Watsco Inc (WSO)
Working capital 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue (ttm) | US$ in thousands | 7,283,760 | 7,261,780 | 7,170,740 | 7,301,420 | 7,274,350 | 7,204,990 | 6,951,760 | 6,667,640 | 6,280,190 | 5,923,050 | 5,677,150 | 5,182,890 | 5,054,930 | 4,972,530 | 4,830,780 | 4,847,250 | 4,770,368 | 4,689,374 | 4,590,464 | 4,551,354 |
| Total current assets | US$ in thousands | 2,391,930 | 2,730,570 | 2,882,570 | 2,597,820 | 2,298,740 | 2,409,880 | 2,623,930 | 2,320,130 | 1,961,400 | 1,980,860 | 2,022,060 | 1,695,360 | 1,484,440 | 1,644,120 | 1,631,470 | 1,590,380 | 1,546,730 | 1,690,830 | 1,695,090 | 1,490,380 |
| Total current liabilities | US$ in thousands | 712,012 | 887,628 | 955,999 | 953,083 | 906,522 | 939,522 | 1,061,340 | 836,839 | 726,722 | 796,693 | 815,264 | 630,820 | 487,145 | 609,498 | 638,858 | 520,474 | 461,717 | 542,288 | 580,518 | 469,773 |
| Working capital turnover | 4.34 | 3.94 | 3.72 | 4.44 | 5.23 | 4.90 | 4.45 | 4.50 | 5.09 | 5.00 | 4.70 | 4.87 | 5.07 | 4.81 | 4.87 | 4.53 | 4.40 | 4.08 | 4.12 | 4.46 |
December 31, 2023 calculation
Working capital turnover = Revenue (ttm) ÷ (Total current assets – Total current liabilities)
= $7,283,760K ÷ ($2,391,930K – $712,012K)
= 4.34
Working capital turnover is a financial ratio that measures how efficiently a company is utilizing its working capital to generate sales revenue. A higher working capital turnover ratio indicates that the company is efficiently managing its working capital to generate sales.
Analyzing the working capital turnover of Watsco Inc. over the past eight quarters, we observe fluctuations in the ratio. In Q4 2023, the working capital turnover ratio was 4.34, reflecting a slight decrease from the previous quarter. Despite this decrease, the company's working capital turnover remains relatively strong, indicating efficient utilization of working capital to generate sales.
Looking at the trend over the past year, Watsco Inc. has maintained a consistently high working capital turnover ratio, with values ranging from 3.72 to 5.23. This suggests that the company has been effectively managing its working capital to support its sales operations.
Overall, Watsco Inc.'s working capital turnover ratio highlights the company's ability to efficiently convert its working capital into sales revenue. However, it is essential for the company to continue monitoring and managing its working capital effectively to sustain its operational efficiency and financial performance.