WESCO International Inc (WCC)

Short-term

Turnover ratios

The activity ratios of Wesco International, Inc. provide insights into the company's efficiency in managing its resources and operations.

Firstly, the inventory turnover ratio indicates how many times a company's inventory is sold and replaced within a given period. Wesco International, Inc.'s inventory turnover has been fluctuating over the past five years, with a range of 4.62 to 6.70. A higher inventory turnover ratio is generally better as it suggests that the company is selling its inventory quickly and efficiently.

Secondly, the receivables turnover ratio reflects how effectively the company is collecting on its credit sales. Wesco's receivables turnover has also varied, ranging from 4.55 to 6.42. A higher receivables turnover implies that the company is collecting its receivables more frequently, which is favorable for cash flow.

Next, the payables turnover ratio shows how a company is managing its payments to suppliers. Wesco's payables turnover has fluctuated between 5.86 and 8.16, indicating changes in the company's payment practices over the years. A higher payables turnover ratio means that the company is paying its suppliers more quickly, which can impact relationships with vendors.

Lastly, the working capital turnover ratio measures how efficiently a company utilizes its working capital to generate sales. Wesco's working capital turnover has ranged from 4.47 to 5.74, reflecting the company's ability to generate sales relative to its working capital levels. A higher working capital turnover ratio signifies that the company is effectively using its resources to drive revenue.

In summary, analyzing Wesco International, Inc.'s activity ratios provides valuable insights into the company's operational efficiency, inventory management, accounts receivable collection, payment practices, and overall working capital utilization. Monitoring these ratios over time can help stakeholders assess the company's performance and identify areas for improvement.

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Average number of days

Activity ratios provide insight into how efficiently a company manages its assets and liabilities to generate sales. Let's analyze the activity ratios of Wesco International, Inc. based on the provided data:

1. Days of Inventory on Hand (DOH):
- The company's DOH has fluctuated over the years, ranging from 54.48 days in 2019 to 76.20 days in 2022.
- A higher DOH indicates that the company is holding inventory for a longer period, which may tie up capital and increase carrying costs.
- The decreasing trend from 2020 to 2021 suggests that Wesco International may have improved its inventory management efficiency during this period.

2. Days of Sales Outstanding (DSO):
- Wesco International's DSO has ranged from 56.84 days in 2019 to 80.13 days in 2020.
- A lower DSO indicates that the company is collecting accounts receivable more quickly, converting sales into cash faster.
- The fluctuating DSO over the years implies varying effectiveness in collecting payment from customers within the industry standard time frames.

3. Number of Days of Payables:
- The days of payables for Wesco International have fluctuated between 44.73 days in 2019 and 59.42 days in 2022.
- A higher number of days of payables suggests that the company is taking longer to pay its suppliers, potentially improving cash flow in the short term.
- The trend indicates changes in the company's payment terms and relationship with suppliers over the years.

Overall, a careful analysis of these activity ratios provides valuable insights into Wesco International's inventory management, accounts receivable collection efficiency, and payment practices, highlighting areas where the company may need to focus on to optimize its working capital management.

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Long-term

The long-term activity ratios of Wesco International, Inc. provide insights into the efficiency with which the company utilizes its fixed assets and total assets to generate sales over the years.

1. Fixed Asset Turnover:
Fixed asset turnover measures how efficiently a company utilizes its fixed assets to generate revenue. Wesco International, Inc. has exhibited a fluctuating trend in fixed asset turnover over the past five years. The ratio has ranged from a low of 30.88 in 2020 to a high of 53.19 in 2022. This indicates that the company's ability to generate sales from its fixed assets improved significantly in 2022 compared to prior years, with a slight decline in 2023. Overall, the high values suggest that Wesco International has been effectively leveraging its fixed assets to drive revenue, although some variability is seen across the years.

2. Total Asset Turnover:
Total asset turnover reflects the efficiency with which a company uses all its assets to generate sales. Wesco International's total asset turnover has shown a relatively stable pattern over the years, ranging from 1.04 in 2020 to 1.67 in 2019. A total asset turnover ratio above 1 implies that the company generates more in sales than the total assets it holds, indicating efficient asset utilization. Wesco International's ability to generate sales in relation to its total assets has been consistent, although the ratio peaked in 2019 before slightly declining in the subsequent years.

In conclusion, Wesco International, Inc. has demonstrated varying levels of efficiency in utilizing its fixed assets and total assets to generate revenue over the past five years. The company's fixed asset turnover has shown more fluctuation, while its total asset turnover has remained relatively stable. Overall, these ratios suggest that Wesco International has been effectively managing its asset base to drive sales, with room for improvement in optimizing the utilization of fixed assets.