Xylem Inc (XYL)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Inventory turnover | 5.37 | 4.56 | 4.30 | 4.60 | 5.46 |
| Receivables turnover | 5.13 | 4.55 | 5.04 | 5.45 | 5.28 |
| Payables turnover | 5.32 | 4.80 | 4.76 | 5.04 | 5.35 |
| Working capital turnover | 4.86 | 4.39 | 3.88 | 2.94 | 3.11 |
Based on the provided data for Xylem Inc's activity ratios, we can observe the following trends:
1. Inventory Turnover:
- The inventory turnover ratio measures how efficiently the company manages its inventory. Xylem's inventory turnover decreased from 5.46 in 2020 to 4.30 in 2022 before slightly increasing to 5.37 in 2024. This indicates that the company took longer to sell its inventory in 2022 compared to 2020 but improved in 2024.
2. Receivables Turnover:
- The receivables turnover ratio reflects how quickly the company collects payments from its customers. Xylem's receivables turnover remained relatively stable, ranging from 4.55 in 2023 to 5.45 in 2021. This indicates that the company effectively collected payments from its customers during the period.
3. Payables Turnover:
- The payables turnover ratio indicates how quickly a company pays off its suppliers. Xylem's payables turnover decreased from 5.35 in 2020 to 4.76 in 2022 before increasing to 5.32 in 2024. This suggests that the company took longer to pay off its suppliers in 2022 but improved its payment efficiency by 2024.
4. Working Capital Turnover:
- The working capital turnover ratio measures how efficiently a company utilizes its working capital to generate sales. Xylem's working capital turnover ranged from 2.94 in 2021 to 4.86 in 2024, showing an increasing trend over the years. This indicates that the company effectively utilized its working capital to generate sales and improve operational efficiency.
In summary, Xylem Inc showed varying trends in its activity ratios over the years, with fluctuations in inventory turnover and payables turnover, while maintaining stable receivables turnover and improving working capital turnover. Overall, these ratios provide insights into the company's operational efficiency and management of resources.
Average number of days
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 67.95 | 79.96 | 84.83 | 79.35 | 66.86 |
| Days of sales outstanding (DSO) | days | 71.11 | 80.15 | 72.44 | 66.96 | 69.09 |
| Number of days of payables | days | 68.63 | 76.03 | 76.76 | 72.43 | 68.18 |
Activity ratios provide insights into how efficiently a company is managing its assets, specifically in terms of inventory turnover, accounts receivable collection, and accounts payable management. Let's analyze the activity ratios for Xylem Inc based on the given data:
1. Days of Inventory on Hand (DOH):
- In 2020, Xylem had inventory on hand for an average of 66.86 days, indicating that the company was able to sell and replenish its inventory relatively quickly.
- However, there was an increase in DOH over the years, reaching 84.83 days in 2022 before decreasing slightly to 67.95 days in 2024. This suggests a temporary slowdown in inventory turnover in 2022, possibly due to changes in demand or supply chain disruptions.
2. Days of Sales Outstanding (DSO):
- Xylem took an average of 69.09 days to collect its accounts receivable in 2020, which improved to 66.96 days in 2021, indicating effective credit management.
- The DSO increased to 80.15 days in 2023 but then decreased to 71.11 days in 2024. This fluctuation may reflect changes in customer payment behavior or credit policies.
3. Number of Days of Payables:
- Xylem had an average payment period of 68.18 days for its payables in 2020, which increased to 76.76 days in 2022 before declining slightly to 68.63 days in 2024. This indicates that the company took longer to pay its suppliers over the years.
- A longer payment period could signify better cash flow management but may also strain supplier relationships if not managed carefully.
Overall, analyzing Xylem Inc's activity ratios suggests changes in inventory management, accounts receivable collection, and payable periods over the years. Monitoring these ratios can help evaluate the company's operational efficiency and effectiveness in managing working capital.
Long-term
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 7.43 | 6.30 | 8.77 | 8.07 | 7.42 |
| Total asset turnover | 0.52 | 0.46 | 0.69 | 0.63 | 0.56 |
Xylem Inc's long-term activity ratios demonstrate its efficiency in utilizing fixed assets to generate sales revenue over the years. The Fixed Asset Turnover ratio has shown a consistent increasing trend from 7.42 in 2020 to 7.43 in 2024. This indicates that Xylem has been able to generate more sales revenue per dollar invested in fixed assets, reflecting operational efficiency and effective asset management.
In contrast, the Total Asset Turnover ratio has fluctuated over the same period, decreasing from 0.56 in 2020 to 0.52 in 2024. This suggests that Xylem's overall efficiency in generating sales revenue from all assets has decreased slightly. However, it is important to note that this ratio is influenced by factors beyond fixed assets alone, such as current assets.
Overall, the increasing trend in Fixed Asset Turnover implies that Xylem has been successful in maximizing the use of its fixed assets to drive sales, while the fluctuation in Total Asset Turnover indicates the need to further evaluate the company's overall asset utilization efficiency.