Watts Water Technologies Inc (WTS)
Payables turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cost of revenue | US$ in thousands | 1,721,400 | 1,680,600 | 1,584,800 | 1,342,200 | 1,420,200 |
| Payables | US$ in thousands | 131,800 | 134,300 | 143,400 | 110,100 | 123,300 |
| Payables turnover | 13.06 | 12.51 | 11.05 | 12.19 | 11.52 |
December 31, 2023 calculation
Payables turnover = Cost of revenue ÷ Payables
= $1,721,400K ÷ $131,800K
= 13.06
The payables turnover ratio for Watts Water Technologies, Inc. has shown a fluctuating trend over the past five years. The ratio increased from 7.49 in 2019 to 8.31 in 2023, indicating that the company is generating revenue at a faster pace relative to its accounts payable. This suggests that the company is efficiently managing its accounts payable by paying off suppliers in a timely manner while maximizing sales.
However, it is important to note that there was a slight dip in the payables turnover ratio in 2021 to 7.27, which could indicate a potential delay in paying suppliers during that period. This could potentially strain supplier relationships if not managed effectively.
Overall, the increasing trend in the payables turnover ratio from 2019 to 2023 reflects positively on the company's ability to efficiently manage its payables and indicates a strong performance in terms of cash flow management and liquidity. Further analysis of the underlying reasons for the fluctuations in the ratio would provide insights into the company's working capital management strategies.
Peer comparison
Dec 31, 2023