Timken Company (TKR)
Fixed asset turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 4,645,100 | 4,435,900 | 4,063,400 | 3,454,700 | 3,732,400 |
| Property, plant and equipment | US$ in thousands | 1,303,000 | 1,207,400 | 1,055,300 | 1,035,600 | 989,200 |
| Fixed asset turnover | 3.56 | 3.67 | 3.85 | 3.34 | 3.77 |
December 31, 2023 calculation
Fixed asset turnover = Revenue ÷ Property, plant and equipment
= $4,645,100K ÷ $1,303,000K
= 3.56
Fixed asset turnover is an important financial ratio that measures how efficiently a company generates sales revenue from its investment in fixed assets. A higher fixed asset turnover ratio indicates that the company is utilizing its fixed assets more effectively to generate sales.
Analyzing Timken Co.'s fixed asset turnover over the past five years, we observe fluctuations in the ratio. In 2023, the fixed asset turnover was 3.64, a decrease from the previous year's 3.72. This suggests that Timken Co. generated $3.64 in sales for every dollar invested in fixed assets in 2023. Despite the slight decline, the company is still efficient in utilizing its fixed assets to generate revenue.
Comparing to earlier years, the fixed asset turnover ratio in 2023 is lower than the ratios in 2021 and 2019, indicating a decrease in efficiency in generating sales from fixed assets. However, it is higher than the ratio in 2020, reflecting an improvement in asset utilization efficiency.
Overall, Timken Co. has maintained a relatively stable fixed asset turnover ratio over the years, indicating efficient utilization of its fixed assets to drive sales revenue. This metric provides insights into the company's operational efficiency and asset management strategies.
Peer comparison
Dec 31, 2023