Parker-Hannifin Corporation (PH)

Activity ratios

Short-term

Turnover ratios

	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Inventory turnover	5.99	5.67	6.03	5.94	6.29
Receivables turnover	91.96	107.55	87.18	83.83	98.43
Payables turnover	8.38	8.04	7.71	7.45	11.11
Working capital turnover	—	—	2.54	5.65	7.09

Parker-Hannifin Corporation's activity ratios provide insights into how efficiently the company manages its resources.

1. Inventory turnover:
The inventory turnover ratio has been relatively stable over the past five years, ranging from 5.67 to 6.29. This indicates that Parker-Hannifin is effectively managing its inventory levels, with a higher turnover suggesting efficient inventory management.

2. Receivables turnover:
The receivables turnover ratio has shown some fluctuations but generally indicates that the company collects its receivables quickly. A high receivables turnover ratio implies efficient credit management and timely collection of outstanding payments.

3. Payables turnover:
The payables turnover ratio has also been consistent over the years, indicating that Parker-Hannifin is managing its payables effectively. A higher payables turnover ratio suggests that the company is paying its suppliers promptly.

4. Working capital turnover:
The working capital turnover ratio, which is only available for the last three years, shows an increasing trend. This implies that the company is generating more revenue per dollar of working capital employed, reflecting improved efficiency in utilizing its current assets to generate sales.

Overall, based on these activity ratios, Parker-Hannifin Corporation appears to be effectively managing its inventory, receivables, payables, and working capital, which are crucial aspects of its operational efficiency and financial performance.

Average number of days

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Days of inventory on hand (DOH)	days	60.93	64.36	60.55	61.43	58.07
Days of sales outstanding (DSO)	days	3.97	3.39	4.19	4.35	3.71
Number of days of payables	days	43.54	45.39	47.36	49.01	32.87

Days of inventory on hand (DOH) measures how long, on average, inventory is held before it is sold. Parker-Hannifin Corporation's DOH has been relatively consistent over the past five years, ranging from 58.07 days in 2020 to 64.36 days in 2023. The slight decrease in 2020 and 2022 suggests improved inventory management efficiency, but the recent increase in 2024 may indicate a buildup of inventory.

Days of sales outstanding (DSO) evaluates how long it takes the company to collect revenue after a sale is made. Parker-Hannifin's DSO has fluctuated over the years, with a peak of 4.35 days in 2021 and a low of 3.39 days in 2023. The decrease in 2023 and 2024 indicates improved efficiency in collecting receivables.

Number of days of payables indicates how long it takes the company to pay its suppliers. Parker-Hannifin's days of payables have been gradually increasing over the years, from 32.87 days in 2020 to 49.01 days in 2021. This trend may suggest either a shift in payment terms with suppliers or potential liquidity constraints.

Overall, Parker-Hannifin Corporation's activity ratios show varying levels of efficiency in managing inventory, collecting receivables, and paying suppliers over the past five years. Continuous monitoring of these metrics is crucial for assessing operational performance and making informed business decisions.

Long-term

	Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Fixed asset turnover	7.20	6.56	7.40	6.28	5.83
Total asset turnover	0.68	0.63	0.61	0.70	0.67

The long-term activity ratios of Parker-Hannifin Corporation have shown some fluctuations over the past five years. The fixed asset turnover ratio has trended upwards from 5.83 in 2020 to 7.20 in 2024, indicating that the company has been able to generate more sales revenue relative to its investment in fixed assets. This suggests improved efficiency in utilizing its fixed assets to generate sales.

On the other hand, the total asset turnover ratio has shown some variability, decreasing from 0.70 in 2021 to 0.61 in 2022 before increasing to 0.68 in 2024. This ratio measures how effectively the company is utilizing all its assets to generate sales. The overall trend suggests that Parker-Hannifin Corporation's utilization of total assets to generate sales has improved slightly over the five-year period.

Overall, the increasing trend in the fixed asset turnover ratio and the mixed trend in the total asset turnover ratio indicate that Parker-Hannifin Corporation has been relatively successful in managing its long-term assets efficiently to drive sales growth, albeit with some variability in performance.