Westinghouse Air Brake Technologies Corp (WAB)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 3.70 | 3.60 | 4.13 | 4.17 | 4.22 |
| Receivables turnover | 7.99 | 7.75 | 7.06 | 7.57 | 4.78 |
| Payables turnover | 6.76 | 5.63 | 6.89 | 7.53 | 6.47 |
| Working capital turnover | 11.80 | 9.51 | 8.30 | 11.22 | 8.51 |
The inventory turnover ratio for Westinghouse Air Brake Technologies Corp has shown a slight fluctuation over the past five years, with a decrease from 3.34 in 2019 to 2.95 in 2023. This indicates that the company is selling its inventory less efficiently in 2023 compared to previous years. On the other hand, the receivables turnover ratio has been increasing steadily, reaching 5.75 in 2023, implying that the company is collecting its accounts receivable more quickly.
In terms of payables turnover, there was a significant increase from 4.48 in 2022 to 5.39 in 2023, indicating that the company is taking longer to pay its suppliers. The working capital turnover ratio has also shown an increasing trend over the past five years, reaching 12.11 in 2023. This suggests that the company is generating more revenue relative to its working capital.
Overall, the activity ratios of Westinghouse Air Brake Technologies Corp indicate some mixed performance in managing its inventory, receivables, payables, and working capital turnover. Further analysis and comparison with industry benchmarks would be needed to evaluate the company's operational efficiency more comprehensively.
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 | 98.63 | 101.28 | 88.40 | 87.62 | 86.41 |
| Days of sales outstanding (DSO) | days | 45.66 | 47.08 | 51.72 | 48.20 | 76.37 |
| Number of days of payables | days | 53.98 | 64.78 | 52.97 | 48.50 | 56.41 |
Westinghouse Air Brake Technologies Corp's activity ratios provide insight into the efficiency of the company's operations in managing inventory, collecting receivables, and paying its suppliers.
1. Days of Inventory on Hand (DOH): The trend in DOH over the past five years shows an increase from 109.28 days in 2019 to 123.82 days in 2023. This indicates that the company is holding inventory for a longer period, which can tie up capital and increase carrying costs. The increase in DOH may suggest inefficiencies in inventory management or slower inventory turnover.
2. Days of Sales Outstanding (DSO): The DSO trend has been fluctuating over the years, with a slight improvement from 74.06 days in 2019 to 63.52 days in 2023. A decreasing DSO suggests that the company is collecting receivables more quickly, which is a positive indicator of efficient accounts receivable management. However, further improvement in DSO could help enhance cash flow and working capital management.
3. Number of Days of Payables: The trend in the number of days of payables shows some variability, with the metric ranging from 61.25 days in 2020 to 81.56 days in 2022. A higher number of days of payables indicates that the company is taking longer to pay its suppliers, which can be advantageous in terms of preserving cash flow. However, excessively long payment terms may strain supplier relationships.
In summary, Westinghouse Air Brake Technologies Corp's activity ratios suggest room for improvement in inventory management efficiency, while showing some positive trends in accounts receivable collection. The company's management of payables appears strategic in terms of cash flow optimization but should be monitored to balance supplier relationships.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 6.35 | 5.72 | 5.11 | 4.58 | 4.80 |
| Total asset turnover | 0.50 | 0.44 | 0.41 | 0.40 | 0.42 |
Westinghouse Air Brake Technologies Corp has shown an improving trend in its fixed asset turnover ratio over the past five years, indicating that the company is generating more revenue from its fixed assets. The fixed asset turnover ratio increased from 4.95 in 2019 to 6.52 in 2023, which suggests that the company is utilizing its fixed assets more efficiently to generate sales.
In contrast, the total asset turnover ratio has fluctuated over the same period, but remained relatively low. This indicates that Westinghouse Air Brake Technologies Corp is generating less revenue relative to its total assets. The total asset turnover ratio stood at 0.51 in 2023, up from 0.43 in 2019, but it remains comparatively lower than the fixed asset turnover ratio.
Overall, while the company has shown improvements in generating revenue from its fixed assets, there seems to be room for further efficiency in utilizing its total assets to generate sales. Management may want to evaluate strategies to improve the overall asset turnover to enhance the company's operational efficiency and profitability.