Trane Technologies plc (TT)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Inventory turnover	1.46	1.69	1.39	1.25	1.35	1.88	1.69	1.54	1.68	8.02	8.43	8.17	9.28	9.76	9.46	9.55	11.51	7.63	7.23	7.01
Receivables turnover	5.89	5.43	5.18	6.16	5.67	5.32	5.29	5.86	5.72	5.55	5.24	5.82	5.54	5.69	6.05	7.36	7.48	5.56	5.21	5.92
Payables turnover	1.55	1.76	1.51	1.50	1.29	1.78	1.59	1.49	1.44	6.76	6.37	6.97	7.26	8.22	9.36	9.66	10.66	8.20	7.46	7.72
Working capital turnover	21.34	11.29	15.32	12.91	22.75	20.23	29.50	9.91	8.08	5.04	5.08	5.14	4.75	4.70	5.57	6.64	4.03	12.43	13.83	6.18

Trane Technologies plc's activity ratios provide insights into how efficiently the company manages its assets and liabilities.

1. Inventory turnover: Trane's inventory turnover has been relatively stable around 5 times per year over the quarters, indicating that the company efficiently sells through its inventory. A higher turnover suggests effective inventory management.

2. Receivables turnover: Trane's receivables turnover has shown some fluctuation, but overall it has remained above 5 in recent quarters. This indicates that the company is efficient in collecting payments from customers, which is favorable for cash flow and liquidity.

3. Payables turnover: Trane's payables turnover has been relatively consistent around 5 to 5.8 over the quarters. This suggests that the company takes around 5 to 6 months to pay its suppliers, which is a typical industry practice.

4. Working capital turnover: Trane's working capital turnover has varied significantly, with a notable decrease in Q3 2023 compared to previous quarters. A higher turnover indicates that the company efficiently turns its working capital into revenue, but the decrease in Q3 2023 could be a signal of changes in operating efficiency or liquidity management.

Overall, Trane Technologies plc appears to manage its inventories and receivables efficiently, while also maintaining a steady pace in paying its suppliers. The working capital turnover fluctuations may require further investigation to understand the underlying factors affecting the company's operational efficiency.

Average number of days

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	249.89	216.60	261.95	291.27	270.11	193.87	216.44	237.63	217.42	45.53	43.32	44.69	39.33	37.41	38.57	38.22	31.71	47.83	50.48	52.09
Days of sales outstanding (DSO)	days	61.94	67.17	70.49	59.24	64.43	68.64	68.97	62.30	63.83	65.78	69.66	62.68	65.90	64.12	60.35	49.59	48.79	65.68	70.02	61.66
Number of days of payables	days	235.16	206.86	242.05	243.91	283.36	205.02	229.44	245.16	253.85	53.97	57.29	52.36	50.27	44.39	39.00	37.78	34.26	44.50	48.91	47.26

To analyze Trane Technologies plc's activity ratios, we will consider the days of inventory on hand (DOH), days of sales outstanding (DSO), and the number of days of payables for the most recent quarters presented.

1. Days of Inventory on Hand (DOH):
- Trane Technologies plc's average DOH for Q4 2023 was 66.45 days, which is slightly lower than in Q3 2023 (68.25 days).
- Overall, the trend in inventory management efficiency appears stable with fluctuations around 66-76 days over the past eight quarters.
- A lower DOH indicates quicker turnover of inventory, suggesting efficient inventory management practices, but it is important to monitor for potential inventory obsolescence or stockouts.

2. Days of Sales Outstanding (DSO):
- Trane Technologies plc's DSO in Q4 2023 was 61.05 days, showing an improvement compared to Q3 2023 (66.20 days).
- The trend in DSO over the past eight quarters has shown fluctuations between 58-69 days, indicating the company's ability to collect receivables efficiently.
- A lower DSO signifies a quicker collection of receivables, which is positive for cash flow and liquidity management.

3. Number of Days of Payables:
- Trane Technologies plc had 62.54 days of payables outstanding in Q4 2023, which is slightly lower than in Q3 2023 (65.18 days).
- The company's payables days have shown variability between 62-71 days over the past eight quarters, indicating a mixed approach to managing payables.
- A higher number of days of payables could imply better cash flow management but may also indicate strained supplier relationships if extended too far.

Overall, Trane Technologies plc's activity ratios suggest a generally efficient management of inventory, receivables, and payables. However, it is essential for the company to maintain a balance between these components to optimize working capital efficiency and overall financial performance. Periodic monitoring and analysis of these activity ratios will provide insights into Trane Technologies plc's operational effectiveness and potential areas for improvement.

Long-term

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Fixed asset turnover	9.83	10.14	10.01	10.15	10.25	10.65	10.24	10.01	9.93	10.10	10.01	9.47	9.04	10.02	10.66	11.61	12.09	9.27	9.03	9.23
Total asset turnover	0.90	0.90	0.88	0.90	0.87	0.86	0.83	0.81	0.77	0.74	0.72	0.71	0.67	0.73	0.81	0.87	0.80	0.81	0.78	0.81

Trane Technologies plc's long-term activity ratios, namely the Fixed Asset Turnover and Total Asset Turnover, provide insights into the company's efficiency in utilizing its assets to generate sales.

The Fixed Asset Turnover ratio measures how effectively the company is using its fixed assets to generate revenue. Trane Technologies plc consistently maintained a high Fixed Asset Turnover ratio over the observed quarters, ranging between 9.97 and 10.41. This indicates that the company efficiently leverages its fixed assets to generate sales, with a steady trend of performance in this area.

On the other hand, the Total Asset Turnover ratio reflects the company's overall efficiency in generating sales from all its assets, including both fixed and current assets. Trane Technologies plc's Total Asset Turnover ratio ranged between 0.82 and 0.92 during the observed quarters, indicating a moderate level of efficiency in utilizing its total assets to generate revenue. The company's Total Asset Turnover has been relatively stable, with some fluctuations but no significant upward or downward trend.

In conclusion, Trane Technologies plc demonstrates strong efficiency in utilizing its fixed assets to generate revenue, as evidenced by the consistently high Fixed Asset Turnover ratio. The company also maintains a moderate level of efficiency in generating sales from its total assets, as reflected in the relatively stable Total Asset Turnover ratio.