Analysis of Short-term (Operating) Activity Ratios
Quarterly Data
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Short-term Activity Ratios (Summary)
Ecolab Inc., short-term (operating) activity ratios (quarterly data)
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
- Inventory Turnover
- Inventory turnover showed an upward trend from March 2018 through December 2019, reaching a peak of 5.79. This was followed by volatility in 2020 and 2021, with values ranging between 5.01 and 6.33, indicating some fluctuations in how efficiently inventories were managed over these periods.
- Receivables Turnover
- Receivables turnover remained relatively stable over the entire period, staying close to five to five and a half times per year. A slight dip was observed in March 2020 (5.05), succeeded by a brief recovery in June 2020 (5.92), then stabilizing again around 5.1 to 5.2 during 2021, suggesting consistent but moderate effectiveness in collecting receivables.
- Payables Turnover
- Payables turnover exhibited a general decline from a high near 7.0 in late 2018 and early 2019 to around 5.5 by the end of 2021, indicating a trend toward slower payment to suppliers. Notably, the turnover dipped sharply during 2020, reflecting possible extended payment terms or delayed payments during that period.
- Working Capital Turnover
- Working capital turnover experienced significant fluctuation, with very high values in early 2018 and early 2019 (up to approximately 24.71), followed by a marked decline through 2020 and early 2021, reaching lows around 4.65 to 6.0. An uptick appeared in late 2021 (11.23), but the overall trend suggests diminished efficiency in using working capital to generate sales during the pandemic and recovery periods.
- Average Inventory Processing Period
- The average inventory processing period decreased steadily from about 72 days in early 2018 to a low of 63 days by December 2019, signaling improved inventory turnover speed. However, increased variability and lengthening periods occurred thereafter, with days rising again to above 70 in parts of 2021, indicating some slowdown in inventory management efficiency.
- Average Receivable Collection Period
- The average receivable collection period was fairly stable around 66–68 days until early 2020. There was a noticeable spike to 72 days in March 2020, followed by a quick improvement to 62 days in June 2020. The period then stabilized again around 70 days in 2021, suggesting that collection processes temporarily slowed during early 2020 but improved thereafter.
- Operating Cycle
- The operating cycle displayed minor variations, averaging near 130 to 140 days throughout the timeline. A slight shortening occurred in 2019, but it extended during the pandemic period in 2020 and 2021, reaching up to 143 days, indicating a modest elongation in the time from inventory purchase to cash receipt.
- Average Payables Payment Period
- The average payables payment period showed a decreasing trend from 58 days in early 2018 to 52–54 days during 2018 and 2019, followed by a gradual increase beginning 2020, peaking at 66 days by the end of 2021. This suggests a general move towards taking longer to pay suppliers in recent years.
- Cash Conversion Cycle
- The cash conversion cycle fluctuated between 76 and 84 days, with a peak around 84 days in early 2019 and March 2020 and a trough near 69 days in mid-2020. The cycle generally stabilized in the early 80s during 2021, reflecting variability in the net days to convert inputs into cash but no clear long-term improvement or deterioration.
Turnover Ratios
Average No. Days
Inventory Turnover
Ecolab Inc., inventory turnover calculation (quarterly data)
| Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||
| Cost of sales, including special charges | 2,043,100) | 2,016,700) | 1,844,000) | 1,712,000) | 1,780,300) | 1,769,600) | 1,635,700) | 1,720,200) | 2,211,100) | 2,207,400) | 2,208,200) | 2,096,700) | 2,216,800) | 2,190,700) | 2,146,100) | 2,072,300) | |||||
| Inventories | 1,491,800) | 1,378,200) | 1,418,500) | 1,347,000) | 1,285,200) | 1,287,800) | 1,228,700) | 1,529,700) | 1,505,600) | 1,586,700) | 1,625,300) | 1,645,600) | 1,546,400) | 1,587,900) | 1,557,600) | 1,541,800) | |||||
| Short-term Activity Ratio | |||||||||||||||||||||
| Inventory turnover1 | 5.11 | 5.34 | 5.01 | 5.12 | 5.37 | 5.70 | 6.33 | 5.46 | 5.79 | 5.50 | 5.36 | 5.26 | 5.58 | 5.26 | 5.17 | 5.05 | |||||
| Benchmarks | |||||||||||||||||||||
| Inventory Turnover, Competitors2 | |||||||||||||||||||||
| Linde plc | 10.12 | 9.86 | 9.56 | 9.20 | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Sherwin-Williams Co. | 5.92 | 5.99 | 5.84 | 5.39 | — | — | — | — | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q4 2021 Calculation
Inventory turnover
= (Cost of sales, including special chargesQ4 2021
+ Cost of sales, including special chargesQ3 2021
+ Cost of sales, including special chargesQ2 2021
+ Cost of sales, including special chargesQ1 2021)
÷ Inventories
= (2,043,100 + 2,016,700 + 1,844,000 + 1,712,000)
÷ 1,491,800 = 5.11
2 Click competitor name to see calculations.
- Cost of Sales, Including Special Charges
- The cost of sales exhibited a generally stable pattern from March 2018 through December 2019, fluctuating within a relatively narrow range around 2,090,000 to 2,220,000 thousand US dollars. A noticeable decline occurred starting in March 2020, coinciding with a drop to approximately 1,720,000 thousand US dollars. This lower level persisted through the next three quarters, with a slight upward trend into late 2021, culminating in a figure of about 2,043,000 thousand US dollars by December 2021. This suggests an initial impact on cost structures, likely related to external market or operational disruptions, followed by a gradual recovery.
- Inventories
- Inventories showed a modest increase from around 1,541,800 thousand US dollars in March 2018 to a peak near 1,645,600 thousand US dollars by March 2019, before declining to approximately 1,505,600 thousand US dollars at the end of 2019. A sharp reduction was observed in mid-2020, reaching a low of roughly 1,228,700 thousand US dollars in June 2020. Subsequently, inventory levels trended upward through the remaining periods, ending at approximately 1,491,800 thousand US dollars by December 2021. This fluctuation may reflect adjustments in inventory management in response to changing demand or supply chain conditions.
- Inventory Turnover Ratio
- The inventory turnover ratio demonstrated an increasing trend during 2018 and 2019, rising from 5.05 to a peak of 5.79 by the end of 2019, indicating improved efficiency in inventory usage or faster sales. An even further increase was noted in mid-2020, reaching 6.33, coinciding with the period of lower inventory levels. Following this peak, the ratio exhibited a decreasing trend through 2021, falling back to approximately 5.11 by December 2021. This pattern implies that inventory was turned over more rapidly during the market disruptions in 2020, with normalization toward historical levels in the subsequent periods.
- Overall Insights
- The data indicates an initial period of relative stability in cost of sales and inventory metrics, followed by significant shifts beginning in early 2020. The decline in cost of sales and inventories, paired with an elevated inventory turnover ratio, suggests operational adjustments likely driven by external pressures such as changes in demand or supply chain constraints. The gradual restoration of cost and inventory figures alongside a reduction in turnover ratio in late 2021 points to a market and operational environment moving toward recovery and normalization.
Receivables Turnover
Ecolab Inc., receivables turnover calculation (quarterly data)
| Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||
| Net sales | 3,364,600) | 3,320,800) | 3,162,700) | 2,885,000) | 3,065,300) | 3,018,600) | 2,685,700) | 3,020,600) | 3,823,600) | 3,817,900) | 3,759,400) | 3,505,400) | 3,760,500) | 3,747,200) | 3,689,600) | 3,470,900) | |||||
| Accounts receivable, net | 2,478,400) | 2,384,100) | 2,331,000) | 2,272,000) | 2,273,800) | 2,320,700) | 2,255,500) | 2,855,900) | 2,796,500) | 2,722,500) | 2,747,100) | 2,691,600) | 2,662,500) | 2,652,700) | 2,635,400) | 2,574,300) | |||||
| Short-term Activity Ratio | |||||||||||||||||||||
| Receivables turnover1 | 5.14 | 5.22 | 5.20 | 5.13 | 5.19 | 5.41 | 5.92 | 5.05 | 5.33 | 5.45 | 5.38 | 5.46 | 5.51 | 5.49 | 5.45 | 5.50 | |||||
| Benchmarks | |||||||||||||||||||||
| Receivables Turnover, Competitors2 | |||||||||||||||||||||
| Linde plc | 6.84 | 6.82 | 6.67 | 6.70 | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Sherwin-Williams Co. | 8.48 | 7.57 | 7.58 | 7.82 | — | — | — | — | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q4 2021 Calculation
Receivables turnover
= (Net salesQ4 2021
+ Net salesQ3 2021
+ Net salesQ2 2021
+ Net salesQ1 2021)
÷ Accounts receivable, net
= (3,364,600 + 3,320,800 + 3,162,700 + 2,885,000)
÷ 2,478,400 = 5.14
2 Click competitor name to see calculations.
- Net Sales
- The net sales exhibit a fluctuating trend over the periods considered. Initially, from March 2018 to December 2018, there is a gradual increase in sales, reaching a peak in the last quarter of 2018. However, a decline is observed in the first quarter of 2019, followed by a recovery and stabilization near previous peak levels by the end of 2019. A significant drop occurs starting in the first quarter of 2020, coinciding with the onset of the COVID-19 pandemic, with net sales decreasing sharply through mid-2020. A modest recovery trend is visible towards the end of 2020 and continues into 2021, yet sales remain below the pre-2020 levels by December 2021.
- Accounts Receivable, Net
- The net accounts receivable generally increase from March 2018 through December 2019, indicating a growing amount of credit sales or slower collections during this period. Starting in the first quarter of 2020, a notable decline is observed, aligning temporally with the decrease in net sales. This reduction persists through mid-2020, followed by a stabilization phase in late 2020 and early 2021. Slight increases in accounts receivable are evident throughout 2021, though levels remain relatively stable compared to the earlier periods.
- Receivables Turnover Ratio
- The receivables turnover ratio, which measures how efficiently the company collects its receivables, shows modest variation across the periods. There is a slight decline from an initial level around 5.5 in early 2018 to approximately 5.3 by the end of 2019, hinting at a somewhat slower collection process. In 2020, a notable increase is seen in the second quarter, likely reflecting improved collection efficiency or reduced sales volume. However, this is followed by a gradual decline in turnover ratio in subsequent quarters through 2021, stabilizing around 5.1 to 5.2. Overall, receivables turnover suggests some fluctuations in collection efficiency, influenced by external factors affecting sales and credit terms.
Payables Turnover
Ecolab Inc., payables turnover calculation (quarterly data)
| Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||
| Cost of sales, including special charges | 2,043,100) | 2,016,700) | 1,844,000) | 1,712,000) | 1,780,300) | 1,769,600) | 1,635,700) | 1,720,200) | 2,211,100) | 2,207,400) | 2,208,200) | 2,096,700) | 2,216,800) | 2,190,700) | 2,146,100) | 2,072,300) | |||||
| Accounts payable | 1,384,200) | 1,237,100) | 1,213,300) | 1,128,200) | 1,160,600) | 1,108,400) | 1,087,700) | 1,279,500) | 1,284,300) | 1,269,400) | 1,297,900) | 1,237,700) | 1,255,600) | 1,195,300) | 1,242,100) | 1,229,100) | |||||
| Short-term Activity Ratio | |||||||||||||||||||||
| Payables turnover1 | 5.50 | 5.94 | 5.86 | 6.11 | 5.95 | 6.62 | 7.15 | 6.52 | 6.79 | 6.88 | 6.71 | 6.99 | 6.87 | 6.99 | 6.49 | 6.33 | |||||
| Benchmarks | |||||||||||||||||||||
| Payables Turnover, Competitors2 | |||||||||||||||||||||
| Linde plc | 5.01 | 5.44 | 5.14 | 5.30 | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Sherwin-Williams Co. | 4.74 | 4.07 | 4.21 | 4.50 | — | — | — | — | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q4 2021 Calculation
Payables turnover
= (Cost of sales, including special chargesQ4 2021
+ Cost of sales, including special chargesQ3 2021
+ Cost of sales, including special chargesQ2 2021
+ Cost of sales, including special chargesQ1 2021)
÷ Accounts payable
= (2,043,100 + 2,016,700 + 1,844,000 + 1,712,000)
÷ 1,384,200 = 5.50
2 Click competitor name to see calculations.
- Cost of Sales, Including Special Charges
- The cost of sales exhibited a general increasing trend from March 2018 through December 2019, peaking around that period. Following this peak, there was a notable decline in the first half of 2020, coinciding with a decrease in cost of sales to levels significantly lower than previous years. However, starting mid-2020, the cost of sales resumed an upward trajectory, continuing to rise steadily through to the end of 2021. Despite the recovery, the figures in late 2021 did not fully reach the peak levels observed at the end of 2019.
- Accounts Payable
- Accounts payable showed relative stability from early 2018 until the end of 2019, with minor fluctuations but generally maintaining a consistent range. In 2020, there was a dip in accounts payable values, particularly during the middle quarters of the year. This decline was followed by a recovery in late 2020 and 2021, with accounts payable increasing to higher levels than previously observed by the end of 2021. The increase in accounts payable during 2021 suggests an expansion in payables or extended payment terms relative to previous years.
- Payables Turnover Ratio
- The payables turnover ratio exhibited variation over the reported periods. It generally fluctuated between approximately 5.5 and 7.0 throughout the years observed. Early 2018 through 2019 saw turnover ratios mostly above 6.5, indicating relatively rapid payment cycles. However, starting in 2020, the turnover ratio began to decline with some variability, reaching the lowest point by the end of 2021. This declining trend suggests the company was taking longer to pay suppliers or experienced slower payment cycles during this timeframe.
- Overall Insights
- The observed data indicates the company faced a disruption around early 2020, as reflected in declining cost of sales and accounts payable values, likely linked to external factors affecting operations. Following this, a recovery phase is evident, with increasing cost of sales and accounts payable through 2021. The reduction in payables turnover ratio over time points to an elongation in payment periods or possibly changes in credit terms with suppliers. This shift could impact working capital management and supplier relations. The data suggests prudent monitoring of payables and cost control measures will be important moving forward.
Working Capital Turnover
Ecolab Inc., working capital turnover calculation (quarterly data)
| Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||
| Current assets | 4,687,100) | 4,986,800) | 5,487,400) | 5,150,000) | 5,117,400) | 4,992,000) | 5,166,200) | 6,437,100) | 4,828,400) | 4,870,100) | 4,853,500) | 4,751,000) | 4,677,700) | 4,822,300) | 4,607,900) | 4,596,800) | |||||
| Less: Current liabilities | 3,553,200) | 2,894,500) | 2,880,300) | 2,852,200) | 2,932,200) | 3,106,400) | 3,227,700) | 4,257,400) | 3,630,600) | 3,919,500) | 4,127,700) | 4,156,000) | 3,685,600) | 3,589,800) | 3,623,800) | 3,982,800) | |||||
| Working capital | 1,133,900) | 2,092,300) | 2,607,100) | 2,297,800) | 2,185,200) | 1,885,600) | 1,938,500) | 2,179,700) | 1,197,800) | 950,600) | 725,800) | 595,000) | 992,100) | 1,232,500) | 984,100) | 614,000) | |||||
| Net sales | 3,364,600) | 3,320,800) | 3,162,700) | 2,885,000) | 3,065,300) | 3,018,600) | 2,685,700) | 3,020,600) | 3,823,600) | 3,817,900) | 3,759,400) | 3,505,400) | 3,760,500) | 3,747,200) | 3,689,600) | 3,470,900) | |||||
| Short-term Activity Ratio | |||||||||||||||||||||
| Working capital turnover1 | 11.23 | 5.94 | 4.65 | 5.07 | 5.40 | 6.65 | 6.89 | 6.62 | 12.44 | 15.61 | 20.35 | 24.71 | 14.79 | 11.81 | 14.61 | 23.04 | |||||
| Benchmarks | |||||||||||||||||||||
| Working Capital Turnover, Competitors2 | |||||||||||||||||||||
| Linde plc | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Sherwin-Williams Co. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q4 2021 Calculation
Working capital turnover
= (Net salesQ4 2021
+ Net salesQ3 2021
+ Net salesQ2 2021
+ Net salesQ1 2021)
÷ Working capital
= (3,364,600 + 3,320,800 + 3,162,700 + 2,885,000)
÷ 1,133,900 = 11.23
2 Click competitor name to see calculations.
- Working Capital
- The working capital exhibited significant fluctuations throughout the observed periods. From the first quarter of 2018 to the fourth quarter of 2018, it showed an initial increase from approximately 614 million to around 1.23 billion, followed by a decline to approximately 992 million at the end of 2018. In 2019, working capital initially decreased to around 595 million before steadily rising to about 1.20 billion by year-end. The year 2020 saw a sharp increase, reaching a peak near 2.19 billion, then fluctuated moderately in subsequent quarters. In 2021, it maintained high levels in the first half of the year but experienced a notable decline to approximately 1.13 billion in the final quarter.
- Net Sales
- Net sales remained relatively stable and demonstrated a slight upward trend from early 2018 through 2019, with quarterly values generally ranging between 3.5 billion and 3.8 billion. A sharp decline occurred in 2020, with sales dropping from over 3 billion to around 2.7 billion during the second quarter, likely reflecting external economic challenges. A gradual recovery ensued over the following quarters, with net sales climbing back to approximately 3.36 billion by the end of 2021, though not fully returning to pre-2020 peak levels.
- Working Capital Turnover
- The working capital turnover ratio, calculated as net sales divided by working capital, showed a distinct downward trend over the timeline. Starting at a high of 23.04 in the first quarter of 2018, it steadily declined to single digits by the end of 2019. The lowest turnover values occurred during 2020, reflecting reduced sales levels combined with elevated working capital. Early 2021 saw continued low turnover ratios around 4.65 to 5.94, but a marked improvement appeared in the final quarter, increasing significantly to 11.23. This suggests a recovery in sales efficiency relative to the working capital base, although the ratio remained below the initial 2018 figures.
- Overall Insights
- The data indicates that while working capital generally increased over the period, net sales experienced volatility, particularly a considerable dip in 2020. This divergence led to a weaker working capital turnover ratio during that year, reflecting less efficient utilization of working capital. The improvement in turnover towards the end of 2021 may signal a partial restoration of operational efficiency. The substantial working capital fluctuations could imply inventory management adjustments or changes in receivables and payables strategies in response to market conditions. Monitoring these trends is advisable to ensure alignment with strategic financial goals and operational capacity.
Average Inventory Processing Period
Ecolab Inc., average inventory processing period calculation (quarterly data)
| Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||
| Inventory turnover | 5.11 | 5.34 | 5.01 | 5.12 | 5.37 | 5.70 | 6.33 | 5.46 | 5.79 | 5.50 | 5.36 | 5.26 | 5.58 | 5.26 | 5.17 | 5.05 | |||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||
| Average inventory processing period1 | 71 | 68 | 73 | 71 | 68 | 64 | 58 | 67 | 63 | 66 | 68 | 69 | 65 | 69 | 71 | 72 | |||||
| Benchmarks (no. days) | |||||||||||||||||||||
| Average Inventory Processing Period, Competitors2 | |||||||||||||||||||||
| Linde plc | 36 | 37 | 38 | 40 | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Sherwin-Williams Co. | 62 | 61 | 62 | 68 | — | — | — | — | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q4 2021 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 5.11 = 71
2 Click competitor name to see calculations.
- Inventory Turnover Ratio Trends
- The inventory turnover ratio exhibits a general upward trajectory from early 2018 through mid-2020, increasing from 5.05 to a peak of 6.33 by June 2020. This indicates an improvement in the company's efficiency in managing and selling inventory over this period. However, after mid-2020, the ratio declines, fluctuating around the range of 5.1 to 5.34, suggesting a deceleration in inventory turnover efficiency during the latter part of 2020 and throughout 2021.
- Average Inventory Processing Period Trends
- The average inventory processing period shows an inverse pattern relative to the inventory turnover ratio. It decreases steadily from 72 days in March 2018 to a low of 58 days by June 2020, reflecting faster inventory processing and turnover. Subsequently, there is an upward movement in this metric starting in the second half of 2020, reaching values around 71 to 73 days by mid-2021, which points to slower inventory processing and potentially increased inventory holding periods.
- Relationship Between Metrics
- There is a clear inverse correlation between the inventory turnover ratio and the average inventory processing period across the dataset. When the turnover ratio increased, the processing period decreased, indicating more efficient inventory management. Conversely, periods with a declining turnover ratio correspond to increases in the processing period, signifying reduced inventory movement speed.
- Implications and Insights
- The initial period of rising turnover ratio and declining inventory processing times suggests operational improvements or favorable business conditions enhancing inventory management efficiency. The reversal of these trends starting in mid-2020 may reflect external challenges, operational changes, or shifts in demand impacting inventory dynamics. The data implies a need for focus on inventory control strategies to regain prior efficiency levels.
Average Receivable Collection Period
Ecolab Inc., average receivable collection period calculation (quarterly data)
| Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||
| Receivables turnover | 5.14 | 5.22 | 5.20 | 5.13 | 5.19 | 5.41 | 5.92 | 5.05 | 5.33 | 5.45 | 5.38 | 5.46 | 5.51 | 5.49 | 5.45 | 5.50 | |||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||
| Average receivable collection period1 | 71 | 70 | 70 | 71 | 70 | 68 | 62 | 72 | 68 | 67 | 68 | 67 | 66 | 67 | 67 | 66 | |||||
| Benchmarks (no. days) | |||||||||||||||||||||
| Average Receivable Collection Period, Competitors2 | |||||||||||||||||||||
| Linde plc | 53 | 54 | 55 | 54 | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Sherwin-Williams Co. | 43 | 48 | 48 | 47 | — | — | — | — | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q4 2021 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 5.14 = 71
2 Click competitor name to see calculations.
- Receivables Turnover Ratio
- The receivables turnover ratio remained relatively stable from March 2018 through December 2019, fluctuating slightly between 5.33 and 5.55. A noticeable decline occurred in the first quarter of 2020, reaching a low of 5.05. This decrease was followed by a rebound in the second quarter of 2020, climbing to 5.92. Subsequently, there was a gradual decline through the rest of 2020 and the entirety of 2021, settling around 5.13–5.22 by the end of 2021. This pattern suggests temporary disruption around early 2020, potentially linked to external factors affecting collections efficiency, with only partial recovery afterward.
- Average Receivable Collection Period
- The average collection period showed consistency around 66 to 68 days from 2018 through 2019, reflecting stable collection practices. In early 2020, the period extended to 72 days, indicating slower receivable conversion into cash during that quarter. The collection period then shortened to 62 days in the second quarter of 2020, suggesting improved efficiency or adjustments in credit policies. However, from the third quarter of 2020 onwards, the collection period trend moved upward gradually, reaching approximately 70 to 71 days in 2021. This upward trend highlights a lengthening in the time required to collect receivables as the year progressed.
- Overall Analysis
- The data illustrate a period of disruption starting in early 2020, reflected by a declining receivables turnover ratio and an increase in the collection period, consistent with slower cash inflows from customers. Although some recovery was evident soon after, the turnover did not return to pre-2020 levels, and the collection period slightly increased through 2021. These trends may indicate challenges in maintaining historical collection efficiency, possibly due to changes in market conditions, customer payment behavior, or credit management strategies during and after the noted disruption period.
Operating Cycle
Ecolab Inc., operating cycle calculation (quarterly data)
No. days
| Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||
| Average inventory processing period | 71 | 68 | 73 | 71 | 68 | 64 | 58 | 67 | 63 | 66 | 68 | 69 | 65 | 69 | 71 | 72 | |||||
| Average receivable collection period | 71 | 70 | 70 | 71 | 70 | 68 | 62 | 72 | 68 | 67 | 68 | 67 | 66 | 67 | 67 | 66 | |||||
| Short-term Activity Ratio | |||||||||||||||||||||
| Operating cycle1 | 142 | 138 | 143 | 142 | 138 | 132 | 120 | 139 | 131 | 133 | 136 | 136 | 131 | 136 | 138 | 138 | |||||
| Benchmarks | |||||||||||||||||||||
| Operating Cycle, Competitors2 | |||||||||||||||||||||
| Linde plc | 89 | 91 | 93 | 94 | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Sherwin-Williams Co. | 105 | 109 | 110 | 115 | — | — | — | — | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q4 2021 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= 71 + 71 = 142
2 Click competitor name to see calculations.
- Average Inventory Processing Period
-
The average inventory processing period demonstrates a generally decreasing trend from the beginning of the observed timeline through the end of 2019, moving from 72 days in March 2018 to a low of 63 days by December 2019. However, starting in 2020, the trend becomes more volatile, with a pronounced dip to 58 days in June 2020 followed by fluctuations ranging between 64 and 73 days throughout 2020 and 2021. This suggests an improvement in inventory turnover efficiency up to late 2019, disrupted by variability in the subsequent periods.
- Average Receivable Collection Period
-
The average receivable collection period remains relatively stable over the entire period, with values consistently close to the mid-to-high 60-day range. Minor fluctuations occur, with a peak at 72 days in March 2020 and a corresponding decrease to 62 days shortly thereafter in June 2020. This brief variability is followed by a return to approximately 70 days, indicating that receivables turnover experienced a temporary acceleration and subsequent stabilization.
- Operating Cycle
-
The operating cycle presents a modest downward trend from 138 days in March 2018 to a low of 131 days by December 2018 and December 2019, reflecting improved operational efficiency. In 2020, a notable dip to 120 days in June is observed, followed by an increase that peaks at 142 days multiple times in 2021. This suggests that operational efficiency improved significantly mid-2020 but then reversed, leading to a lengthening of the operating cycle towards the end of the timeline.
Average Payables Payment Period
Ecolab Inc., average payables payment period calculation (quarterly data)
| Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||
| Payables turnover | 5.50 | 5.94 | 5.86 | 6.11 | 5.95 | 6.62 | 7.15 | 6.52 | 6.79 | 6.88 | 6.71 | 6.99 | 6.87 | 6.99 | 6.49 | 6.33 | |||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||
| Average payables payment period1 | 66 | 61 | 62 | 60 | 61 | 55 | 51 | 56 | 54 | 53 | 54 | 52 | 53 | 52 | 56 | 58 | |||||
| Benchmarks (no. days) | |||||||||||||||||||||
| Average Payables Payment Period, Competitors2 | |||||||||||||||||||||
| Linde plc | 73 | 67 | 71 | 69 | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Sherwin-Williams Co. | 77 | 90 | 87 | 81 | — | — | — | — | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q4 2021 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 5.50 = 66
2 Click competitor name to see calculations.
- Payables Turnover Ratio
- The payables turnover ratio displayed some fluctuations over the observed periods from March 2018 to December 2021. Initially, the ratio increased from 6.33 to a peak of 6.99 throughout 2018 and early 2019, indicating a faster rate of paying off suppliers. However, from mid-2019 onward, the ratio demonstrated a declining trend overall, dropping to 5.5 by the end of 2021. Notably, there were intermittent spikes such as the increase to 7.15 in June 2020. The general downward movement toward the later periods suggests that the company slowed its payments relative to purchases.
- Average Payables Payment Period (Days)
- The average payables payment period generally moved inversely to the payables turnover ratio, as expected. It initially declined from 58 days in March 2018 to 52 days by September 2018, reflecting quicker settlements. After that, the payment period experienced modest oscillations around the low 50s until early 2020. Beginning in 2020, the payment period increased significantly, peaking at 66 days in December 2021. This extended payment duration suggests that the company took longer to settle its payables towards the end of the timeline, consistent with the lower payables turnover ratio.
- Overall Trends and Insights
- The data reveal that the company initially maintained a relatively efficient payment cycle in 2018 and early 2019, characterized by a high payables turnover and correspondingly lower payment periods. Starting in 2020, both metrics suggest a strategic shift or changing operational conditions leading to slower payments. The increase in average payment days along with the decrease in turnover ratio may indicate extended credit terms negotiated with suppliers or cash flow management practices delaying disbursements. The notable increase in payment period during 2020 and 2021 could also be influenced by external factors affecting payment behavior.
Cash Conversion Cycle
Ecolab Inc., cash conversion cycle calculation (quarterly data)
No. days
| Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||
| Average inventory processing period | 71 | 68 | 73 | 71 | 68 | 64 | 58 | 67 | 63 | 66 | 68 | 69 | 65 | 69 | 71 | 72 | |||||
| Average receivable collection period | 71 | 70 | 70 | 71 | 70 | 68 | 62 | 72 | 68 | 67 | 68 | 67 | 66 | 67 | 67 | 66 | |||||
| Average payables payment period | 66 | 61 | 62 | 60 | 61 | 55 | 51 | 56 | 54 | 53 | 54 | 52 | 53 | 52 | 56 | 58 | |||||
| Short-term Activity Ratio | |||||||||||||||||||||
| Cash conversion cycle1 | 76 | 77 | 81 | 82 | 77 | 77 | 69 | 83 | 77 | 80 | 82 | 84 | 78 | 84 | 82 | 80 | |||||
| Benchmarks | |||||||||||||||||||||
| Cash Conversion Cycle, Competitors2 | |||||||||||||||||||||
| Linde plc | 16 | 24 | 22 | 25 | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Sherwin-Williams Co. | 28 | 19 | 23 | 34 | — | — | — | — | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q4 2021 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 71 + 71 – 66 = 76
2 Click competitor name to see calculations.
- Average Inventory Processing Period
- The average inventory processing period showed a gradual decline throughout 2018, moving from 72 days in March to 65 days by December. In 2019, this trend continued with some fluctuations, generally decreasing from 69 days to a low of 63 days by year-end. However, in 2020, variability increased, with a notable dip to 58 days in June followed by a rise to 68 days by December. The first three quarters of 2021 exhibited an increasing trend, peaking at 73 days in June before decreasing slightly to 68 and then rising again to 71 days by the final quarter.
- Average Receivable Collection Period
- This period remained relatively stable over the entire timeframe, fluctuating narrowly between 66 and 71 days. It maintained consistency in 2018 and 2019, hovering around 66-68 days. Slight increases occurred in 2020, with a peak at 72 days in March and a slight decline thereafter. In 2021, values plateaued close to 70-71 days, indicating consistent collection efficiency without significant improvements or deteriorations.
- Average Payables Payment Period
- The payables payment period demonstrated a generally fluctuating but slightly increasing trend over the years. Starting at 58 days in early 2018, it dipped to as low as 52 days mid-2018 but gradually increased thereafter. By the end of 2019, it stabilized around 54 to 56 days. Notably, 2020 showed an upward shift, particularly toward the end of the year where it reached 61 days. This trend continued into 2021, culminating at 66 days by the last quarter, indicating a lengthening in the time taken to settle payables.
- Cash Conversion Cycle
- The cash conversion cycle exhibited a pattern of moderate fluctuation around the low 80s during 2018 and 2019, with a peak of 84 days observed in both September 2018 and March 2019. In 2020, a marked improvement occurred, with the cycle shortening to a low of 69 days in June, corresponding with shorter inventory and payables periods. Following this improvement, the cycle stabilized around 77-82 days into 2021, ending the period at 76 days. Overall, the data suggests efforts to optimize working capital management, especially during 2020.