Trimble Inc (TRMB)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 6.22 | 3.90 | 4.47 | 4.63 | 4.78 |
| Receivables turnover | 5.38 | 5.43 | 5.51 | 5.08 | 5.38 |
| Payables turnover | 8.87 | 8.95 | 7.84 | 9.76 | 9.36 |
| Working capital turnover | 2,374.19 | 65.53 | 13.97 | — | 152.15 |
Inventory turnover provides insight into how efficiently Trimble Inc manages its inventory. The ratio has improved over the past five years, indicating that the company is selling its inventory more quickly. This could be due to better inventory management practices or changes in customer demand.
Receivables turnover indicates how quickly the company collects its accounts receivable. Trimble Inc has maintained a relatively stable receivables turnover ratio over the years, suggesting that the company effectively manages its credit and collection policies.
Payables turnover reflects how efficiently the company pays its suppliers. Trimble Inc has shown fluctuations in its payables turnover ratio, but it generally indicates that the company is paying its suppliers at a consistent pace. A higher turnover ratio may suggest that the company is taking advantage of credit terms or managing cash flow effectively.
Working capital turnover measures how effectively Trimble Inc utilizes its working capital to generate revenue. The significant improvement in the working capital turnover ratio from 2022 to 2023 indicates a drastic increase in revenue generated per dollar of working capital. This can be a positive sign of improved efficiency in utilizing resources and managing operations effectively.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 58.69 | 93.53 | 81.62 | 78.82 | 76.43 |
| Days of sales outstanding (DSO) | days | 67.89 | 67.21 | 66.26 | 71.85 | 67.86 |
| Number of days of payables | days | 41.16 | 40.78 | 46.57 | 37.41 | 39.01 |
We will analyze Trimble Inc's activity ratios, specifically focusing on Days of Inventory on Hand (DOH), Days of Sales Outstanding (DSO), and Number of Days of Payables.
1. Days of Inventory on Hand (DOH):
- In 2023, Trimble Inc had 58.69 days of inventory on hand, a significant improvement from 93.53 days in 2022. This indicates that the company is managing its inventory more efficiently, possibly through better demand forecasting or inventory management practices.
- The decreasing trend in DOH from 2021 to 2023 suggests that Trimble Inc has been able to streamline its production and distribution processes, leading to shorter inventory holding periods.
2. Days of Sales Outstanding (DSO):
- The DSO for Trimble Inc was 67.89 days in 2023, slightly higher than the previous year's 67.21 days. This indicates that the company is taking slightly longer to collect its receivables, which could potentially impact cash flow.
- The relatively stable DSO over the years indicates that Trimble Inc has been consistent in its credit and collection policies. However, efforts to reduce DSO further could enhance the company's cash flow management.
3. Number of Days of Payables:
- In 2023, Trimble Inc had 41.16 days of payables, a slight increase from 40.78 days in 2022. The increase in payables days may indicate that the company is taking longer to pay its suppliers, potentially improving its cash flow temporarily.
- The fluctuation in payables days over the years suggests that Trimble Inc may be adjusting its payment terms with suppliers based on business conditions. However, it is important to strike a balance between optimizing cash flow and maintaining good relationships with suppliers.
In conclusion, Trimble Inc has shown improvements in inventory management efficiency, although there are slight concerns regarding the collection of receivables and payment to suppliers. Continued monitoring and potential adjustments in working capital management practices could further enhance the company's overall financial performance.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 18.76 | 16.79 | 15.69 | 12.52 | 13.55 |
| Total asset turnover | 0.40 | 0.51 | 0.52 | 0.46 | 0.49 |
The fixed asset turnover ratio for Trimble Inc has been gradually increasing over the past five years, from 13.55 in 2019 to 18.76 in 2023, indicating that the company has become more efficient in generating sales relative to its investment in fixed assets. This improvement suggests that Trimble is effectively utilizing its fixed assets to generate revenue.
On the other hand, the total asset turnover ratio shows a fluctuating trend, with a decrease from 0.49 in 2019 to 0.40 in 2023. This indicates that Trimble's overall efficiency in generating sales from its total assets has been decreasing slightly over the years. A lower total asset turnover ratio may suggest that the company has been less efficient in utilizing all its assets to generate revenue.
Overall, while Trimble Inc has shown an improvement in utilizing its fixed assets efficiently to generate sales, there may be opportunities for the company to enhance its overall asset turnover to maximize revenue generation from its total asset base.