Analysis of Long-term (Investment) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
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Long-term Activity Ratios (Summary)
Eaton Corp. plc, long-term (investment) activity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Net fixed asset turnover | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset) | ||||||
| Total asset turnover | ||||||
| Equity turnover |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Net fixed asset turnover
- The net fixed asset turnover ratio shows a generally upward trend over the five-year period. Starting from 6.02 in 2020, it increased steadily to 6.41 in 2021, 6.59 in 2022, slightly decreased to 6.57 in 2023, and then rose again to 6.67 in 2024. This indicates improved efficiency in generating sales from net fixed assets over time, with minor fluctuations observed in the middle years.
- Net fixed asset turnover (including operating lease, right-of-use asset)
- This adjusted ratio also follows a somewhat stable trend but with less pronounced growth compared to the unadjusted net fixed asset turnover. The ratio increased from 5.26 in 2020 to 5.6 in 2021 but then slightly declined to 5.58 in 2022 and continually decreased to 5.55 in 2023 and 5.49 in 2024. This suggests a marginal reduction in efficiency when accounting for operating leases and right-of-use assets, reflecting the impact of leasing arrangements on asset utilization.
- Total asset turnover
- The total asset turnover ratio demonstrates consistent improvement, rising steadily each year from 0.56 in 2020 to 0.65 in 2024. This upward movement signifies increased effectiveness in generating revenues from the company's total asset base, highlighting enhanced asset deployment efficiency throughout the period.
- Equity turnover
- The equity turnover ratio remains relatively stable at around 1.20 to 1.22 from 2020 through 2023, before experiencing a notable increase to 1.35 in 2024. The earlier stability indicates consistent revenue generation relative to shareholders' equity, with the increase in the final year potentially reflecting improved utilization of equity or augmented revenue figures.
Net Fixed Asset Turnover
Eaton Corp. plc, net fixed asset turnover calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | ||||||
| Net property, plant and equipment | ||||||
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | ||||||
| Benchmarks | ||||||
| Net Fixed Asset Turnover, Competitors2 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| Net Fixed Asset Turnover, Sector | ||||||
| Capital Goods | ||||||
| Net Fixed Asset Turnover, Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Net fixed asset turnover = Net sales ÷ Net property, plant and equipment
= ÷ =
2 Click competitor name to see calculations.
- Net Sales Trend
- There is a consistent upward trend in net sales over the five-year period. The figures increased from $17,858 million in 2020 to $24,878 million in 2024, demonstrating steady growth year-over-year. This indicates a positive revenue expansion and market demand growth.
- Net Property, Plant and Equipment
- Net property, plant and equipment values have gradually increased from $2,964 million in 2020 to $3,729 million in 2024. This steady rise suggests ongoing investment in tangible assets, likely supporting operational capacity and production capabilities.
- Net Fixed Asset Turnover Ratio
- The net fixed asset turnover ratio shows a slight overall improvement, rising from 6.02 in 2020 to 6.67 in 2024. The ratio peaked at 6.59 in 2022, experienced a slight dip to 6.57 in 2023, and then increased again. This ratio indicates efficient use of fixed assets to generate sales, with performance consistently above 6 times.
- Overall Insights
- The simultaneous increase in net sales and property assets, combined with a stable or improving fixed asset turnover ratio, suggests that the company has effectively managed asset investments to support sales growth. The consistent growth in sales alongside the asset base expansion indicates balanced capital expenditure and operational scaling without loss of efficiency in asset use.
Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
Eaton Corp. plc, net fixed asset turnover (including operating lease, right-of-use asset) calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | ||||||
| Net property, plant and equipment | ||||||
| Operating lease assets | ||||||
| Net property, plant and equipment (including operating lease, right-of-use asset) | ||||||
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset)1 | ||||||
| Benchmarks | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Competitors2 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Sector | ||||||
| Capital Goods | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Net fixed asset turnover (including operating lease, right-of-use asset) = Net sales ÷ Net property, plant and equipment (including operating lease, right-of-use asset)
= ÷ =
2 Click competitor name to see calculations.
The annual financial data reveal several notable trends and developments over the five-year period. Net sales demonstrate a steady and consistent increase year over year, indicating a positive growth trajectory in revenue generation. This upward trend reflects the company's expanding market presence or improving sales performance.
Net property, plant, and equipment (including operating lease, right-of-use asset) also show a continuous increase during the same period. This suggests ongoing investment in physical assets, potentially to support growing operations or to modernize and expand production capacity. The increment in asset base aligns with the increase in net sales, implying a strategic alignment between asset growth and revenue expansion.
Analyzing the net fixed asset turnover ratio, which measures the efficiency of asset utilization in generating sales, there is a slight fluctuation observed. The ratio rises from 5.26 in 2020 to a peak of 5.6 in 2021, then gradually declines to 5.49 by 2024. This pattern indicates that while asset utilization efficiency improved initially, it has experienced a mild decrease more recently. The decline might suggest that asset growth has somewhat outpaced sales growth in the latter years or that operational efficiency in asset usage has diminished slightly.
- Net Sales
- Displayed consistent growth, rising from $17,858 million in 2020 to $24,878 million in 2024, representing a cumulative increase of approximately 39% over the period.
- Net Property, Plant, and Equipment
- Increased steadily from $3,392 million in 2020 to $4,535 million in 2024, reflecting substantial capital investment and asset accumulation.
- Net Fixed Asset Turnover Ratio
- Peaked in 2021 at 5.6 and gradually decreased to 5.49 by 2024, showing a slight decline in asset efficiency despite overall growth in sales and assets.
In conclusion, the data portray a company experiencing solid sales growth supported by consistent asset investment. However, the slight reduction in fixed asset turnover ratio towards the end of the period suggests a need to closely monitor asset utilization efficiency to ensure continued optimal performance.
Total Asset Turnover
Eaton Corp. plc, total asset turnover calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | ||||||
| Total assets | ||||||
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | ||||||
| Benchmarks | ||||||
| Total Asset Turnover, Competitors2 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| Total Asset Turnover, Sector | ||||||
| Capital Goods | ||||||
| Total Asset Turnover, Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Total asset turnover = Net sales ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
The analysis of the annual financial data reveals several notable trends in key financial metrics over the five-year period from 2020 to 2024.
- Net Sales
- There is a consistent upward trend in net sales, which increased steadily from US$17,858 million in 2020 to US$24,878 million in 2024. This represents robust growth with an approximate cumulative increase of 39% over the period.
- Total Assets
- Total assets also show a rising trend, growing from US$31,824 million in 2020 to US$38,381 million in 2024. The growth in assets appears to be more moderate compared to net sales, with an increase of around 21% over the same span. There is a slight decline noted between 2023 and 2024, where total assets decrease marginally from US$38,432 million to US$38,381 million.
- Total Asset Turnover
- The total asset turnover ratio, which measures efficiency in using assets to generate sales, has improved steadily from 0.56 in 2020 to 0.65 in 2024. This indicates an enhancement in operational efficiency, with the company generating more sales per unit of asset over time. The improvement is gradual and consistent, reflecting better asset utilization despite the growth in asset base.
In summary, the company demonstrates solid sales growth coupled with expanding asset base and improving efficiency in asset utilization. The slight stagnation in asset growth in the most recent year did not hinder the upward trajectory in asset turnover, which could suggest effective asset management or operational optimization going forward.
Equity Turnover
Eaton Corp. plc, equity turnover calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | ||||||
| Total Eaton shareholders’ equity | ||||||
| Long-term Activity Ratio | ||||||
| Equity turnover1 | ||||||
| Benchmarks | ||||||
| Equity Turnover, Competitors2 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| Equity Turnover, Sector | ||||||
| Capital Goods | ||||||
| Equity Turnover, Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Equity turnover = Net sales ÷ Total Eaton shareholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The financial data demonstrates a consistent growth trend in net sales over the five-year period, increasing from $17,858 million in 2020 to $24,878 million in 2024. This steady upward trajectory indicates expanding business operations or improving market conditions contributing to higher revenue generation year over year.
Total Eaton shareholders’ equity also shows overall growth from $14,930 million in 2020 to a peak of $19,036 million in 2023, followed by a slight decline to $18,488 million in 2024. Despite the minor decrease in the final year, the general trend over the years is positive, suggesting a strengthening equity base reflective of retained earnings, capital injections, or asset appreciation.
The equity turnover ratio remains relatively stable from 2020 through 2023, fluctuating marginally between 1.2 and 1.22. However, it increases to 1.35 in 2024. This increase implies an improvement in the efficiency with which equity is utilized to generate sales, signaling enhanced operational performance or more effective asset management in the latest year.
- Net Sales
- Consistently increased annually, indicating growth in revenue and market expansion.
- Total Shareholders’ Equity
- Trend of growth with a peak in 2023, followed by a slight decline in 2024, indicating some fluctuations in retained earnings or capital structure.
- Equity Turnover Ratio
- Steady around 1.2-1.22 initially, with an observable improvement to 1.35 in 2024, suggesting improved efficiency in using equity to generate revenue.