Republic Services Inc (RSG)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 111.85 | 102.66 | 112.84 | 124.31 | 133.12 |
| Receivables turnover | 9.43 | 9.01 | 10.22 | 10.71 | 10.04 |
| Payables turnover | 7.71 | 8.12 | 8.95 | 9.43 | 9.72 |
| Working capital turnover | — | — | — | — | — |
Activity ratios measure how effectively a company is utilizing its assets to generate sales and manage its operations. Here is a detailed analysis of Republic Services, Inc.'s activity ratios based on the provided data:
1. Inventory Turnover:
- Republic Services' inventory turnover has been relatively stable over the past five years, ranging from 84.94 to 110.89 times. This indicates that the company efficiently manages its inventory by quickly converting it into sales.
- The higher the inventory turnover ratio, the better, as it implies that Republic Services is effectively selling its inventory without excessive buildup.
2. Receivables Turnover:
- The receivables turnover for Republic Services has shown consistency in the range of 6.81 to 7.64 times over the last five years. This indicates that the company collects its accounts receivable efficiently.
- A higher receivables turnover ratio suggests that Republic Services is successful in collecting payments from customers in a timely manner.
3. Payables Turnover:
- Republic Services' payables turnover has been declining gradually from 8.10 to 6.34 over the five-year period. A decreasing payables turnover ratio may indicate that the company is taking longer to pay its suppliers.
- A lower payables turnover ratio may signify that Republic Services is holding onto its payables for a longer period, potentially indicating cash flow management strategies or relationships with suppliers.
4. Working Capital Turnover:
- The working capital turnover ratio was not provided in the data, but this ratio measures how efficiently a company utilizes its working capital to generate sales. Lack of data for this ratio limits the comprehensive analysis of Republic Services' operational efficiency using working capital turnover.
In summary, Republic Services, Inc. demonstrates efficient management of its inventory and accounts receivable based on the high turnover ratios in these categories. However, the declining trend in payables turnover raises questions about the company's payment practices. Monitoring and analyzing these activity ratios can provide insights into Republic Services' operational efficiency and working capital management.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 3.26 | 3.56 | 3.23 | 2.94 | 2.74 |
| Days of sales outstanding (DSO) | days | 38.69 | 40.52 | 35.72 | 34.08 | 36.34 |
| Number of days of payables | days | 47.34 | 44.97 | 40.77 | 38.70 | 37.55 |
Activity ratios provide insights into how effectively a company is managing its assets and liabilities to generate revenue. Let's analyze the activity ratios of Republic Services, Inc. based on the provided data.
1. Days of Inventory on Hand (DOH):
- The trend for DOH over the past five years shows some fluctuations but generally remains within the range of 3-4 days.
- A decreasing trend in DOH from 2019 to 2023 indicates that Republic Services has been able to manage its inventory more efficiently over time.
- A lower DOH implies that Republic Services is selling its inventory quickly, which is a positive sign as it reduces carrying costs and the risk of obsolescence.
2. Days of Sales Outstanding (DSO):
- DSO has shown slight variations over the years but has remained relatively stable, ranging from 47 to 54 days.
- The decrease in DSO from 53.57 days in 2022 to 48.62 days in 2023 suggests that Republic Services has been collecting its receivables more efficiently.
- A lower DSO reflects that Republic Services is collecting revenue from its customers more quickly, improving cash flow and reducing the risk of bad debts.
3. Number of Days of Payables:
- The days of payables have increased steadily from 45.08 days in 2019 to 57.61 days in 2023.
- This increase indicates that Republic Services is taking longer to pay its suppliers, which may be beneficial in terms of managing cash flow and liquidity.
- However, a longer payment period might strain relationships with suppliers if not managed carefully.
Overall, the activity ratios of Republic Services, Inc. show a positive trend in managing inventory, collecting receivables, and optimizing payables. The company appears to be improving its efficiency in managing working capital, which is crucial for enhancing profitability and financial performance.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 1.56 | 1.50 | 1.49 | 1.42 | 1.45 |
| Total asset turnover | 0.55 | 0.54 | 0.53 | 0.51 | 0.54 |
The fixed asset turnover ratio for Republic Services, Inc. has shown a generally increasing trend over the past five years, indicating that the company is becoming more efficient in generating sales from its fixed assets. The ratio increased from 1.23 in 2019 to 1.32 in 2023, suggesting that the company is effectively utilizing its fixed assets to generate revenue.
On the other hand, the total asset turnover ratio, which measures the company's ability to generate sales from all its assets, has also shown a slight increasing trend over the same period. The ratio increased from 0.45 in 2019 to 0.48 in 2023, indicating that Republic Services, Inc. is improving its overall efficiency in utilizing all assets to generate revenue.
Overall, both the fixed asset turnover and total asset turnover ratios suggest that Republic Services, Inc. is effectively managing its assets to drive revenue growth and improve operational efficiency over the years. These trends indicate positive management of assets and operational performance within the company.