Timken Company (TKR)
Working capital turnover
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 4,573,000 | 4,769,000 | 4,496,700 | 4,132,900 | 3,513,200 |
| Total current assets | US$ in thousands | 2,516,900 | 2,634,900 | 2,504,000 | 2,213,500 | 2,000,300 |
| Total current liabilities | US$ in thousands | 820,500 | 1,471,300 | 1,012,400 | 896,600 | 848,000 |
| Working capital turnover | 2.70 | 4.10 | 3.01 | 3.14 | 3.05 |
December 31, 2024 calculation
Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $4,573,000K ÷ ($2,516,900K – $820,500K)
= 2.70
Working capital turnover is an important financial ratio that reflects how efficiently a company is utilizing its working capital to generate sales revenue. By analyzing Timken Company's working capital turnover over the years, we can gain insights into the company's management of its current assets and liabilities.
From the data provided, we observe fluctuations in Timken Company's working capital turnover. In 2020, the working capital turnover was 3.05, indicating that the company generated $3.05 in sales revenue for every dollar of working capital invested. This ratio improved slightly to 3.14 in 2021 before declining to 3.01 in 2022. However, there was a significant increase in the ratio to 4.10 in 2023, suggesting a notable improvement in the efficiency of working capital utilization.
The latest data point for 2024 shows a decrease in the working capital turnover to 2.70, signaling a potential challenge in effectively leveraging working capital to drive sales. A low working capital turnover ratio may indicate inefficiencies in managing inventory, accounts receivable, or accounts payable, which could impact the company's overall profitability and liquidity.
Overall, Timken Company's working capital turnover has shown variability over the years, with a notable spike in 2023 followed by a decline in 2024. It is essential for the company to closely monitor and optimize its working capital management to ensure sustainable efficiency in generating sales revenue and maintaining financial health.
Peer comparison
Dec 31, 2024