Watsco Inc (WSO)
Payables turnover
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cost of revenue (ttm) | US$ in thousands | 5,291,620 | 5,250,510 | 5,175,560 | 5,273,320 | 5,244,050 | 5,196,130 | 5,011,080 | 4,844,560 | 4,612,647 | 4,385,369 | 4,248,379 | 3,912,869 | 3,832,113 | 3,771,435 | 3,668,745 | 3,676,425 | 3,613,402 | 3,543,290 | 3,460,068 | 3,428,178 |
| Payables | US$ in thousands | 369,396 | 509,308 | 602,462 | 593,148 | 456,128 | 474,268 | 625,962 | 462,569 | 364,185 | 454,498 | 490,921 | 384,109 | 251,553 | 352,694 | 377,445 | 311,586 | 239,666 | 311,317 | 356,062 | 278,634 |
| Payables turnover | 14.33 | 10.31 | 8.59 | 8.89 | 11.50 | 10.96 | 8.01 | 10.47 | 12.67 | 9.65 | 8.65 | 10.19 | 15.23 | 10.69 | 9.72 | 11.80 | 15.08 | 11.38 | 9.72 | 12.30 |
December 31, 2023 calculation
Payables turnover = Cost of revenue (ttm) ÷ Payables
= $5,291,620K ÷ $369,396K
= 14.33
The payables turnover ratio is a financial metric that assesses how efficiently a company manages its accounts payable by measuring how many times, on average, a company pays off its suppliers during a specific period. A higher payables turnover ratio indicates that the company is paying its suppliers more frequently, which could indicate strong liquidity and good relationships with suppliers.
Analyzing Watsco Inc.'s payables turnover ratio over the past eight quarters, we observe fluctuations in the ratio. In Q4 2023, the payables turnover ratio was notably high at 14.33, indicating that Watsco Inc. paid off its suppliers approximately 14.33 times during that quarter. This could suggest that the company efficiently manages its payables and has a good relationship with its suppliers.
Comparing this to the previous quarters, we see that the payables turnover ratio varied between 8.01 and 11.50, with Q1 2022 showing the lowest turnover ratio of 8.01. This implies that during Q1 2022, Watsco Inc. took longer to pay off its suppliers compared to the other quarters in 2022.
Overall, an increasing trend in the payables turnover ratio can indicate more efficient management of accounts payable and stronger working capital management. However, it is essential to consider industry benchmarks and company-specific factors when interpreting this ratio in isolation. Further analysis and comparison with industry peers would provide a more comprehensive understanding of Watsco Inc.'s payables turnover performance.