Sherwin-Williams Co (SHW)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Inventory turnover	8.40	8.75	8.09	7.23	7.32	7.43	7.59	7.63	8.97	9.27	9.17	8.56	8.60	8.25	6.87	5.73	5.22	5.49	5.33	5.09
Receivables turnover	9.14	7.68	7.23	7.62	8.48	7.38	6.88	7.19	8.32	7.43	7.44	7.66	8.70	7.21	7.09	7.81	8.57	7.20	6.66	7.53
Payables turnover	8.45	8.10	7.92	7.79	7.89	6.74	6.12	6.21	7.19	6.29	6.61	7.14	7.33	6.71	6.64	5.72	5.26	4.94	4.89	5.36
Working capital turnover	—	—	1,959.56	—	—	1,008.83	—	—	—	—	—	—	—	21.66	41.39	—	163.03	426.03	—	—

The activity ratios of Sherwin-Williams Co. provide insights into how efficiently the company is managing its inventory, receivables, payables, and working capital.

1. Inventory Turnover: The inventory turnover ratio measures how many times a company's inventory is sold and replaced over a period. Sherwin-Williams Co.'s inventory turnover has been relatively stable, ranging from 4.76 to 5.61 over the past eight quarters. This indicates that the company is efficiently managing its inventory levels and selling its products effectively.

2. Receivables Turnover: The receivables turnover ratio shows how many times a company collects its accounts receivables during a period. Sherwin-Williams Co.'s receivables turnover has varied, with a range of 6.97 to 9.34 over the same period. A higher turnover indicates that the company is collecting receivables more quickly, which is a positive sign for cash flow and liquidity.

3. Payables Turnover: The payables turnover ratio measures how quickly a company pays its suppliers. Sherwin-Williams Co.'s payables turnover has been relatively consistent, ranging from 4.10 to 5.31. A higher turnover suggests that the company is managing its payables effectively and may indicate strong supplier relationships.

4. Working Capital Turnover: The working capital turnover ratio calculates how efficiently a company is using its working capital to generate sales. Sherwin-Williams Co. has reported working capital turnover figures only for certain quarters, showing significant variations, such as 1,022.67 and 1,996.60. An increasing turnover implies better utilization of working capital to drive sales.

Overall, Sherwin-Williams Co. appears to be effectively managing its activity ratios, which bodes well for its operational efficiency and financial performance. By analyzing these ratios over time, investors and stakeholders can gain valuable insights into the company's ability to control costs, manage its assets and liabilities, and generate revenue.

Average number of days

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	43.48	41.72	45.14	50.46	49.89	49.14	48.09	47.84	40.70	39.40	39.82	42.62	42.44	44.23	53.15	63.68	69.92	66.44	68.45	71.73
Days of sales outstanding (DSO)	days	39.93	47.52	50.50	47.92	43.05	49.45	53.09	50.73	43.86	49.12	49.05	47.63	41.95	50.60	51.47	46.74	42.59	50.69	54.79	48.49
Number of days of payables	days	43.20	45.07	46.08	46.84	46.28	54.17	59.68	58.78	50.75	58.04	55.25	51.15	49.82	54.37	54.93	63.79	69.42	73.85	74.70	68.15

The activity ratios of Sherwin-Williams Co. over the past eight quarters can provide insights into the efficiency of the company's operations.

1. Days of Inventory on Hand (DOH):
- The DOH measures how many days it takes for the company to sell its inventory.
- Sherwin-Williams Co. has shown consistent inventory management over the quarters, with the DOH fluctuating between 65.08 days to 76.62 days.
- A lower DOH indicates better inventory management as the company is selling its products efficiently, while a higher DOH suggests slower inventory turnover.

2. Days of Sales Outstanding (DSO):
- The DSO ratio reflects the average number of days it takes for the company to collect payment after a sale.
- Sherwin-Williams Co. has seen fluctuations in DSO, ranging from 39.08 days to 52.39 days, indicating variability in the collection of receivables.
- A lower DSO is favorable as it implies quicker collection of receivables, while a higher DSO could indicate potential issues with credit policies or customer payment behaviors.

3. Number of Days of Payables:
- This metric indicates how long the company takes to pay its suppliers.
- Sherwin-Williams Co. has maintained relatively stable payables periods, with the number of days of payables ranging from 68.73 days to 89.11 days.
- A longer payables period can signify better cash flow management, while a shorter payables period might indicate strong supplier relationships but could also lead to potential liquidity challenges.

Overall, by analyzing these activity ratios, it appears that Sherwin-Williams Co. has been managing its inventory efficiently, maintaining a reasonable collection period, and effectively managing its payables. However, fluctuations in these ratios over the quarters suggest the need for continuous monitoring and potential adjustments in operational strategies to improve overall effectiveness and efficiency.

Long-term

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Fixed asset turnover	7.95	8.75	9.23	9.38	9.85	10.48	10.45	10.50	10.49	10.57	10.67	10.39	9.86	9.95	9.75	9.78	9.75	9.93	9.99	9.99
Total asset turnover	0.98	0.98	0.97	0.96	0.96	0.96	0.93	0.92	0.95	0.93	0.94	0.91	0.89	0.85	0.86	0.87	0.87	0.86	0.84	0.84

The analysis of Sherwin-Williams Co.'s long-term activity ratios reveals a consistent trend in its fixed asset turnover ratio and total asset turnover ratio over the past eight quarters.

The fixed asset turnover ratio measures how efficiently the company is utilizing its fixed assets to generate revenue. Sherwin-Williams Co.'s fixed asset turnover ratio has consistently decreased from 10.04 in Q4 2022 to 10.64 in Q1 2022. This indicates that the company's fixed assets are becoming less efficient in generating revenue over time.

On the other hand, the total asset turnover ratio measures how efficiently the company is using all its assets to generate sales. Sherwin-Williams Co.'s total asset turnover ratio has remained relatively stable around 1.00 over the same period. This suggests that the company is maintaining its overall efficiency in generating sales relative to its total asset base.

In conclusion, while Sherwin-Williams Co. has shown a decline in the efficiency of its fixed assets in generating revenue, it has managed to sustain its overall efficiency in utilizing its total assets to drive sales over the past eight quarters.