PACCAR Inc (PCAR)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 11.75 | 0.38 | 0.38 | 0.48 | 0.91 |
| Receivables turnover | — | — | — | — | — |
| Payables turnover | — | — | — | — | — |
| Working capital turnover | 2.42 | 1.10 | 2.81 | 12.02 | 2.59 |
Inventory Turnover:
1. December 31, 2020: The inventory turnover ratio was 0.91, indicating that inventory was turning over approximately once per year.
2. December 31, 2021: The inventory turnover ratio decreased to 0.48, suggesting a decrease in the efficiency of inventory management, as inventory turnover slowed down significantly.
3. December 31, 2022 and 2023: The inventory turnover remained low at 0.38, indicating a consistent trend of slower inventory turnover.
4. December 31, 2024: There was a significant improvement with the inventory turnover ratio jumping to 11.75. This sudden increase could be due to changes in production, sales, or inventory management practices.
Receivables Turnover:
There is no data available for receivables turnover for the periods provided, making it challenging to assess the efficiency of the company in collecting payments from customers.
Payables Turnover:
Similar to receivables turnover, there is no data available for payables turnover for the periods provided, limiting insights into how efficiently the company is managing its payments to suppliers.
Working Capital Turnover:
1. December 31, 2020: The working capital turnover ratio was 2.59, indicating that the company generated $2.59 in revenue for each dollar of working capital invested.
2. December 31, 2021: The working capital turnover ratio significantly increased to 12.02, reflecting a substantial improvement in efficiency in generating revenue relative to the working capital employed.
3. December 31, 2022 and 2023: The working capital turnover decreased to 2.81 and 1.10, respectively, indicating a decline in the efficiency of working capital utilization.
4. December 31, 2024: The working capital turnover ratio slightly improved to 2.42, suggesting a moderate enhancement in generating revenue compared to the working capital utilized.
In summary, PACCAR Inc experienced fluctuating trends in its activity ratios over the given periods. The company exhibited varying levels of efficiency in managing its inventory and working capital, while data gaps in receivables and payables turnover ratios limit a comprehensive analysis of the overall efficiency in managing accounts receivable and payable.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 31.05 | 959.69 | 957.71 | 762.01 | 401.65 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
PACCAR Inc's activity ratios provide insight into the efficiency of its operations.
1. Days of Inventory on Hand (DOH): The analysis shows a considerable increase in inventory turnover efficiency from 401.65 days in 2020 to 31.05 days in 2024. A lower number of days indicates that PACCAR is selling its inventory faster, which can help reduce storage costs and the risk of obsolete inventory.
2. Days of Sales Outstanding (DSO): Unfortunately, there is no data available for DSO, which measures how quickly the company collects cash from its credit sales. Typically, a lower DSO indicates that PACCAR is efficient in collecting receivables.
3. Number of Days of Payables: There is no data available for the number of days of payables, which would have indicated how many days it takes for the company to pay its suppliers. A longer period may suggest better cash flow management, but excessively long periods may strain supplier relationships.
Overall, the improvement in the DOH ratio over the years is a positive sign for PACCAR Inc's operational efficiency, even though the lack of data for DSO and payables hinders a comprehensive analysis of the company's overall working capital management. It would be beneficial to have more data for a more thorough assessment of PACCAR's activity ratios.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 8.45 | 9.29 | 8.31 | 6.92 | 5.73 |
| Total asset turnover | 0.78 | 0.86 | 0.87 | 0.80 | 0.66 |
PACCAR Inc's Fixed Asset Turnover has shown a positive trend over the years, increasing from 5.73 in 2020 to 8.45 in 2024. This indicates that the company has been able to generate more revenue from its fixed assets efficiently. The upward trend suggests improved utilization and productivity of fixed assets.
In contrast, the Total Asset Turnover ratio fluctuated between 0.66 and 0.87 during the period under review. The ratio peaked at 0.87 in 2022 but dipped slightly to 0.78 in 2024. This indicates that PACCAR Inc generated 78 cents in sales for every dollar of assets in 2024.
Overall, the increasing trend of Fixed Asset Turnover suggests that PACCAR has effectively utilized its fixed assets to generate revenue, whereas the fluctuation in Total Asset Turnover indicates variability in the company's overall ability to generate sales from its total assets. It is important for the company to monitor and analyze these ratios to ensure optimal asset utilization and operational efficiency.