Watsco Inc (WSO)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 4.02 | 3.93 | 3.83 | 4.14 | 4.83 |
| Receivables turnover | — | — | — | — | — |
| Payables turnover | — | — | — | — | — |
| Working capital turnover | 3.63 | 4.34 | 5.23 | 5.09 | 5.07 |
Watsco Inc's inventory turnover ratio has been decreasing slightly over the years, from 4.83 in 2020 to 4.02 in 2024. This indicates that the company is selling its inventory at a slightly slower rate.
The receivables turnover ratio data is not provided for any of the years, which makes it difficult to assess how quickly the company is collecting payments from its customers.
Similarly, payables turnover data is not available, making it challenging to evaluate how efficiently the company is paying its suppliers.
The working capital turnover ratio has decreased from 5.07 in 2020 to 3.63 in 2024. This indicates a decline in the company's efficiency in generating revenue from its working capital. It suggests that the company may be facing challenges in utilizing its working capital effectively to drive sales and operations.
Overall, Watsco Inc's activity ratios give an indication of its operational efficiency, but a more comprehensive analysis would require additional information on the company's accounts receivable and accounts payable management.
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 | 90.73 | 92.93 | 95.37 | 88.27 | 75.61 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | — | — | — | — | — |
Watsco Inc's activity ratios show the efficiency of the company in managing its inventory, receivables, and payables.
1. Days of Inventory on Hand (DOH):
- The Days of Inventory on Hand increased from 75.61 days as of December 31, 2020, to 90.73 days as of December 31, 2024. This indicates that Watsco Inc is taking longer to sell its inventory, which could imply either overstocking or slower sales.
2. Days of Sales Outstanding (DSO):
- The data does not provide information on Days of Sales Outstanding for Watsco Inc, which would have shown how long it takes the company to collect payments from its customers. Without this data, it is difficult to assess the efficiency of the company's accounts receivable management.
3. Number of Days of Payables:
- Similarly, the data does not include the number of Days of Payables, which could have highlighted how long Watsco Inc takes to pay its suppliers. Understanding this metric is crucial in assessing the company's cash management practices and relationships with suppliers.
Overall, while the information on Days of Inventory on Hand indicates potential concerns with inventory management, the lack of data on Days of Sales Outstanding and Number of Days of Payables limits a comprehensive evaluation of Watsco Inc's overall activity ratios and efficiency in managing its working capital.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | — | — | 16.43 | 56.57 | 51.46 |
| Total asset turnover | 1.70 | 1.95 | 2.09 | 2.04 | 2.02 |
Based on the provided data, Watsco Inc's long-term activity ratios show some interesting trends:
1. Fixed Asset Turnover: The fixed asset turnover ratio indicates how efficiently the company generates sales using its fixed assets. The trend for Watsco Inc indicates an increase from 51.46 in 2020 to 56.57 in 2021, signifying an improvement in utilizing fixed assets to generate revenue. However, there is a noticeable decline in the ratio to 16.43 in 2022, which warrants further investigation into potential reasons for this significant drop. Unfortunately, data for 2023 and 2024 is not available for a comprehensive analysis.
2. Total Asset Turnover: The total asset turnover ratio measures how effectively a company utilizes all its assets to generate revenue. Watsco Inc's total asset turnover has been relatively stable, showing a slight increase from 2.02 in 2020 to 2.04 in 2021 and further to 2.09 in 2022. However, there is a slight decline to 1.95 in 2023 and a more noticeable drop to 1.70 in 2024. This decline could indicate potential issues in efficiently utilizing all assets to generate sales.
In conclusion, Watsco Inc's fixed asset turnover initially improved but then significantly declined in 2022, warranting further investigation into the company's management of fixed assets. The total asset turnover remained relatively steady, with a slight decline in 2023 and a more pronounced drop in 2024, suggesting a potential inefficiency in utilizing all assets effectively to drive sales.