Toro Co (TTC)
Payables turnover
| Oct 31, 2024 | Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 4,085,000 | 4,158,200 | 3,972,900 | 3,465,100 | 2,971,950 |
| Payables | US$ in thousands | 452,700 | 430,000 | 578,700 | 503,116 | 363,953 |
| Payables turnover | 9.02 | 9.67 | 6.87 | 6.89 | 8.17 |
October 31, 2024 calculation
Payables turnover = Cost of revenue ÷ Payables
= $4,085,000K ÷ $452,700K
= 9.02
The payables turnover ratio for Toro Co has exhibited fluctuations over the past five years. The ratio decreased from 8.17 in 2020 to 6.89 in 2021 but then increased to 6.87 in 2022. There was a significant improvement in payables turnover in 2023, reaching 9.67, before slightly declining to 9.02 in 2024.
A high payables turnover ratio indicates that the company is paying off its suppliers quickly, which can be beneficial for maintaining good relationships with suppliers. However, an excessively high ratio may suggest that the company is not utilizing its trade credit effectively or may be overly aggressive in managing its payables.
Conversely, a low payables turnover ratio could indicate that the company is taking longer to pay its suppliers, potentially straining supplier relationships or causing missed discounts. It may also suggest inefficiencies in the company's payables management process.
Overall, it is important for Toro Co to monitor its payables turnover ratio closely to ensure it strikes the right balance between managing its cash flow effectively and maintaining positive relationships with its suppliers.