Trane Technologies plc (TT)
Payables turnover
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 3,761,100 | 3,143,500 | 2,694,300 | 2,569,900 | 11,037,600 |
| Payables | US$ in thousands | 2,148,000 | 2,025,200 | 2,091,600 | 1,787,300 | 1,520,200 |
| Payables turnover | 1.75 | 1.55 | 1.29 | 1.44 | 7.26 |
December 31, 2024 calculation
Payables turnover = Cost of revenue ÷ Payables
= $3,761,100K ÷ $2,148,000K
= 1.75
Trane Technologies plc's payables turnover has experienced a declining trend over the past five years. In December 2020, the payables turnover was 7.26, indicating that the company was able to pay off its accounts payable approximately 7.26 times during that year. However, by December 2024, this ratio had decreased to 1.75, suggesting a decrease in the efficiency of the company's payables management.
A payables turnover ratio below 1.0 generally indicates that the company is taking longer to pay its suppliers, which could potentially strain relationships or lead to additional costs such as late payment penalties. While the ratio of 1.75 in December 2024 is an improvement from the lowest point in December 2022, Trane Technologies plc may still benefit from focusing on managing its payables more effectively to improve cash flow and relationships with suppliers.