WESCO International Inc (WCC)
Payables turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 20,978,800 | 19,982,000 | 17,415,900 | 11,979,100 | 6,777,460 |
| Payables | US$ in thousands | 2,431,500 | 2,728,200 | 2,140,250 | 1,707,330 | 830,478 |
| Payables turnover | 8.63 | 7.32 | 8.14 | 7.02 | 8.16 |
December 31, 2023 calculation
Payables turnover = Cost of revenue ÷ Payables
= $20,978,800K ÷ $2,431,500K
= 8.63
The payables turnover ratio measures the efficiency with which a company manages its accounts payables by evaluating how many times during a period the company pays off its suppliers. A higher payables turnover ratio indicates that the company is paying its suppliers more frequently.
In the case of Wesco International, Inc., the payables turnover has fluctuated over the past five years. In 2023, the payables turnover ratio was 7.21, an increase from 6.14 in 2022 and 6.74 in 2021. This suggests that in 2023, Wesco International paid its suppliers approximately 7.21 times throughout the year, compared to 6.14 times in the previous year and 6.74 times in 2021.
The upward trend in the payables turnover ratio indicates improved efficiency in managing accounts payables for Wesco International. It shows that the company is able to settle its payables more frequently, which can reflect strong supplier relationships, effective cash flow management, and potentially favorable credit terms negotiated with vendors.
However, it's also crucial to consider the industry norms and company's specific operational and strategic considerations when interpreting the payables turnover ratio. Overall, a rising payables turnover ratio for Wesco International, Inc. could be viewed positively as an indication of effective working capital management and financial health.
Peer comparison
Dec 31, 2023