PACCAR Inc (PCAR)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Inventory turnover | 0.38 | 0.36 | 0.33 | 0.34 | 0.38 | 0.35 | 0.38 | 0.40 | 0.48 | 0.39 | 0.51 | 0.72 | 0.90 | 0.99 | 0.98 | 0.90 | 0.96 | 0.86 | 0.81 | 0.86 |
| Receivables turnover | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Payables turnover | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Working capital turnover | 2.62 | 6.84 | 7.75 | 9.16 | 2.81 | 8.58 | 9.58 | 9.67 | 12.02 | 10.89 | 10.56 | 9.99 | 2.59 | 11.82 | 13.09 | 14.12 | 3.37 | 12.23 | — | — |
Paccar Inc.'s activity ratios indicate how efficiently the company is managing its assets and liabilities to generate sales and operate its business.
1. Inventory turnover: This ratio measures how many times Paccar's inventory is sold and replaced over a period. The trend shows that the company is effectively managing its inventory levels, with a consistent and relatively high turnover rate around 9-10 times annually from Q1 2022 to Q4 2023. A higher inventory turnover generally indicates efficient inventory management.
2. Receivables turnover: This ratio reflects how quickly Paccar is collecting payments from its customers. The declining trend in receivables turnover from Q1 2022 to Q4 2023 suggests that the company is taking slightly longer to collect payments from customers. However, the ratio remains relatively stable around 1.7-1.9 times annually, indicating an acceptable collection period.
3. Payables turnover: The data provided only includes information for Q1 and Q4 of 2022 and 2023, showing a notable increase in payables turnover from 13.99 in Q4 2022 to 16.15 in Q1 2023. This increase indicates that Paccar is taking longer to pay its suppliers, which could potentially improve the company's cash flow position.
4. Working capital turnover: This ratio evaluates how efficiently Paccar is utilizing its working capital to generate sales. The trend indicates a slight decrease in working capital turnover from Q1 2022 to Q4 2023, implying that the company is generating fewer sales relative to its working capital. However, the turnover rate remains relatively stable between 3.3 and 4 times annually, suggesting efficient utilization of working capital overall.
In conclusion, Paccar Inc. demonstrates efficient management of its inventory and working capital, though there are slight fluctuations in receivables turnover and payables turnover. Overall, the company's activity ratios suggest effective operational performance and asset utilization.
Average number of days
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 970.58 | 1,025.47 | 1,097.06 | 1,084.69 | 961.84 | 1,035.20 | 962.16 | 922.82 | 761.61 | 925.72 | 715.04 | 504.45 | 405.52 | 368.64 | 370.84 | 407.73 | 380.82 | 425.62 | 447.95 | 423.77 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
Activity ratios provide insight into how efficiently a company is managing its assets and operations to generate sales. Let's analyze the activity ratios of Paccar Inc. based on the given data for Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables.
1. Days of Inventory on Hand (DOH):
- DOH measures how many days, on average, inventory is held before being sold.
- Paccar Inc. saw a slight increase in DOH from Q4 2022 to Q1 2023, indicating that inventory turnover may have slowed down.
- A lower DOH is generally preferable as it implies faster inventory turnover and lower carrying costs.
2. Days of Sales Outstanding (DSO):
- DSO represents the average number of days it takes for the company to collect revenue after a sale is made.
- Paccar Inc. experienced fluctuations in DSO over the quarters, with a peak in Q2 2022 and another peak in Q1 2022.
- A lower DSO is desirable as it indicates faster cash collection and a more efficient accounts receivable process.
3. Number of Days of Payables:
- Unfortunately, complete data for Days of Payables is not available for all quarters.
- Comparing Q4 2022 and Q1 2023, it can be observed that the number of days of payables decreased, which could imply that the company is taking longer to pay its suppliers.
- A longer payment period may provide short-term liquidity benefits but could strain supplier relationships if extended excessively.
In conclusion, analyzing Paccar Inc.'s activity ratios reveals fluctuations and trends that suggest potential areas for operational improvement. Monitoring these ratios over time can help assess the company's efficiency in managing its working capital and operational processes.
Long-term
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Fixed asset turnover | 9.29 | — | 8.64 | 8.78 | 8.31 | 8.30 | 4.50 | 7.06 | 6.92 | 4.20 | 6.04 | 5.99 | 5.73 | 6.14 | 6.85 | 8.30 | 8.88 | 9.57 | 9.58 | 9.65 |
| Total asset turnover | 0.86 | 0.90 | 0.88 | 0.88 | 0.87 | 0.89 | 0.83 | 0.79 | 0.80 | 0.80 | 0.76 | 0.68 | 0.66 | 0.71 | 0.78 | 0.89 | 0.90 | 0.93 | 0.93 | 0.93 |
The fixed asset turnover ratio of Paccar Inc. has been consistently increasing over the past eight quarters, indicating that the company is generating more revenue relative to its investment in fixed assets. This implies that Paccar is utilizing its fixed assets efficiently to generate sales.
On the other hand, the total asset turnover ratio has fluctuated slightly but generally remained stable over the same period. This ratio measures how efficiently the company is using all of its assets to generate revenue. A stable total asset turnover ratio suggests that Paccar is effectively managing its total assets to generate sales.
In conclusion, Paccar Inc. demonstrates strong efficiency in both fixed asset turnover and total asset turnover, suggesting effective management of assets to generate revenue. The increasing trend in fixed asset turnover further highlights the company's improving efficiency in utilizing its fixed assets.