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.
Long-term Activity Ratios (Summary)
Ecolab Inc., long-term (investment) activity ratios
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Net Fixed Asset Turnover
- The ratio exhibited a slight upward trend over the five-year period, moving from 3.73 in 2017 to 3.87 in 2021. There was relative stability between 2018 and 2020, followed by a modest increase in 2021, indicating a gradual improvement in the efficiency with which net fixed assets were utilized to generate revenue.
- Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)
- This ratio showed a declining trend from 2018 to 2020, decreasing from 3.82 to 3.29, before slightly recovering to 3.46 in 2021. The lower values in 2019 and 2020 may reflect the impact of adopting lease accounting standards, which incorporate right-of-use assets and potentially lead to adjusted asset bases, thereby affecting the turnover ratio.
- Total Asset Turnover
- The total asset turnover ratio declined over the examined period, starting at 0.69 in 2017 and falling steadily to 0.60 by 2021. Notably, the ratio peaked at 0.73 in 2018 before exhibiting a consistent downward movement. This trend suggests a reduction in the efficiency of overall asset use in generating revenue.
- Equity Turnover
- Equity turnover experienced fluctuations throughout the period. Beginning at 1.82 in 2017, it remained relatively stable in 2018, dropped notably to 1.72 in 2019, peaked at 1.91 in 2020, and then decreased to 1.76 in 2021. These changes imply variability in how effectively equity was employed to generate sales, with the highest efficiency observed in 2020.
Net Fixed Asset Turnover
Ecolab Inc., net fixed asset turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net sales | 12,733,100) | 11,790,200) | 14,906,300) | 14,668,200) | 13,838,300) | |
| Property, plant and equipment, net | 3,288,500) | 3,124,900) | 3,954,900) | 3,836,000) | 3,707,100) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | 3.87 | 3.77 | 3.77 | 3.82 | 3.73 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover, Competitors2 | ||||||
| Linde plc | 1.18 | 0.94 | — | — | — | |
| Sherwin-Williams Co. | 10.68 | 10.01 | — | — | — | |
| Net Fixed Asset Turnover, Sector | ||||||
| Chemicals | 1.81 | 1.49 | — | — | — | |
| Net Fixed Asset Turnover, Industry | ||||||
| Materials | 1.27 | 0.99 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Net fixed asset turnover = Net sales ÷ Property, plant and equipment, net
= 12,733,100 ÷ 3,288,500 = 3.87
2 Click competitor name to see calculations.
- Net Sales
- Net sales demonstrated an overall upward trend from 2017 through 2019, increasing from approximately 13.8 billion USD to 14.9 billion USD. However, in 2020, there was a significant decline to around 11.8 billion USD, likely reflective of broader economic challenges during that period. The subsequent year, 2021, saw a partial recovery with net sales rising to approximately 12.7 billion USD, though still below the peak levels observed in 2019.
- Property, Plant and Equipment, Net
- The net value of property, plant, and equipment exhibited a gradual increase from 2017 to 2019, moving from about 3.7 billion USD to nearly 4.0 billion USD. This trend reversed in 2020, where a notable reduction brought the value down to approximately 3.1 billion USD. In 2021, there was a moderate increase again, reaching around 3.3 billion USD, indicating some reinvestment or asset acquisition following the prior contraction.
- Net Fixed Asset Turnover
- The net fixed asset turnover ratio showed relative stability throughout the period analyzed, maintaining values close to the range of 3.7 to 3.9. This consistency suggests that despite fluctuations in asset values and sales, the efficiency with which fixed assets are being utilized to generate sales remained fairly steady. A slight upward movement was noted in 2021, reaching 3.87, which may indicate improved asset utilization efficiency after the market disruptions experienced in 2020.
Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
Ecolab Inc., net fixed asset turnover (including operating lease, right-of-use asset) calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net sales | 12,733,100) | 11,790,200) | 14,906,300) | 14,668,200) | 13,838,300) | |
| Property, plant and equipment, net | 3,288,500) | 3,124,900) | 3,954,900) | 3,836,000) | 3,707,100) | |
| Operating lease assets | 396,800) | 423,800) | 577,500) | —) | —) | |
| Property, plant and equipment, net (including operating lease, right-of-use asset) | 3,685,300) | 3,548,700) | 4,532,400) | 3,836,000) | 3,707,100) | |
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset)1 | 3.46 | 3.32 | 3.29 | 3.82 | 3.73 | |
| Benchmarks | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Competitors2 | ||||||
| Linde plc | 1.14 | 0.91 | — | — | — | |
| Sherwin-Williams Co. | 5.41 | 5.11 | — | — | — | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Sector | ||||||
| Chemicals | 1.65 | 1.37 | — | — | — | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Industry | ||||||
| Materials | 1.21 | 0.95 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Net fixed asset turnover (including operating lease, right-of-use asset) = Net sales ÷ Property, plant and equipment, net (including operating lease, right-of-use asset)
= 12,733,100 ÷ 3,685,300 = 3.46
2 Click competitor name to see calculations.
- Net Sales
- Net sales exhibited a generally increasing trend from 2017 to 2019, rising from approximately 13.8 billion to nearly 14.9 billion US dollars. However, a significant decline occurred in 2020, with net sales dropping to about 11.8 billion US dollars. This downturn was followed by a partial recovery in 2021, with net sales increasing to approximately 12.7 billion US dollars, yet remaining below the peak levels seen in 2019.
- Property, Plant and Equipment, Net
- The net value of property, plant, and equipment, including operating lease right-of-use assets, showed an upward movement from 3.7 billion US dollars in 2017 to a peak of around 4.5 billion US dollars in 2019. Subsequently, there was a notable reduction in 2020 to approximately 3.5 billion US dollars, followed by a slight increase in 2021 to about 3.7 billion US dollars. This suggests an investment peak prior to a period of divestment or depreciation before stabilizing in the most recent year.
- Net Fixed Asset Turnover Ratio
- The net fixed asset turnover ratio started at 3.73 in 2017 and experienced a slight increase to 3.82 in 2018, indicating improved efficiency in using fixed assets to generate sales. However, it declined substantially to 3.29 in 2019 and showed marginal improvement in the following two years, reaching 3.46 in 2021. The decline during 2019-2020 corresponds with the reduction in net sales and the increase in fixed assets prior to 2020, reflecting less efficient asset utilization during that period with some recovery thereafter.
- Summary
- Overall, the data reflect a cycle of growth in both sales and asset investment culminating in 2019, followed by a contraction phase in 2020 likely influenced by external factors impacting sales and asset deployment. The partial recovery in 2021 indicates adaptation or stabilization in operations, although sales and asset turnover have not yet returned to their pre-decline levels. The asset utilization efficiency, as measured by the fixed asset turnover ratio, decreased alongside falling sales, suggesting a period of underutilized capacity or increased asset base relative to sales.
Total Asset Turnover
Ecolab Inc., total asset turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net sales | 12,733,100) | 11,790,200) | 14,906,300) | 14,668,200) | 13,838,300) | |
| Total assets | 21,206,400) | 18,126,000) | 20,869,100) | 20,074,500) | 19,962,400) | |
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | 0.60 | 0.65 | 0.71 | 0.73 | 0.69 | |
| Benchmarks | ||||||
| Total Asset Turnover, Competitors2 | ||||||
| Linde plc | 0.38 | 0.31 | — | — | — | |
| Sherwin-Williams Co. | 0.97 | 0.90 | — | — | — | |
| Total Asset Turnover, Sector | ||||||
| Chemicals | 0.50 | 0.42 | — | — | — | |
| Total Asset Turnover, Industry | ||||||
| Materials | 0.49 | 0.40 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Total asset turnover = Net sales ÷ Total assets
= 12,733,100 ÷ 21,206,400 = 0.60
2 Click competitor name to see calculations.
- Net Sales
- Net sales exhibited a generally positive trend from 2017 through 2019, increasing from 13.84 billion to 14.91 billion US dollars. However, there was a notable decline in 2020, with net sales dropping to approximately 11.79 billion US dollars. This downward adjustment was partially reversed in 2021, when net sales rose to about 12.73 billion US dollars, though still below the peak levels of 2019.
- Total Assets
- Total assets moved relatively steadily from 2017 to 2019, growing from nearly 20.0 billion to over 20.8 billion US dollars. In 2020, there was a marked decrease to approximately 18.13 billion US dollars, followed by a rebound in 2021 to around 21.21 billion US dollars, reaching a new high for the period reviewed.
- Total Asset Turnover
- Total asset turnover, which measures efficiency in using assets to generate sales, was highest in 2018 at 0.73. This metric gradually declined in subsequent years, dropping to 0.71 in 2019, then more sharply to 0.65 in 2020, and further to 0.6 in 2021. This indicates a decreasing efficiency in asset utilization over time, particularly after 2019.
- Overall Insights
- The data suggest that the company experienced growth in sales and assets through 2019, followed by a contraction in both during 2020, likely influenced by external market or economic factors. The partial recovery in 2021 shows resilience, yet asset turnover decline points to less effective use of assets in generating sales. The interplay of these factors signals challenges in maintaining operational efficiency amid fluctuating sales and asset base size.
Equity Turnover
Ecolab Inc., equity turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net sales | 12,733,100) | 11,790,200) | 14,906,300) | 14,668,200) | 13,838,300) | |
| Total Ecolab shareholders’ equity | 7,224,200) | 6,166,500) | 8,685,300) | 8,003,200) | 7,618,500) | |
| Long-term Activity Ratio | ||||||
| Equity turnover1 | 1.76 | 1.91 | 1.72 | 1.83 | 1.82 | |
| Benchmarks | ||||||
| Equity Turnover, Competitors2 | ||||||
| Linde plc | 0.70 | 0.58 | — | — | — | |
| Sherwin-Williams Co. | 8.18 | 5.09 | — | — | — | |
| Equity Turnover, Sector | ||||||
| Chemicals | 1.09 | 0.90 | — | — | — | |
| Equity Turnover, Industry | ||||||
| Materials | 1.22 | 0.98 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Equity turnover = Net sales ÷ Total Ecolab shareholders’ equity
= 12,733,100 ÷ 7,224,200 = 1.76
2 Click competitor name to see calculations.
The financial data reveals several notable trends regarding the company's sales, equity, and efficiency over the five-year period.
- Net Sales
- Net sales exhibited a general upward trajectory from 2017 through 2019, increasing from approximately $13.8 billion to nearly $15 billion. However, a significant decline occurred in 2020, where sales dropped to around $11.8 billion, likely impacted by external factors. In 2021, there was a partial recovery as sales rose again to approximately $12.7 billion, though still below the pre-2020 levels.
- Total Shareholders’ Equity
- Shareholders’ equity increased steadily from 2017 to 2019, moving from about $7.6 billion to $8.7 billion. This upward trend reversed sharply in 2020, with equity decreasing to approximately $6.2 billion. In 2021, equity rebounded somewhat to $7.2 billion but did not fully regain its previous peak. This fluctuation suggests challenges faced during the 2020 period affecting the company’s net asset base.
- Equity Turnover Ratio
- The equity turnover ratio, reflecting how efficiently the company uses its equity to generate sales, showed minor fluctuations throughout the period. It remained relatively stable around 1.8 from 2017 to 2018, dipped slightly to 1.72 in 2019, increased to 1.91 in 2020, and then decreased to 1.76 in 2021. The spike in 2020, despite reduced sales and equity, implies a relatively higher efficiency in generating revenue per unit of equity during that challenging year.
In summary, the company experienced growth in sales and equity until 2019, followed by a downturn in 2020 with partial recovery in 2021. The equity turnover ratio indicates maintained operational efficiency even amid fluctuating equity and sales levels.