Westinghouse Air Brake Technologies Corp (WAB)

Short-term

Turnover ratios

Westinghouse Air Brake Technologies Corp's activity ratios reveal important insights into the efficiency of the company's operations.

1. Inventory Turnover:
- The inventory turnover ratio decreased slightly from 4.17 in 2020 to 3.80 in 2024. This suggests that the company is selling its inventory at a slightly slower pace over the years. The decrease may indicate either excess inventory levels or a slowdown in sales.

2. Receivables Turnover:
- The receivables turnover ratio increased steadily from 7.57 in 2020 to 9.00 in 2024. This improvement indicates that the company is collecting its receivables more efficiently. The increase in the ratio suggests that the company is managing its credit and collection policies effectively.

3. Payables Turnover:
- The payables turnover ratio fluctuated over the years, with a noticeable decrease from 7.53 in 2020 to 5.63 in 2022, followed by a slight recovery to 6.77 in 2024. The declining trend in payables turnover may imply that the company is taking longer to pay its creditors, possibly showing strain on the company's liquidity.

4. Working Capital Turnover:
- The working capital turnover ratio fluctuated with a peak of 11.80 in 2023. A higher working capital turnover ratio indicates that the company is effectively utilizing its working capital to generate sales revenue. However, the ratio decreased to 9.00 in 2024, suggesting potential inefficiencies in utilizing working capital effectively in that year.

In conclusion, while the receivables turnover ratio showed improvement, indicating efficient collection practices, the inventory turnover and payables turnover ratios exhibited some challenges. The fluctuations in these ratios may require further analysis to understand the underlying reasons and potential impacts on the company's financial performance.

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Average number of days

Based on the provided data for Westinghouse Air Brake Technologies Corp, here is a detailed analysis of the activity ratios:

1. Days of Inventory on Hand (DOH):
- The Days of Inventory on Hand measures how many days, on average, a company holds inventory before selling it.
- The trend for Westinghouse Air Brake Technologies Corp shows an increase in the Days of Inventory on Hand from 87.62 days in 2020 to 95.98 days in 2024.
- This indicates that the company is holding inventory for a longer period, which may tie up capital and could potentially lead to higher holding costs.

2. Days of Sales Outstanding (DSO):
- The Days of Sales Outstanding represents how long it takes the company to collect payment after making a sale.
- Westinghouse Air Brake Technologies Corp improved its DSO from 48.20 days in 2020 to 40.57 days in 2024.
- A decreasing trend in DSO suggests that the company is collecting payments more efficiently, which can improve cash flow and liquidity.

3. Number of Days of Payables:
- The Number of Days of Payables measures the average number of days it takes a company to pay its suppliers.
- Westinghouse Air Brake Technologies Corp has a fluctuating trend in the Days of Payables, ranging from 48.50 days in 2020 to 64.78 days in 2022.
- A longer time to pay suppliers could indicate a strain on liquidity or potential negotiation power with suppliers.

In summary, Westinghouse Air Brake Technologies Corp has shown improvements in its Days of Sales Outstanding over the years, indicating better efficiency in collecting payments. However, the increasing trend in Days of Inventory on Hand and fluctuating Days of Payables suggest potential challenges in inventory management and payment practices that may impact the company's working capital management and overall financial performance.

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Long-term

Westinghouse Air Brake Technologies Corp has shown an impressive upward trend in its fixed asset turnover ratio over the past five years, increasing from 4.58 in 2020 to 7.16 in 2024. This indicates that the company is generating more revenue from its fixed assets each year, a positive sign of efficiency in asset utilization.

Similarly, the total asset turnover ratio has also exhibited growth, climbing steadily from 0.40 in 2020 to 0.55 in 2024. This suggests that Westinghouse Air Brake Technologies Corp is utilizing its total assets more effectively to generate revenue over the years.

Overall, the long-term activity ratios reflect the company's ability to efficiently utilize its assets to generate sales and revenue, indicating positive operational performance and effective management of its asset base.