Timken Company (TKR)
Payables turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 4,138,100 | 3,932,800 | 3,658,300 | 3,120,700 | 3,321,800 |
| Payables | US$ in thousands | 367,200 | 403,900 | 430,000 | 351,400 | 301,700 |
| Payables turnover | 11.27 | 9.74 | 8.51 | 8.88 | 11.01 |
December 31, 2023 calculation
Payables turnover = Cost of revenue ÷ Payables
= $4,138,100K ÷ $367,200K
= 11.27
The payables turnover ratio for Timken Co. has shown some fluctuation over the past five years. The ratio increased from 7.12 in 2020 to 7.05 in 2021, indicating a slight decrease in the efficiency of paying off its trade payables during that period. However, in the subsequent years, there was an improvement in the efficiency of managing payables as the ratios increased to 7.94 in 2022 and further to 8.88 in 2023.
A higher payables turnover ratio suggests that the company is managing its trade payables more effectively by either paying them off more quickly or negotiating more favorable credit terms with suppliers. This can be a positive indicator of liquidity and operational efficiency.
Overall, the increasing trend in the payables turnover ratio for Timken Co. from 2020 to 2023 is a positive sign of the company's ability to efficiently manage its short-term obligations to suppliers.
Peer comparison
Dec 31, 2023