XPO Logistics Inc (XPO)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | — | 361.47 | 414.62 | — | — |
| Receivables turnover | 7.96 | 8.09 | 3.42 | 2.14 | 4.27 |
| Payables turnover | 7.30 | 11.79 | 20.77 | 12.72 | 9.48 |
| Working capital turnover | 2,581.33 | 62.75 | 51.81 | 28.42 | 127.15 |
Based on the provided data, we can analyze the activity ratios of XPO Inc over the five-year period as follows:
1. Receivables Turnover:
- The receivables turnover ratio measures how efficiently a company manages its accounts receivable by indicating how many times a company collects its average accounts receivable balance during a period.
- XPO Inc's receivables turnover has fluctuated over the five years, ranging from a low of 5.63 in 2020 to a high of 8.09 in 2022.
- A higher receivables turnover ratio indicates that XPO Inc is collecting its receivables more quickly, which is generally favorable as it signifies better liquidity and efficiency in managing its credit sales.
2. Payables Turnover:
- The payables turnover ratio evaluates how efficiently a company pays its suppliers by measuring how many times a company pays off its average accounts payable balance during a period.
- XPO Inc's payables turnover has also varied significantly over the years, with a peak of 9.49 in 2022 and a low of 3.31 in the most recent year, 2023.
- A higher payables turnover ratio suggests that XPO Inc is paying its suppliers more quickly, potentially improving relationships with suppliers and managing working capital more effectively.
3. Working Capital Turnover:
- The working capital turnover ratio indicates how efficiently a company is using its working capital to generate sales revenue.
- XPO Inc's working capital turnover has shown considerable fluctuations, with a notable increase in 2023 to 2,581.33 from much lower values in the previous years.
- A higher working capital turnover ratio generally signifies that XPO Inc is generating more revenue per unit of working capital, demonstrating improved efficiency in utilizing its resources to drive sales.
In summary, XPO Inc's activity ratios reflect varying levels of efficiency in managing its receivables, payables, and working capital over the years. The company's performance in these areas can have implications for its liquidity, cash flow management, and overall operational effectiveness. A closer examination of the trends in these ratios can provide insights into XPO Inc's financial health and management of its working capital cycle.
Average number of days
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | 1.01 | 0.88 | — | — |
| Days of sales outstanding (DSO) | days | 45.86 | 45.12 | 106.68 | 170.78 | 85.43 |
| Number of days of payables | days | 49.98 | 30.95 | 17.57 | 28.68 | 38.52 |
Days of inventory on hand (DOH) is not provided in the table for XPO Inc across the years. This ratio measures how many days, on average, inventory is held before being sold or used in the production process. Without this data, we are unable to assess how efficiently XPO manages its inventory levels.
Days of sales outstanding (DSO) for XPO Inc has been relatively consistent over the years. DSO measures how many days, on average, it takes for the company to collect its accounts receivable. A lower DSO indicates faster collection of receivables, which implies better liquidity and cash flow management. The decrease in DSO from 2020 to 2021 is a positive sign, indicating improved efficiency in collecting payments from customers.
Number of days of payables for XPO Inc has varied significantly over the years, with a considerable increase in 2023 compared to the previous years. This ratio reflects how long, on average, the company takes to pay its suppliers. A higher number of days of payables can sometimes indicate a strategic delay in payment to suppliers, which can help improve cash flow and liquidity. However, an excessively high number of days of payables may strain relationships with suppliers.
Overall, the DSO and number of days of payables ratios suggest that XPO Inc has been managing its receivables and payables effectively, at least until the increase in days of payables in 2023, which may require further monitoring to ensure it does not affect relationships with suppliers.
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 2.52 | 4.21 | 4.30 | 3.26 | 3.95 |
| Total asset turnover | 1.03 | 1.23 | 0.83 | 0.38 | 0.76 |
XPO Inc's fixed asset turnover has experienced a declining trend over the past five years, decreasing from 6.16 in 2019 to 2.52 in 2023. This indicates that the company is generating less revenue relative to its investment in fixed assets. However, the fixed asset turnover ratio is still above 1, suggesting that the company is effectively utilizing its fixed assets to generate sales.
In contrast, the total asset turnover ratio also shows a fluctuating pattern but has generally improved over the period. It increased from 1.18 in 2019 to 1.47 in 2021, showcasing that XPO Inc has been more efficient in generating revenue relative to its total assets. However, the ratio slightly declined to 1.03 in 2023, which may indicate a decrease in the company's overall efficiency in utilizing its total assets to generate sales.
In conclusion, despite the decline in the fixed asset turnover ratio, XPO Inc has shown improvements in its total asset turnover ratio over the years, indicating moderate operational efficiency in utilizing its assets to generate revenue.