Waste Management Inc (WM)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 78.17 | 87.12 | 88.56 | 98.11 | 91.58 |
| Receivables turnover | 6.01 | 6.93 | 7.01 | 6.81 | 5.60 |
| Payables turnover | 7.87 | 8.82 | 8.22 | 9.63 | 10.13 |
| Working capital turnover | — | — | — | — | — |
Based on the provided data for Waste Management Inc's activity ratios:
1. Inventory Turnover:
- Waste Management Inc's inventory turnover has been fluctuating over the years, ranging from a high of 98.11 in 2021 to a low of 78.17 in 2024. This indicates the company's efficiency in managing and selling its inventory. An increase in inventory turnover is generally seen as a positive sign as it shows that the company is selling its products more frequently.
2. Receivables Turnover:
- The receivables turnover ratio for Waste Management Inc has also shown variability, with values ranging from 5.60 in 2020 to 6.93 in 2023. A higher turnover ratio suggests that the company is efficient in collecting its receivables, which is important for maintaining healthy cash flows.
3. Payables Turnover:
- Waste Management Inc's payables turnover ratio has been declining over the years, indicating a decrease in the frequency with which the company pays its suppliers. This could suggest changes in the company's payment terms with its suppliers or changes in its purchasing patterns.
4. Working Capital Turnover:
- The data provided does not include information on Waste Management Inc's working capital turnover, making it difficult to assess the company's efficiency in utilizing its working capital to generate sales revenue. Working capital turnover is a measure of how effectively a company is using its working capital to support its operations.
Overall, the analysis of these activity ratios provides insights into Waste Management Inc's management of its inventory, receivables, and payables, which are crucial components of its operational efficiency and financial performance. Monitoring these ratios over time can help assess the company's financial health and efficiency in managing its resources.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 4.67 | 4.19 | 4.12 | 3.72 | 3.99 |
| Days of sales outstanding (DSO) | days | 60.73 | 52.70 | 52.06 | 53.57 | 65.15 |
| Number of days of payables | days | 46.38 | 41.39 | 44.38 | 37.89 | 36.03 |
Activity ratios are important tools used to measure how effectively a company manages its resources in generating sales and cash inflows. Let's analyze the activity ratios of Waste Management Inc based on the provided data:
1. Days of Inventory on Hand (DOH):
- Waste Management Inc had 3.99 days of inventory on hand as of December 31, 2020, which decreased to 3.72 days by December 31, 2021. The DOH then increased to 4.12 days by December 31, 2022, 4.19 days by December 31, 2023, and further to 4.67 days by December 31, 2024. This indicates a general trend of increasing inventory holding periods over the years.
2. Days of Sales Outstanding (DSO):
- The company had 65.15 days of sales outstanding as of December 31, 2020, which decreased to 53.57 days by December 31, 2021. DSO continued to improve to 52.06 days by December 31, 2022 and 52.70 days by December 31, 2023, before slightly increasing to 60.73 days by December 31, 2024. The decreasing trend in DSO indicates improved efficiency in collecting sales revenue from customers.
3. Number of Days of Payables:
- Waste Management Inc had 36.03 days of payables as of December 31, 2020, which increased to 37.89 days by December 31, 2021. The number of days of payables further increased to 44.38 days by December 31, 2022, decreased to 41.39 days by December 31, 2023, and then increased again to 46.38 days by December 31, 2024. This suggests a fluctuating trend in the company's payment cycles to its suppliers.
Overall, the trend in Waste Management Inc's activity ratios shows fluctuations in inventory management, improving efficiency in collecting sales revenue, and varying payment cycles to suppliers over the years. Monitoring these ratios can help assess the company's operational effectiveness and working capital management.
See also:
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 0.52 | 0.50 | 0.52 | 0.50 | 0.44 |
| Total asset turnover | 0.50 | 0.61 | 0.62 | 0.60 | 0.50 |
Waste Management Inc's fixed asset turnover has shown a consistent improvement over the years, increasing from 0.44 in 2020 to 0.52 in 2024. This indicates that Waste Management Inc is generating more revenue from its fixed assets.
In terms of total asset turnover, Waste Management Inc experienced fluctuations in this ratio during the period under review. It increased from 0.50 in 2020 to 0.62 in 2022, but then decreased slightly to 0.50 in 2024.
Overall, both the fixed asset turnover and total asset turnover ratios suggest that Waste Management Inc has been efficiently utilizing its assets to generate sales, with a gradual improvement in fixed asset turnover and some variability in total asset turnover over the years.