Analysis of Long-term (Investment) 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.
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- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Enterprise Value (EV)
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Price to Book Value (P/BV) since 2005
- Analysis of Debt
- Aggregate Accruals
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Long-term Activity Ratios (Summary)
Illinois Tool Works Inc., long-term (investment) 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).
The analysis of the quarterly financial ratios reveals distinct trends across the periods under review.
- Net Fixed Asset Turnover
- This ratio remained relatively stable around the 8.2 to 8.4 range from the beginning of 2018 through the end of 2019, indicating consistent utilization efficiency of net fixed assets. However, starting from the first quarter of 2020, a downward trend is observable, reaching a low point near 7.08 by the last quarter of 2020. This decline suggests a reduction in the efficiency with which the company uses its fixed assets to generate sales during this period. A partial recovery is noted in 2021, with the ratio improving and stabilizing near 8 towards the end of the year, though it does not fully regain its previous peak levels.
- Total Asset Turnover
- The total asset turnover ratio showed a gradual increase from 0.90 at the start of 2018 to a near peak of 0.99 by the end of that year, reflecting improved overall asset efficiency in generating revenues. During 2019, the ratio stabilized around 0.94 to 0.95 but began to decline in 2020, dropping to a low of approximately 0.81 by the last quarter. This dip indicates a diminished ability to generate sales from total assets during the challenging economic conditions experienced that year. A moderate recovery ensued in 2021, with the ratio rising back to around 0.9, although it remained below the 2018-2019 levels.
- Equity Turnover
- Equity turnover exhibited a marked increasing trend from early 2018 through the first quarter of 2020, escalating from about 3.51 to a peak of 6.04. This trend points to a growing efficiency in utilizing equity to generate sales during this period. However, subsequent quarters in 2020 saw a significant downturn, with the ratio falling steadily to approximately 3.95 by the end of the year, signaling reduced sales generation efficiency relative to equity. In 2021, the equity turnover ratio showed modest improvement and relative stabilization around 4.0, yet the recovery did not approach the earlier peak levels observed in early 2020.
Overall, the data reflects a stable and improving asset utilization trend until early 2020, followed by a pronounced decline likely impacted by external factors affecting operational efficiency. The beginning of 2021 marks a phase of gradual recovery across all turnover metrics, though full restoration to pre-2020 performance levels was not achieved within the observed timeframe.
Net Fixed Asset Turnover
Illinois Tool Works Inc., net fixed asset 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 millions) | |||||||||||||||||||||
| Operating revenue | |||||||||||||||||||||
| Net plant and equipment | |||||||||||||||||||||
| Long-term Activity Ratio | |||||||||||||||||||||
| Net fixed asset turnover1 | |||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||
| Net Fixed Asset Turnover, Competitors2 | |||||||||||||||||||||
| Boeing Co. | |||||||||||||||||||||
| Caterpillar Inc. | |||||||||||||||||||||
| Eaton Corp. plc | |||||||||||||||||||||
| GE Aerospace | |||||||||||||||||||||
| Honeywell International Inc. | |||||||||||||||||||||
| Lockheed Martin Corp. | |||||||||||||||||||||
| RTX Corp. | |||||||||||||||||||||
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
Net fixed asset turnover
= (Operating revenueQ4 2021
+ Operating revenueQ3 2021
+ Operating revenueQ2 2021
+ Operating revenueQ1 2021)
÷ Net plant and equipment
= ( + + + )
÷ =
2 Click competitor name to see calculations.
The analysis of the financial data reveals several noteworthy trends over the examined periods.
- Operating Revenue
-
Operating revenue shows a generally stable pattern with some fluctuations. It maintained a level slightly above 3500 million US dollars through 2018 and the first quarter of 2019, with minor decreases in certain quarters. A significant decline occurred in the second quarter of 2020, coinciding with broader economic disruptions, reaching its lowest point at 2564 million US dollars. Subsequently, the revenue rebounded steadily through the rest of 2020 and into 2021, returning to levels comparable to pre-2020 figures by the end of 2021.
- Net Plant and Equipment
-
Net plant and equipment values show a gradual downward trend from early 2018 through mid-2019, decreasing from 1829 million US dollars to a low point around 1693 million US dollars. After this trough, the asset base remained relatively stable with slight fluctuations, showing some recovery towards the end of 2021, reaching 1809 million US dollars. This suggests moderate capital investment activity or asset turnover adjustments during this timeframe.
- Net Fixed Asset Turnover Ratio
-
The net fixed asset turnover ratio, indicating operational efficiency in using fixed assets to generate revenue, generally declined over the period. It started at a high of 8.31 during mid-2018 and decreased gradually to 7.08 by the end of 2020. Some signs of recovery appear in 2021, with the ratio rising again above 7.9 before settling at around 7.99 at year-end. The lower ratios during 2020 align with the drop in revenue and unchanged asset base, reflecting less effective asset utilization amid challenging conditions.
In summary, the company experienced a revenue decline in early 2020 with a subsequent recovery, slight contraction and stabilization of net plant and equipment values, and a corresponding impact on operational efficiency as evidenced by the net fixed asset turnover ratio trends. The improving turnover ratio in 2021 indicates a rebound in asset utilization efficiency alongside revenue growth.
Total Asset Turnover
Illinois Tool Works Inc., total asset 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 millions) | |||||||||||||||||||||
| Operating revenue | |||||||||||||||||||||
| Total assets | |||||||||||||||||||||
| Long-term Activity Ratio | |||||||||||||||||||||
| Total asset turnover1 | |||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||
| Total Asset Turnover, Competitors2 | |||||||||||||||||||||
| Boeing Co. | |||||||||||||||||||||
| Caterpillar Inc. | |||||||||||||||||||||
| Eaton Corp. plc | |||||||||||||||||||||
| GE Aerospace | |||||||||||||||||||||
| Honeywell International Inc. | |||||||||||||||||||||
| Lockheed Martin Corp. | |||||||||||||||||||||
| RTX Corp. | |||||||||||||||||||||
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
Total asset turnover
= (Operating revenueQ4 2021
+ Operating revenueQ3 2021
+ Operating revenueQ2 2021
+ Operating revenueQ1 2021)
÷ Total assets
= ( + + + )
÷ =
2 Click competitor name to see calculations.
The financial data reveals several notable trends over the examined periods. Operating revenue demonstrates a general pattern of fluctuation with a peak in the middle quarters of 2018 and 2021. Initially, revenue remains relatively stable around the mid-3500 million US dollar mark during 2018 and 2019, before experiencing a significant decline in the first half of 2020. This drop likely reflects challenges faced in that period. However, a recovery is evident from the third quarter of 2020 onward, with revenues steadily increasing and reaching a high point close to previous peaks by the end of 2021.
Total assets show a gradual decrease from early 2018 through 2020, moving from approximately 16,163 million US dollars to a lower range near 14,000 million by mid-2020. From the latter half of 2020 through 2021, total assets increase progressively, culminating in a value exceeding 16,000 million by the end of 2021. This pattern suggests periods of asset reduction followed by renewed accumulation or investment.
The total asset turnover ratio, which reflects the efficiency in utilizing assets to generate revenue, trends downward starting from a high of nearly 0.99 in late 2018 to a low near 0.81 at the end of 2020. There is a moderate recovery in this ratio throughout 2021, climbing back toward 0.9. The initial decline in asset turnover during 2020 aligns with the dip in revenue and suggests a less efficient use of assets during that challenging period, with some improvement as business conditions stabilize.
- Operating Revenue
- Relatively stable through 2018 and 2019 with a significant dip in early 2020 followed by a recovery to near pre-2020 levels by the end of 2021.
- Total Assets
- Gradual decrease from 2018 to mid-2020, then steady growth through 2021, indicating a reversal from asset reduction to asset expansion.
- Total Asset Turnover
- Declining efficiency in asset utilization observed in 2020, with improvement but not full recovery to earlier peak levels by the end of 2021.
Equity Turnover
Illinois Tool Works Inc., equity 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 millions) | |||||||||||||||||||||
| Operating revenue | |||||||||||||||||||||
| Stockholders’ equity attributable to ITW | |||||||||||||||||||||
| Long-term Activity Ratio | |||||||||||||||||||||
| Equity turnover1 | |||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||
| Equity Turnover, Competitors2 | |||||||||||||||||||||
| Boeing Co. | |||||||||||||||||||||
| Caterpillar Inc. | |||||||||||||||||||||
| Eaton Corp. plc | |||||||||||||||||||||
| GE Aerospace | |||||||||||||||||||||
| Honeywell International Inc. | |||||||||||||||||||||
| Lockheed Martin Corp. | |||||||||||||||||||||
| RTX Corp. | |||||||||||||||||||||
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
Equity turnover
= (Operating revenueQ4 2021
+ Operating revenueQ3 2021
+ Operating revenueQ2 2021
+ Operating revenueQ1 2021)
÷ Stockholders’ equity attributable to ITW
= ( + + + )
÷ =
2 Click competitor name to see calculations.
- Operating Revenue
- The operating revenue displayed fluctuations over the analyzed quarters. From March 2018 to December 2019, revenue remained relatively stable, ranging from approximately $3.46 billion to $3.83 billion, with minor declines toward the end of 2019. In early 2020, a significant decline is observed, dropping notably in the second quarter to roughly $2.56 billion, likely impacted by external factors affecting the business environment during that period. Following this trough, revenue experienced a recovery trend, increasing steadily through the remainder of 2020 and into 2021, reaching levels slightly above $3.6 billion toward the end of 2021, although still somewhat variable.
- Stockholders' Equity Attributable to ITW
- Stockholders' equity showed a declining trend from March 2018 through June 2020, decreasing from approximately $4.16 billion to around $2.36 billion. This significant reduction denotes a contraction in the equity base, possibly due to losses, dividends, stock repurchases, or other capital adjustments. From the third quarter of 2020 onward, equity began to recover, increasing progressively and reaching about $3.62 billion by December 2021. Despite this rebound, the equity levels at the end of the analyzed period had not yet returned to the higher levels seen in 2018.
- Equity Turnover
- The equity turnover ratio, which measures operating revenue relative to stockholders' equity, demonstrated a general upward trend from March 2018 to March 2020, rising from 3.51 to a peak of 6.04. This upward movement indicates increasing efficiency in generating revenue from equity. However, after reaching this peak in early 2020, the ratio declined sharply, aligning with the recovery phase observed in both operating revenue and equity. By the end of 2021, the equity turnover ratio stabilized around 4.0, a level somewhat lower than the peak but above the earlier values, suggesting improved but moderated efficiency compared to recent years.