Whirlpool Corporation (WHR)

Short-term

Turnover ratios

The activity ratios of Whirlpool Corp. provide insights into the efficiency of the company's operations related to inventory management, accounts receivable collection, accounts payable management, and working capital efficiency.

1. Inventory Turnover: The inventory turnover ratio measures how many times a company's inventory is sold and replaced over a period. Whirlpool Corp. has shown a consistent inventory turnover rate ranging from 5.41 to 7.97 over the past eight quarters, with an average around 6.76. This indicates that the company is efficiently managing its inventory levels to meet demand and minimize holding costs.

2. Receivables Turnover: The receivables turnover ratio indicates how efficiently a company collects its accounts receivable. Whirlpool Corp. has shown a fluctuating but generally improving trend in receivables turnover, with values ranging from 7.53 to 12.72 over the past eight quarters. This suggests that the company is becoming more effective in collecting payments from its customers.

3. Payables Turnover: The payables turnover ratio measures how efficiently a company pays its suppliers. Whirlpool Corp. has a relatively stable payables turnover ratio, ranging from 3.31 to 4.93 over the past eight quarters. A higher payables turnover ratio indicates that the company is taking longer to pay its suppliers, potentially benefiting from longer payment terms.

4. Working Capital Turnover: The working capital turnover ratio evaluates how effectively a company utilizes its working capital to generate sales. Whirlpool Corp. has shown a significant increase in working capital turnover, from 18.57 to 172.15 over the past eight quarters. This sharp rise indicates a more efficient utilization of working capital to drive revenue growth.

In summary, Whirlpool Corp. has demonstrated efficient inventory management, improving accounts receivable collection, stable accounts payable management, and a significant enhancement in working capital turnover. These trends suggest that the company is effectively managing its resources and generating sales, which is a positive signal for its operational efficiency.

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Average number of days

Based on the provided data on Whirlpool Corp.'s activity ratios, we can analyze the efficiency of the company's operations.

1. Days of Inventory on Hand (DOH): This ratio measures how many days, on average, it takes for Whirlpool to sell its inventory. The trend shows a fluctuating pattern over the past eight quarters, with the number of days of inventory on hand ranging from a low of 45.79 days in Q4 2022 to a high of 67.50 days in Q3 2022. Overall, the company seems to have managed its inventory efficiently with a relatively stable number of days on hand.

2. Days of Sales Outstanding (DSO): This ratio indicates the average number of days it takes for Whirlpool to collect its accounts receivable. The trend shows fluctuations from quarter to quarter, with the number of days of sales outstanding ranging from a low of 28.69 days in Q4 2023 to a high of 48.45 days in Q1 2022. Whirlpool should focus on improving its collection process to reduce the number of days outstanding.

3. Number of Days of Payables: This ratio measures the average number of days it takes for Whirlpool to pay its suppliers. The trend shows some variability, with the number of days of payables ranging from a low of 74.00 days in Q4 2022 to a high of 110.16 days in Q1 2022. Whirlpool should aim to optimize its payment terms with suppliers to maintain a balanced cash flow.

In summary, Whirlpool Corp. has shown relatively consistent efficiency in managing its inventory levels but may need to focus on improving its accounts receivable collection process to minimize days outstanding. The company should also evaluate its payment terms with suppliers to optimize cash flow management.

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Long-term

The fixed asset turnover ratio for Whirlpool Corp. has been relatively stable over the past eight quarters, ranging from 7.80 to 9.38. This indicates that during this period, the company generated between $7.80 and $9.38 in sales revenue for every dollar invested in fixed assets. The higher fixed asset turnover ratios suggest that Whirlpool has been efficient in utilizing its fixed assets to generate sales.

On the other hand, the total asset turnover ratio for Whirlpool has fluctuated between 1.11 and 1.18 over the same period. This ratio indicates that for every dollar of total assets, the company generated between $1.11 and $1.18 in sales revenue. The variations in the total asset turnover ratio may reflect changes in the company's sales volume relative to its total asset base.

Overall, the fixed asset turnover ratios suggest that Whirlpool has been effectively utilizing its fixed assets to generate sales revenue, while the total asset turnover ratios indicate fluctuations in the efficiency of the company's overall asset utilization over the past eight quarters. It would be important to further investigate the reasons behind these fluctuations to better understand the company's long-term activity performance.