Whirlpool Corporation (WHR)

Short-term

Turnover ratios

Inventory turnover measures how effectively a company is managing its inventory by showing how many times the inventory is sold and replaced within a specific period. For Whirlpool Corp., the inventory turnover ratio has been relatively consistent over the past five years, ranging from 6.47 to 7.97, with a higher ratio indicating efficient inventory management.

Receivables turnover reflects how quickly a company collects payment from its customers. Whirlpool Corp.'s receivables turnover has shown improvement over the years, increasing from 6.26 in 2020 to 12.72 in 2023, indicating that the company is collecting payments more efficiently.

Payables turnover measures how quickly a company pays its suppliers. Whirlpool Corp.'s payables turnover ratio has fluctuated but remained fairly stable over the years, ranging from 3.23 to 4.93, with a higher ratio indicating that the company is taking longer to pay its suppliers.

Working capital turnover, which is not provided for all years, indicates how effectively a company utilizes its working capital to generate sales. The significant fluctuation in this ratio for Whirlpool Corp. suggests changing efficiency in utilizing its working capital over the years.

Overall, analyzing these activity ratios gives insight into Whirlpool Corp.'s operational efficiency in managing its inventory, collecting receivables, and paying its suppliers.

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Average number of days

Let's analyze Whirlpool Corp.'s activity ratios based on the provided data.

1. Days of Inventory on Hand (DOH):
- The trend for DOH shows fluctuation over the years, ranging from a low of 45.79 days in 2022 to a high of 56.42 days in 2021.
- A lower DOH indicates that the company is selling inventory more quickly, which can be positive for cash flow.
- Whirlpool Corp. should aim to manage its inventory efficiently to avoid unnecessary carrying costs and potential obsolescence.

2. Days of Sales Outstanding (DSO):
- The DSO has varied significantly over the past five years, with a considerable decrease from 58.33 days in 2020 to 28.69 days in 2023.
- A lower DSO implies that the company is collecting receivables faster, enhancing cash flow and liquidity.
- Whirlpool Corp. seems to have improved its credit collection process, which could be a positive sign of efficient management of accounts receivable.

3. Number of Days of Payables:
- The number of days of payables has fluctuated over the years, with a high of 113.06 days in 2020 and a low of 74.00 days in 2022.
- A higher number of days of payables suggests that the company is taking longer to pay its suppliers, which can have advantages in terms of cash flow management.
- However, excessively extending payables could strain relationships with suppliers in the long run.

In conclusion, Whirlpool Corp. should continually assess and optimize its activity ratios to enhance operational efficiency, maximize cash flow, and maintain healthy supplier relationships. Efforts to streamline inventory management, accelerate receivables collection, and balance payable terms can contribute to the company's overall financial health and stability.

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Long-term

Analyzing Whirlpool Corp.'s long-term activity ratios, we observe a fluctuating trend in both the fixed asset turnover and total asset turnover over the past five years.

The fixed asset turnover ratio indicates that Whirlpool Corp. generated $8.71 in revenue for every dollar invested in fixed assets in 2023, compared to $9.38 in 2022. The decreasing trend in fixed asset turnover suggests a potential decrease in efficiency in generating sales from fixed assets. However, it is essential to note that the ratio remains relatively high, signaling that the company is still effectively utilizing its fixed assets to generate revenue.

On the other hand, the total asset turnover ratio reflects how efficiently Whirlpool Corp. is utilizing all its assets to generate sales. The ratio has fluctuated over the years, with a slight increase from 1.08 in 2021 to 1.12 in 2023. This indicates that the company generated $1.12 in revenue for every dollar invested in total assets in 2023. The upward trend in total asset turnover suggests an improvement in overall asset utilization efficiency, which is a positive indicator of the company's operational performance.

Overall, while Whirlpool Corp. has shown variability in its long-term activity ratios, the relatively high fixed asset turnover and the improving total asset turnover demonstrate effective asset management and operational efficiency in utilizing its assets to generate revenue.