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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- Statement of Comprehensive Income
- Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Geographic Areas
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Net Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Total Asset Turnover since 2005
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Long-term Activity Ratios (Summary)
Eaton Corp. plc, long-term (investment) activity ratios
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| 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: 2025-12-31), 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).
An analysis of long-term activity ratios reveals generally positive trends in asset utilization over the observed period, though some ratios exhibit recent softening. Overall, the company appears to be becoming more efficient in generating revenue from its asset base, with a slight deceleration in the most recent year.
- Net Fixed Asset Turnover
- The net fixed asset turnover ratio demonstrates a modest increase from 6.41 in 2021 to 6.67 in 2024, indicating improved efficiency in generating sales from fixed assets. However, the ratio decreased to 6.36 in 2025, suggesting a slight decline in this efficiency during the latest year. This could be due to increased investment in fixed assets without a corresponding increase in sales, or a decrease in sales.
- Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)
- The net fixed asset turnover ratio, inclusive of operating leases and right-of-use assets, exhibits a consistent, albeit gradual, downward trend. Starting at 5.60 in 2021, the ratio declined to 5.40 in 2025. This suggests that when considering lease obligations as fixed assets, the efficiency of sales generation is decreasing over time. The magnitude of the decline is relatively small, but the consistent direction is noteworthy.
- Total Asset Turnover
- The total asset turnover ratio shows a clear upward trend, increasing from 0.58 in 2021 to 0.67 in 2025. This indicates that the company is becoming more effective at utilizing all of its assets to generate revenue. The increase is consistent, with a slightly larger jump between 2023 and 2024, and a smaller increase in the final year.
- Equity Turnover
- The equity turnover ratio demonstrates a consistent upward trend, rising from 1.20 in 2021 to 1.41 in 2025. This signifies that the company is generating more revenue for each dollar of equity invested. The rate of increase accelerated in the later years of the period, suggesting improved returns on equity.
In summary, the company generally improved its asset utilization efficiency between 2021 and 2024. While the total asset and equity turnover ratios continued to improve in 2025, the net fixed asset turnover ratio experienced a slight decrease, warranting further investigation.
Net Fixed Asset Turnover
Eaton Corp. plc, net fixed asset turnover calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| 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: 2025-12-31), 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).
1 2025 Calculation
Net fixed asset turnover = Net sales ÷ Net property, plant and equipment
= ÷ =
2 Click competitor name to see calculations.
The net fixed asset turnover ratio exhibits a generally stable pattern over the five-year period, with minor fluctuations. Net sales demonstrate consistent growth annually, while net property, plant, and equipment also increased each year, contributing to the observed ratio behavior.
- Net Fixed Asset Turnover Trend
- The ratio began at 6.41 in 2021 and increased to 6.59 in 2022. A slight decrease to 6.57 was noted in 2023, followed by a further increase to 6.67 in 2024. The most recent year, 2025, shows a decrease to 6.36. This suggests a peak in asset utilization efficiency in 2024, followed by a modest decline.
- Relationship to Sales Growth
- Net sales increased each year from 2021 to 2025, indicating growing revenue generation. The net property, plant, and equipment also increased consistently, though at a slower rate than sales in some years. The ratio’s movement generally aligns with these trends; increases in sales, coupled with increases in fixed assets, generally lead to a stable or slightly increasing turnover ratio. The 2025 decrease in the ratio, despite continued sales growth, suggests a larger proportional increase in net property, plant, and equipment during that period.
- Overall Assessment
- The net fixed asset turnover ratio remains relatively consistent throughout the period, indicating a stable level of efficiency in utilizing fixed assets to generate sales. While fluctuations occur, they are not substantial. The slight decrease in 2025 warrants further investigation to determine if it represents a temporary anomaly or the beginning of a more significant trend.
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, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| 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: 2025-12-31), 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).
1 2025 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.
Analysis of the presented financial information reveals a consistent, albeit gradual, decline in the net fixed asset turnover ratio over the five-year period from 2021 to 2025. Simultaneously, both net sales and net property, plant, and equipment (including operating lease and right-of-use assets) demonstrate increasing values throughout the same timeframe.
- Net Sales Trend
- Net sales exhibit a steady upward trend, increasing from US$19,628 million in 2021 to US$27,448 million in 2025. This represents a cumulative growth of approximately 40% over the five-year period, indicating expanding revenue generation.
- Net Property, Plant & Equipment Trend
- Net property, plant, and equipment, inclusive of operating leases and right-of-use assets, also shows consistent growth. Starting at US$3,506 million in 2021, it rises to US$5,084 million in 2025, a roughly 45% increase. This suggests ongoing investment in fixed assets.
- Net Fixed Asset Turnover Ratio Trend
- Despite the increases in both net sales and fixed assets, the net fixed asset turnover ratio experiences a consistent decrease. The ratio declines from 5.60 in 2021 to 5.40 in 2025. This indicates that the company is generating progressively less revenue for each dollar invested in fixed assets. While the decline is moderate, it warrants further investigation.
- The decreasing ratio, coupled with increasing asset values, suggests a potential for inefficiencies in asset utilization or a shift in the company’s operational strategy towards assets that require higher investment relative to sales generation. It is also possible that the growth in sales is not proportionally benefiting from the increased asset base.
In summary, the company demonstrates growth in both sales and fixed assets. However, the declining net fixed asset turnover ratio suggests a diminishing efficiency in converting fixed asset investment into revenue. Continued monitoring of this ratio is recommended to assess the sustainability of this trend and its potential impact on overall profitability.
Total Asset Turnover
Eaton Corp. plc, total asset turnover calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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: 2025-12-31), 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).
1 2025 Calculation
Total asset turnover = Net sales ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
The total asset turnover ratio exhibits a consistent upward trend over the five-year period. This indicates increasing efficiency in utilizing assets to generate sales revenue.
- Total Asset Turnover Trend
- The ratio began at 0.58 in 2021 and increased to 0.67 by 2025. This represents a cumulative increase of approximately 15.5% over the observed timeframe.
- Year-over-Year Changes
- From 2021 to 2022, the ratio experienced a modest increase, moving from 0.58 to 0.59. The increase from 2022 to 2023 was also incremental, reaching 0.60. A more substantial increase was noted between 2023 and 2024, with the ratio rising to 0.65. The final year observed, 2025, saw a continuation of this trend, with the ratio reaching 0.67.
- Relationship to Sales and Assets
- Net sales increased consistently throughout the period, from US$19,628 million in 2021 to US$27,448 million in 2025. Total assets also increased, but at a slower rate than sales, particularly between 2023 and 2024 where assets decreased slightly. This disparity in growth rates contributes to the observed increase in the total asset turnover ratio.
- Implications
- The rising total asset turnover ratio suggests improved operational efficiency. The company is generating more sales revenue for each dollar of assets employed. This could be due to better asset management, increased sales effectiveness, or a combination of both. Continued monitoring of this ratio is recommended to assess the sustainability of this trend.
Equity Turnover
Eaton Corp. plc, equity turnover calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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: 2025-12-31), 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).
1 2025 Calculation
Equity turnover = Net sales ÷ Total Eaton shareholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The equity turnover ratio demonstrates an increasing trend over the five-year period. Net sales exhibited consistent growth throughout the period, while total shareholders’ equity experienced fluctuations. The interplay between these two factors drives the observed changes in equity turnover.
- Equity Turnover
- The equity turnover ratio, which measures how efficiently a company utilizes its shareholders’ equity to generate sales, began at 1.20 in 2021. It experienced a modest increase to 1.22 in 2022 and remained stable at that level in 2023. A more substantial increase was observed in 2024, with the ratio rising to 1.35, and continued upward in 2025, reaching 1.41. This indicates a growing efficiency in generating sales relative to the amount of equity invested.
- Net Sales Trend
- Net sales increased steadily from US$19,628 million in 2021 to US$27,448 million in 2025. This consistent growth in sales contributes to the overall increase in the equity turnover ratio, as the numerator of the ratio expands.
- Shareholders’ Equity Trend
- Total shareholders’ equity increased from US$16,413 million in 2021 to US$17,038 million in 2022, and further to US$19,036 million in 2023. However, a slight decrease was noted in 2024, falling to US$18,488 million, before recovering to US$19,425 million in 2025. The fluctuations in shareholders’ equity moderate the impact of sales growth on the equity turnover ratio. The decrease in equity in 2024, coupled with continued sales growth, likely contributed to the more significant increase in the equity turnover ratio observed in that year.
In summary, the increasing equity turnover ratio suggests that the company is becoming more effective at utilizing shareholders’ equity to generate revenue. The consistent growth in net sales, combined with moderate fluctuations in shareholders’ equity, has driven this positive trend.