Watsco Inc (WSO)

Short-term

Turnover ratios

Based on the provided data on Watsco Inc's activity ratios, we can analyze the following:

1. Inventory Turnover: The inventory turnover ratio measures how efficiently a company manages its inventory. Watsco Inc's inventory turnover ratio ranged from 3.22 to 4.83 over the past few years, indicating that the company varies in its ability to turn over its inventory. A higher ratio suggests better efficiency in selling inventory.

2. Receivables Turnover: The receivables turnover ratio, unfortunately, is not available for analysis as the data is not provided for any period. This ratio typically indicates how many times a company collects its accounts receivable in a given time period.

3. Payables Turnover: Similarly, the payables turnover ratio data is not provided, thus limiting our ability to assess how efficiently Watsco Inc pays off its trade payables.

4. Working Capital Turnover: The working capital turnover ratio reflects how efficiently a company generates revenue from its working capital. Watsco Inc's working capital turnover ratio fluctuated between 3.39 to 5.23 during the period under review. A higher working capital turnover ratio suggests better utilization of working capital to generate sales.

In conclusion, while Watsco Inc demonstrates varying levels of efficiency in managing its inventory and working capital, the lack of data on receivables and payables turnover ratios hinders a comprehensive assessment of the company's overall activity efficiency.

---

Average number of days

Based on the provided data on activity ratios for Watsco Inc, let's analyze the Days of Inventory on Hand (DOH) over the past few years. The DOH measures the average number of days that inventory is held before being sold.

Watsco's DOH has fluctuated over the years, ranging from a low of 75.61 days on December 31, 2020, to a high of 119.14 days on June 30, 2023. A higher DOH indicates that inventory is taking longer to sell, which could tie up working capital and potentially lead to increased holding costs.

It's important to note that a significantly high DOH can suggest inefficiencies in inventory management, potentially leading to obsolete stock or missed sales opportunities. Conversely, a high turnover of inventory can indicate stronger sales performance and efficient inventory management.

For a more comprehensive analysis, it would be beneficial to compare Watsco's DOH with industry benchmarks or historical trends to assess the company's effectiveness in managing its inventory levels and optimizing its working capital.

---

Long-term

The fixed asset turnover ratio for Watsco Inc has shown fluctuations over the periods analyzed. It increased steadily from March 31, 2020, to March 31, 2023, indicating that the company was generating more revenue relative to its fixed assets. However, there was a significant drop in the ratio in the subsequent quarters, reaching its lowest point at 14.61 on September 30, 2023, before showing a slight increase in the last reported period of March 31, 2024.

On the other hand, the total asset turnover ratio also experienced some variability. It generally increased from December 31, 2020, to June 30, 2022, suggesting improved efficiency in utilizing total assets to generate sales. The ratio peaked at 2.09 on December 31, 2022. However, it declined in the following quarters, dropping to 1.67 by March 31, 2024.

Overall, while the fixed asset turnover ratio reflects the effectiveness of using fixed assets to generate sales, the total asset turnover ratio indicates how efficiently all assets are being utilized to generate revenue. The fluctuating trends in these ratios suggest changing efficiency levels in asset utilization over the periods analyzed for Watsco Inc.