Pentair PLC (PNR)
Working capital turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 3,987,100 | 4,061,100 | 3,754,700 | 2,994,800 | 2,957,200 |
| Total current assets | US$ in thousands | 1,569,000 | 1,558,500 | 1,304,000 | 975,100 | 1,061,900 |
| Total current liabilities | US$ in thousands | 949,600 | 1,063,100 | 1,051,700 | 772,500 | 749,000 |
| Working capital turnover | 6.44 | 8.20 | 14.88 | 14.78 | 9.45 |
December 31, 2023 calculation
Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $3,987,100K ÷ ($1,569,000K – $949,600K)
= 6.44
The working capital turnover for Pentair plc has fluctuated over the past five years, with a decreasing trend from 2019 to 2020 followed by a significant increase in 2021. The ratio measures how efficiently the company is using its working capital to generate sales revenue. A higher ratio indicates better efficiency in utilizing working capital to support sales operations.
In 2021, the working capital turnover ratio was 14.92, signaling a strong ability to generate sales relative to the level of working capital invested. This high ratio suggests that Pentair was effectively managing its working capital to support sales growth during that period.
However, in 2022 and 2023, the ratio decreased to 8.32 and 6.63, respectively, indicating a decline in the efficiency of working capital utilization to support sales activities. This trend suggests that Pentair may need to reassess its working capital management strategies to improve efficiency in converting working capital into sales revenue.
Overall, while the working capital turnover ratio for Pentair plc has shown fluctuations over the years, the company should focus on maintaining a balance between managing working capital levels and effectively utilizing these resources to drive sales growth and profitability.
Peer comparison
Dec 31, 2023