Pentair PLC (PNR)

Short-term

Turnover ratios

When analyzing Pentair plc's activity ratios, we can see the following trends:

1. Inventory Turnover: Pentair's inventory turnover has been relatively consistent around the range of 3.50 to 3.90 over the past eight quarters. This indicates that the company is efficiently managing its inventory levels and turning over its inventory multiple times throughout the year.

2. Receivables Turnover: There is some fluctuation in Pentair's receivables turnover ratio, with a peak in Q3 2023 at 7.20 and a slight decline in Q1 2023 at 5.38. Overall, the company collects its receivables approximately 5.38 to 7.20 times a year, showing effective management of its accounts receivable.

3. Payables Turnover: Pentair's payables turnover has been increasing gradually over the quarters, reaching a peak of 9.27 in Q4 2023. This indicates that the company is taking longer to pay its suppliers, potentially improving its cash flow by extending its payables turnover.

4. Working Capital Turnover: The working capital turnover ratio shows how efficiently Pentair is utilizing its working capital to generate sales. The trend indicates that Pentair has been effectively using its working capital, with higher turnover ratios in the range of 5.43 to 9.89 over the past eight quarters.

Overall, Pentair plc's activity ratios suggest efficient management of inventory, receivables, payables, and working capital, which are crucial for maintaining a healthy cash flow and operational efficiency.

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Average number of days

Pentair plc's activity ratios provide insights into how efficiently the company manages its inventory, collects its receivables, and pays its payables.

1. Days of Inventory on Hand (DOH):
- Pentair's days of inventory on hand have been fluctuating over the past eight quarters, ranging from 93.48 days in Q1 2022 to 104.41 days in Q1 2023. This indicates that Pentair has been holding inventory for an average of around 95-105 days before selling it.
- A decreasing trend in DOH could signify improved inventory management efficiency, while an increasing trend may indicate potential issues with inventory control or slower sales.

2. Days of Sales Outstanding (DSO):
- The days of sales outstanding for Pentair have varied significantly over the quarters, with values ranging from 48.67 days in Q2 2022 to 67.81 days in Q1 2023. DSO reflects how long it takes for the company to collect payments from its customers.
- A lower DSO indicates that Pentair is collecting payments more quickly, which is favorable as it improves cash flow and reduces the risk of bad debts. Conversely, a higher DSO could signal challenges in receivables management.

3. Number of Days of Payables:
- Pentair's number of days of payables has shown some fluctuations, with values ranging from 39.38 days in Q4 2023 to 56.52 days in Q1 2022. This metric indicates how long the company takes to pay its suppliers.
- A longer period of payables may suggest that Pentair is effectively using trade credit to manage cash flow and potentially negotiate better terms with suppliers. However, an excessively long period could strain relationships with suppliers.

In sum, analyzing these activity ratios can assist stakeholders in assessing Pentair plc's operational efficiency and effectiveness in managing inventory, receivables, and payables. It is essential for the company to strike a balance between these factors to optimize working capital management and overall financial performance.

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Long-term

The fixed asset turnover ratio for Pentair plc has remained relatively stable over the past eight quarters, ranging from 11.34 to 12.63. This indicates that the company generates a high level of sales in relation to its fixed assets, reflecting efficient utilization of these assets to generate revenue.

On the other hand, the total asset turnover ratio has shown more variability, with values fluctuating between 0.62 and 0.83. Despite the fluctuations, the general trend seems to indicate a moderate level of efficiency in utilizing total assets to generate sales.

Comparing the two ratios, it is evident that Pentair plc is more efficient in generating sales relative to its fixed assets than to its total assets. This suggests that the company may have a significant portion of non-fixed assets (such as cash, inventory, and receivables) that are not being as efficiently utilized in generating revenue as its fixed assets. Management may consider strategies to improve the efficiency of these non-fixed assets to enhance overall asset utilization and increase profitability.