Pentair PLC (PNR)
Payables turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 3,334,700 | 3,568,700 | 3,049,400 | 2,494,800 | 1,905,700 |
| Payables | US$ in thousands | 278,900 | 355,000 | 385,700 | 245,100 | 325,100 |
| Payables turnover | 11.96 | 10.05 | 7.91 | 10.18 | 5.86 |
December 31, 2023 calculation
Payables turnover = Cost of revenue ÷ Payables
= $3,334,700K ÷ $278,900K
= 11.96
The payables turnover ratio measures how efficiently a company manages its trade payables by calculating how many times during a period the company pays off its average accounts payable balance.
Over the five-year period from 2019 to 2023, Pentair plc's payables turnover has shown fluctuating trends. In 2019, the payables turnover ratio was 5.86, which increased to 8.00 in 2020, indicating an improvement in the speed of paying off its accounts payable. This trend reversed in 2021 when the ratio decreased to 6.34, suggesting a slower rate of paying suppliers.
However, in 2022, the payables turnover ratio increased to 7.77, indicating an improvement in managing payables compared to the previous year. The trend continued in 2023, with a further increase to 9.27, which implies that Pentair significantly increased the frequency of paying off its accounts payable during that year.
Overall, the increasing trend in the payables turnover ratio from 2019 to 2023 indicates improved efficiency in managing trade payables, as Pentair was able to pay off its suppliers more frequently in recent years. This could be a positive signal of strong supplier relationships, effective working capital management, or improved cash flow within the company.
Peer comparison
Dec 31, 2023