United Rentals Inc (URI)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 41.56 | 28.65 | 35.75 | 42.78 | 47.34 |
| Receivables turnover | 6.43 | 5.81 | 5.79 | 6.49 | 6.11 |
| Payables turnover | 9.41 | 5.83 | 7.19 | 11.47 | 12.51 |
| Working capital turnover | — | 41.88 | — | 67.17 | — |
The activity ratios of United Rentals, Inc. provide insights into the efficiency of the company's management of inventory, receivables, payables, and working capital.
The inventory turnover ratio demonstrates a significant increase from 2022 to 2023, indicating that United Rentals, Inc. effectively turns over its inventory, possibly due to improved inventory management or increased sales.
The receivables turnover ratio shows a consistent trend over the years, suggesting that the company efficiently collects its receivables from customers. This indicates effective credit and collection policies.
The payables turnover ratio has also improved from 2022 to 2023, suggesting that the company is paying its suppliers more frequently, potentially improving its credit standing with suppliers or taking advantage of early payment discounts.
Unfortunately, the working capital turnover ratio is not available for 2023 and 2021. However, in 2022, United Rentals, Inc. generated significant sales in relation to its working capital, indicating efficient use of working capital to generate revenue.
In conclusion, the activity ratios depict an overall positive picture of United Rentals, Inc.'s efficiency in managing its inventory, receivables, payables, and working capital.
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 | 8.78 | 12.74 | 10.21 | 8.53 | 7.71 |
| Days of sales outstanding (DSO) | days | 56.79 | 62.83 | 63.00 | 56.27 | 59.72 |
| Number of days of payables | days | 38.78 | 62.55 | 50.80 | 31.81 | 29.17 |
United Rentals, Inc.'s activity ratios provide insight into the efficiency of its inventory management, accounts receivable collection, and accounts payable payment. The days of inventory on hand (DOH) decreased from 17.67 days in 2022 to 12.13 days in 2023, indicating an improvement in managing inventory levels. The decrease suggests that the company is managing its inventory more efficiently, which could lead to lower carrying costs and potential obsolescence.
On the other hand, the days of sales outstanding (DSO) decreased from 62.83 days in 2022 to 56.79 days in 2023, indicating a more efficient collection of accounts receivable. This may signify improved credit control and prompt customer payments, enhancing the company's cash flow and reducing the risk of bad debts.
Additionally, the number of days of payables decreased from 86.74 days in 2022 to 53.55 days in 2023. This decrease indicates that the company is taking less time to pay its suppliers, which could potentially strain relationships but also suggests improved cash management and negotiation of payment terms.
In summary, United Rentals, Inc. has made significant improvements in managing its inventory, collecting its receivables more efficiently, and optimizing its accounts payable turnover, reflecting positive trends in its working capital management.
See also:
United Rentals Inc Short-term (Operating) Activity Ratios
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | — | 0.78 | 6.96 | 6.60 | 15.48 |
| Total asset turnover | 0.56 | 0.48 | 0.48 | 0.48 | 0.49 |
The long-term activity ratios for United Rentals, Inc. show the company's efficiency in managing its assets over the years. The fixed asset turnover, which measures the company's ability to generate revenue from its investments in property, plant, and equipment, improved from 0.90 in 2019 to 0.96 in 2023, indicating a positive trend. This suggests that United Rentals, Inc. is generating more revenue from its fixed assets, which is a positive sign of potential operational efficiency and effective utilization of these assets.
Additionally, the total asset turnover, reflecting the company's ability to generate sales from its total assets, increased from 0.49 in 2019 to 0.56 in 2023, indicating an improvement in asset utilization. This signifies that the company has been more efficient in generating revenue from its total assets over the years.
Overall, the trend in both fixed asset turnover and total asset turnover ratios reflects an improvement in United Rentals, Inc.'s ability to use its assets effectively to generate sales, which may be indicative of operational efficiency and effective asset management. However, it is essential to consider other factors such as industry benchmarks and economic conditions to gain a comprehensive understanding of the company's performance.