Watsco Inc (WSO)
Total asset turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 7,283,770 | 7,274,340 | 6,280,190 | 5,054,930 | 4,770,360 |
| Total assets | US$ in thousands | 3,729,180 | 3,488,210 | 3,085,860 | 2,484,350 | 2,556,160 |
| Total asset turnover | 1.95 | 2.09 | 2.04 | 2.03 | 1.87 |
December 31, 2023 calculation
Total asset turnover = Revenue ÷ Total assets
= $7,283,770K ÷ $3,729,180K
= 1.95
The total asset turnover ratio for Watsco Inc. has shown some fluctuation over the past five years. The ratio was 1.87 in 2019, increased to 2.03 in 2020, further increased to 2.04 in 2021, slightly declined to 2.09 in 2022, and then decreased again to 1.95 in 2023.
A total asset turnover ratio of above 1 indicates that Watsco Inc. generates more in sales revenue relative to its total assets. This implies that the company efficiently utilizes its assets to generate sales.
Although there have been fluctuations in the ratio over the years, it has generally remained above 1, suggesting that Watsco Inc. effectively leverages its assets to generate revenue. However, the recent decline in the total asset turnover ratio in 2023 may warrant further investigation to understand the underlying reasons and assess the potential impact on the company's operational efficiency and profitability.