Timken Company (TKR)

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 3.35 2.75 2.65 2.67 2.62 2.74 2.60 2.64 2.74 2.92 2.93 2.86 2.86 3.07 3.15 3.21 3.16 3.29 3.11 3.04
Receivables turnover 6.99 6.63 5.77 6.04 6.35 5.94 5.65 5.63 6.53 5.67 5.43 5.00 5.95 6.06 6.43 6.37 6.85 6.84 6.31 5.95
Payables turnover 11.20 9.62 8.46 8.28 7.73 8.30 7.58 7.05 6.64 7.00 6.99 6.83 6.84 7.92 9.24 8.89 8.82 9.99 8.99 8.66
Working capital turnover 4.03 4.25 2.78 2.77 2.98 3.51 2.74 2.49 3.10 2.94 2.86 2.91 3.00 2.83 2.59 2.78 3.28 3.40 3.18 2.94

Activity ratios provide insights into how efficiently a company is managing its assets and liabilities to generate revenue. Let's analyze the activity ratios of Timken Co. based on the provided data.

1. Inventory Turnover:
- Timken Co.'s inventory turnover has been relatively stable around 2.65 to 2.82 over the past eight quarters. This indicates that, on average, the company is selling and replacing its inventory approximately 2.65 to 2.82 times a year. A higher inventory turnover generally indicates more efficient management of inventory levels.

2. Receivables Turnover:
- The receivables turnover for Timken Co. has ranged from 5.09 to 5.84 over the same period. This ratio reflects how quickly the company is collecting payments from its customers. A higher receivables turnover is generally favorable as it indicates faster collection of receivables.

3. Payables Turnover:
- Timken Co.'s payables turnover has fluctuated between 7.45 to 9.55. A higher payables turnover suggests that the company is paying its suppliers more frequently, which could be a sign of strong supplier relationships or effective cash management.

4. Working Capital Turnover:
- The working capital turnover for Timken Co. has varied from 2.52 to 4.32. This ratio measures how efficiently the company is utilizing its working capital to generate revenue. A higher turnover indicates better utilization of working capital.

Overall, Timken Co. has shown relatively stable performance in managing its inventory, receivables, payables, and working capital turnover over the past eight quarters. Monitoring these activity ratios can help stakeholders assess the company's operational efficiency and financial health.

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 109.08 132.60 137.64 136.53 139.28 133.36 140.47 138.47 133.36 124.97 124.64 127.45 127.71 118.71 115.89 113.74 115.44 110.93 117.48 120.25
Days of sales outstanding (DSO) days 52.24 55.06 63.25 60.46 57.46 61.44 64.57 64.85 55.93 64.34 67.17 72.93 61.31 60.22 56.78 57.33 53.25 53.37 57.83 61.33
Number of days of payables days 32.59 37.96 43.13 44.08 47.22 43.97 48.18 51.79 55.00 52.11 52.20 53.44 53.34 46.09 39.51 41.07 41.36 36.53 40.60 42.16

The activity ratios of Timken Co. can provide insights into its efficiency in managing inventory, accounts receivable, and accounts payable.

- Days of Inventory on Hand (DOH) measures how many days it takes for the company to turn its inventory into sales. The trend of DOH for Timken Co. has been relatively stable around 130-140 days, indicating that the company is maintaining inventory levels consistently.

- Days of Sales Outstanding (DSO) reveals the average number of days it takes for the company to collect payment from its customers. Timken Co.'s DSO has fluctuated between 60-70 days, suggesting that the company may have varying collection processes or terms with customers.

- Number of Days of Payables shows how long it takes for the company to pay its suppliers. Timken Co. has managed its payables efficiently, with a decreasing trend from around 45-50 days in Q1 2022 to around 40 days in Q4 2023, indicating improved payment management.

Overall, Timken Co. appears to have a cautious approach to managing its working capital through these activity ratios, with a focus on balancing its inventory levels, collection times from customers, and payment to suppliers. This analysis suggests that the company is relatively effective in managing its operational efficiency and liquidity position.

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 3.60 3.76 3.73 3.73 3.68 4.09 3.90 4.03 3.87 3.84 3.73 3.49 3.34 3.53 3.62 3.82 3.78 4.14 4.08 4.06
Total asset turnover 0.72 0.75 0.75 0.78 0.77 0.83 0.79 0.77 0.79 0.77 0.74 0.70 0.69 0.71 0.71 0.74 0.77 0.82 0.80 0.78

The fixed asset turnover ratio for Timken Co. has been relatively stable in recent quarters, ranging from 3.64 to 4.14. This indicates that the company is generating between 3.64 to 4.14 in sales for every dollar invested in fixed assets. The fluctuations in this ratio suggest that the company's efficiency in utilizing its fixed assets may have slightly decreased, as a higher ratio is generally preferred. However, the company's fixed asset turnover remains within a reasonable range.

On the other hand, the total asset turnover ratio for Timken Co. has shown a declining trend over the same period, from 0.84 to 0.73. This implies that the company is generating less revenue for each dollar of total assets, which may indicate inefficiencies in asset management or sales generation. A decreasing total asset turnover ratio could be a cause for concern as it suggests that the company may be less effective in utilizing its total assets to generate sales.

Overall, while the fixed asset turnover ratio for Timken Co. appears to be stable, the decreasing trend in the total asset turnover ratio may warrant further investigation into the company's overall asset management and sales efficiency.