PACCAR Inc (PCAR)

Working capital turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Revenue	US$ in thousands	35,127,400	28,819,700	23,522,300	18,728,500	25,599,700
Total current assets	US$ in thousands	13,434,100	10,277,500	1,976,000	7,253,400	7,628,700
Total current liabilities	US$ in thousands	23,800	18,000	19,600	25,500	39,900
Working capital turnover		2.62	2.81	12.02	2.59	3.37

December 31, 2023 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $35,127,400K ÷ ($13,434,100K – $23,800K)
= 2.62

The working capital turnover ratio for Paccar Inc. has shown a fluctuating trend over the past five years. The ratio decreased from 5.78 in 2019 to 4.02 in 2020, indicating a decline in the company's efficiency in utilizing its working capital to generate revenue. However, the ratio improved in the subsequent years, reaching 4.30 in 2021 and further increasing to 4.05 in 2022. This improvement suggests that the company was able to enhance its working capital utilization efficiency during these periods.

In 2023, the working capital turnover ratio further decreased to 3.49, indicating a potential decrease in the efficiency of Paccar Inc. in converting its working capital into sales. A lower working capital turnover ratio could point towards issues such as excess inventory or inefficient management of accounts receivable and accounts payable.

Overall, while the working capital turnover for Paccar Inc. has shown some variability, it is crucial for the company to manage its working capital effectively to ensure optimal operational performance and financial health. The management should focus on strategies to improve working capital turnover to drive profitability and long-term sustainability.