Trex Company Inc (TREX)
Working capital turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 1,091,690 | 1,090,750 | 1,197,010 | 881,886 | 746,565 |
| Total current assets | US$ in thousands | 172,254 | 286,842 | 401,054 | 321,997 | 303,204 |
| Total current liabilities | US$ in thousands | 91,062 | 290,599 | 88,702 | 106,353 | 78,670 |
| Working capital turnover | 13.45 | — | 3.83 | 4.09 | 3.32 |
December 31, 2023 calculation
Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $1,091,690K ÷ ($172,254K – $91,062K)
= 13.45
The working capital turnover ratio for TREX Co., Inc. shows an increasing trend over the past five years. In 2019, the ratio stood at 3.32, indicating that the company turned over its working capital 3.32 times during the year. This ratio improved to 4.08 in 2020 and to 3.83 in 2021, suggesting that the company became more efficient in utilizing its working capital to generate sales.
The most significant improvement in working capital turnover occurred in 2023, where the ratio spiked to 13.48, signifying a substantial increase in the efficiency of the company's working capital management. This large increase may be a result of more effective inventory management, faster collection of receivables, or better payment of payables.
The absence of data for 2022 makes it difficult to identify the trend in that particular year. However, the overall trend from 2019 to 2023 indicates that TREX Co., Inc. has been improving its efficiency in utilizing its working capital to drive sales and generate revenue. A higher working capital turnover ratio generally indicates that the company is generating more sales revenue per dollar of working capital invested, which can be a positive sign for the company's financial health and operational efficiency.
Peer comparison
Dec 31, 2023