Trane Technologies plc (TT)
Payables turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 3,143,500 | 2,694,300 | 2,569,900 | 11,037,600 | 14,752,600 |
| Payables | US$ in thousands | 2,025,200 | 2,091,600 | 1,787,300 | 1,520,200 | 1,381,300 |
| Payables turnover | 1.55 | 1.29 | 1.44 | 7.26 | 10.68 |
December 31, 2023 calculation
Payables turnover = Cost of revenue ÷ Payables
= $3,143,500K ÷ $2,025,200K
= 1.55
Trane Technologies plc's payables turnover ratio has shown a decreasing trend over the past five years. The ratio was highest in 2019 at 6.33 and has been gradually decreasing since then. A payables turnover ratio indicates how efficiently a company is managing its accounts payable by comparing the amount of credit purchases to the average accounts payable balance.
A decreasing payables turnover ratio could suggest that Trane Technologies is taking longer to pay its suppliers, which may indicate a less efficient use of working capital. However, it could also indicate that the company is negotiating better credit terms with its suppliers.
Overall, further analysis of the reasons behind the trend in payables turnover ratio is recommended to fully understand its implications for Trane Technologies' financial management and operational efficiency.