Parker-Hannifin Corporation (PH)

Working capital turnover

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Revenue	US$ in thousands	19,984,900	18,807,800	15,709,500	14,233,900	13,372,200
Total current assets	US$ in thousands	6,798,620	6,834,230	12,046,600	5,616,750	5,034,770
Total current liabilities	US$ in thousands	7,313,310	7,735,370	5,859,320	3,096,500	3,148,370
Working capital turnover		—	—	2.54	5.65	7.09

June 30, 2024 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $19,984,900K ÷ ($6,798,620K – $7,313,310K)
= —

The working capital turnover ratio indicates how efficiently a company utilizes its working capital to generate sales revenue. In the case of Parker-Hannifin Corporation, the working capital turnover has decreased significantly over the past three years. In 2020, the ratio was 7.09, indicating that the company generated $7.09 in sales for every $1 of working capital. This high ratio suggests efficient use of working capital.

However, in 2021 and 2022, the working capital turnover decreased to 5.65 and 2.54, respectively. This downward trend indicates that the company may be facing challenges in efficiently converting its working capital into sales revenue. A lower ratio could signal inefficiencies in managing inventory, receivables, or payables.

It is important for Parker-Hannifin Corporation to closely monitor its working capital turnover ratio and investigate the reasons behind the decline. By identifying and addressing any underlying issues affecting working capital efficiency, the company can strive to improve its overall financial performance and strengthen its liquidity position.