Transdigm Group Incorporated (TDG)
Payables turnover
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 3,268,000 | 2,743,000 | 2,330,000 | 2,285,000 | 2,456,000 |
| Payables | US$ in thousands | 323,000 | 305,000 | 279,000 | 227,000 | 218,000 |
| Payables turnover | 10.12 | 8.99 | 8.35 | 10.07 | 11.27 |
September 30, 2024 calculation
Payables turnover = Cost of revenue ÷ Payables
= $3,268,000K ÷ $323,000K
= 10.12
The payables turnover ratio measures how efficiently a company manages its accounts payable by evaluating how many times a company pays off its suppliers within a specific period. A higher payables turnover ratio indicates that the company is paying its suppliers more frequently.
In the case of Transdigm Group Incorporated, the payables turnover has fluctuated over the past five years. The payables turnover ratio was 10.12 in September 2024, indicating that Transdigm paid off its suppliers approximately 10.12 times during that fiscal year. This is an improvement compared to the previous years, where the ratios were 8.99 in 2023, 8.35 in 2022, 10.07 in 2021, and 11.27 in 2020.
The increase in the payables turnover ratio from 2022 to 2024 suggests that Transdigm has been more effective in managing its accounts payable and settling its obligations with suppliers more promptly. This could indicate better liquidity management or negotiation terms with suppliers. However, it is important to note that a very high payables turnover ratio could also signal potential cash flow issues or strained relationships with suppliers if payments are made too quickly.
Overall, the upward trend in Transdigm's payables turnover ratio reflects positively on its financial management practices and supplier relationships, contributing to a more efficient use of working capital.