Terex Corporation (TEX)
Working capital turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 5,151,500 | 4,417,700 | 3,886,800 | 3,076,400 | 4,353,100 |
| Total current assets | US$ in thousands | 2,245,200 | 1,962,000 | 1,767,800 | 1,878,600 | 2,019,700 |
| Total current liabilities | US$ in thousands | 1,119,200 | 998,600 | 909,900 | 723,300 | 872,400 |
| Working capital turnover | 4.58 | 4.59 | 4.53 | 2.66 | 3.79 |
December 31, 2023 calculation
Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $5,151,500K ÷ ($2,245,200K – $1,119,200K)
= 4.58
The working capital turnover of Terex Corp. has shown a generally increasing trend over the past five years, which indicates the company's ability to efficiently utilize its working capital to generate sales revenue. The working capital turnover ratio measures how effectively a company is able to generate sales from its working capital, and a higher ratio indicates better efficiency in managing its current assets and liabilities.
In 2023, the working capital turnover was 4.58, slightly lower compared to the previous year's ratio of 4.59. This minor decrease could be due to various factors such as changes in the company's operating cycle or sales volume. Despite the small decline, the ratio remains relatively high, signifying that Terex Corp. continues to efficiently convert its working capital into sales.
Compared to 2020, where the working capital turnover was 2.66, there has been a significant improvement in the efficiency of working capital utilization. This suggests that the company has strengthened its operations and management of current assets and liabilities over the past three years.
Overall, the increasing trend in working capital turnover for Terex Corp. reflects positively on the company's operational efficiency and financial performance. It indicates a strong ability to manage working capital effectively and convert it into sales revenue, which is essential for sustainable business growth.