ratio measures how many times a company pays its suppliers within a period. Paccar's payables turnover has shown an increasing trend over the years, reaching 16.15 in 2023. This indicates that the company is paying its suppliers more frequently, which could potentially improve relationships and lead to better credit terms.
4. Working capital turnover: This ratio measures how effectively a company utilizes its working capital to generate revenue. Paccar's working capital turnover has declined from 5.78 in 2019 to 3.49 in 2023. This decrease suggests that the company may be generating less revenue per dollar of working capital employed, which could be a concern.
Overall, Paccar Inc. appears to be managing its inventory efficiently, with a moderate collection of receivables and an improving payables turnover. However, the decreasing trend in working capital turnover warrants further analysis to ensure optimal utilization of resources.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 959.69 | 957.71 | 762.01 | 401.65 | 377.54 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
Activity ratios provide insights into how efficiently a company manages its assets, liabilities, and working capital. A key activity ratio for Paccar Inc. is Days of Inventory on Hand (DOH), which reflects the average number of days it takes for the company to sell its inventory. Over the five-year period, Paccar's DOH has generally increased, indicating a lengthening of its inventory turnover cycle. This could be a sign of slowing sales or challenges in managing inventory levels efficiently.
Another important ratio is Days of Sales Outstanding (DSO), which measures the average number of days it takes for the company to collect its accounts receivable. Paccar's DSO has fluctuated over the years, with a significant increase in 2020 followed by a gradual decrease. A high DSO could suggest difficulties in collecting receivables promptly, impacting cash flow and liquidity.
The Number of Days of Payables ratio shows how long it takes for the company to pay its suppliers. Paccar's payables period has fluctuated but generally remained relatively stable over the period. A longer payables period can indicate favorable payment terms with suppliers but may also reflect delays in settling obligations.
Overall, the trends in Paccar's activity ratios suggest potential challenges in managing working capital effectively, particularly in terms of inventory and accounts receivable. Further analysis of the underlying factors influencing these ratios is necessary to determine the root causes and identify opportunities for improvement in the company's operational efficiency.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 9.29 | 8.31 | 6.92 | 5.73 | 8.88 |
| Total asset turnover | 0.86 | 0.87 | 0.80 | 0.66 | 0.90 |
Paccar Inc.'s long-term activity ratios provide insight into the efficiency of the company in managing its fixed and total assets over the years.
The fixed asset turnover ratio indicates how effectively the company is utilizing its fixed assets to generate sales. From 2019 to 2023, Paccar's fixed asset turnover has shown an overall increasing trend. This suggests that the company has been improving its efficiency in generating sales from its fixed assets. The latest ratio of 5.77 in 2023 indicates that for every dollar invested in fixed assets, Paccar generated $5.77 in sales, reflecting a significant improvement in productivity over the years.
On the other hand, the total asset turnover ratio measures how well the company is using all its assets to generate revenue. Paccar's total asset turnover ratio has been relatively stable over the years, hovering around the range of 0.80 to 0.90. This indicates that the company has been able to consistently generate revenue in proportion to its total assets.
Overall, Paccar Inc. has shown efficiency in utilizing its fixed assets to drive sales growth, as reflected in the increasing trend of the fixed asset turnover ratio. The stability of the total asset turnover ratio suggests that the company has effectively managed its total assets to generate revenue consistently.