Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Illinois Tool Works Inc. (NYSE:ITW)

Analysis of Short-term (Operating) Activity Ratios

Beginner level


Short-term Activity Ratios (Summary)

Illinois Tool Works Inc., short-term (operating) activity ratios

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Turnover Ratios
Inventory turnover 7.03 6.53 6.81 7.34 7.26
Receivables turnover 5.73 5.63 5.45 5.77 6.08
Payables turnover 17.35 16.42 14.08 15.45 17.57
Working capital turnover 3.44 6.60 3.39 4.04 3.08
Average No. Days
Average inventory processing period 52 56 54 50 50
Add: Average receivable collection period 64 65 67 63 60
Operating cycle 116 121 121 113 110
Less: Average payables payment period 21 22 26 24 21
Cash conversion cycle 95 99 95 89 89

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).

Short-term activity ratio Description The company
Inventory turnover An activity ratio calculated as cost of goods sold divided by inventory. Illinois Tool Works Inc.’s inventory turnover ratio deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.
Receivables turnover An activity ratio equal to revenue divided by receivables. Illinois Tool Works Inc.’s receivables turnover ratio improved from 2017 to 2018 and from 2018 to 2019.
Payables turnover An activity ratio calculated as cost of goods sold divided by payables. Illinois Tool Works Inc.’s payables turnover ratio increased from 2017 to 2018 and from 2018 to 2019.
Working capital turnover An activity ratio calculated as revenue divided by working capital. Illinois Tool Works Inc.’s working capital turnover ratio improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019 not reaching 2017 level.

Short-term activity ratio Description The company
Average inventory processing period An activity ratio equal to the number of days in the period divided by inventory turnover over the period. Illinois Tool Works Inc.’s number of days of inventory outstanding deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.
Average receivable collection period An activity ratio equal to the number of days in the period divided by receivables turnover. Illinois Tool Works Inc.’s number of days of receivables outstanding improved from 2017 to 2018 and from 2018 to 2019.
Operating cycle Equal to average inventory processing period plus average receivables collection period.
Average payables payment period An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. Illinois Tool Works Inc.’s number of days of payables outstanding decreased from 2017 to 2018 and from 2018 to 2019.
Cash conversion cycle A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period.

Inventory Turnover

Illinois Tool Works Inc., inventory turnover calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Cost of revenue 8,187  8,604  8,309  7,896  7,888 
Inventories 1,164  1,318  1,220  1,076  1,086 
Short-term Activity Ratio
Inventory turnover1 7.03 6.53 6.81 7.34 7.26
Benchmarks
Inventory Turnover, Competitors2
Caterpillar Inc. 3.25 3.21 3.10 3.29 3.48
Inventory Turnover, Sector
Industrial Engineering 3.61 3.55 3.50 3.74 3.86
Inventory Turnover, Industry
Industrials 3.63 4.07 4.28 4.34 4.12

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).

1 2019 Calculation
Inventory turnover = Cost of revenue ÷ Inventories
= 8,187 ÷ 1,164 = 7.03

2 Click competitor name to see calculations.

Short-term activity ratio Description The company
Inventory turnover An activity ratio calculated as cost of goods sold divided by inventory. Illinois Tool Works Inc.’s inventory turnover ratio deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.

Receivables Turnover

Illinois Tool Works Inc., receivables turnover calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Operating revenue 14,109  14,768  14,314  13,599  13,405 
Trade receivables 2,461  2,622  2,628  2,357  2,203 
Short-term Activity Ratio
Receivables turnover1 5.73 5.63 5.45 5.77 6.08
Benchmarks
Receivables Turnover, Competitors2
Caterpillar Inc. 5.92 5.89 5.74 5.98 6.59
Receivables Turnover, Sector
Industrial Engineering 5.88 5.83 5.66 5.92 6.47
Receivables Turnover, Industry
Industrials 7.86 8.00 6.37 6.58 6.61

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).

1 2019 Calculation
Receivables turnover = Operating revenue ÷ Trade receivables
= 14,109 ÷ 2,461 = 5.73

2 Click competitor name to see calculations.

Short-term activity ratio Description The company
Receivables turnover An activity ratio equal to revenue divided by receivables. Illinois Tool Works Inc.’s receivables turnover ratio improved from 2017 to 2018 and from 2018 to 2019.

Payables Turnover

Illinois Tool Works Inc., payables turnover calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Cost of revenue 8,187  8,604  8,309  7,896  7,888 
Accounts payable 472  524  590  511  449 
Short-term Activity Ratio
Payables turnover1 17.35 16.42 14.08 15.45 17.57
Benchmarks
Payables Turnover, Competitors2
Caterpillar Inc. 6.15 5.25 4.79 6.14 6.72
Payables Turnover, Sector
Industrial Engineering 6.97 6.02 5.56 7.06 7.61
Payables Turnover, Industry
Industrials 6.33 6.53 6.56 7.18 7.60

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).

1 2019 Calculation
Payables turnover = Cost of revenue ÷ Accounts payable
= 8,187 ÷ 472 = 17.35

2 Click competitor name to see calculations.

Short-term activity ratio Description The company
Payables turnover An activity ratio calculated as cost of goods sold divided by payables. Illinois Tool Works Inc.’s payables turnover ratio increased from 2017 to 2018 and from 2018 to 2019.

Working Capital Turnover

Illinois Tool Works Inc., working capital turnover calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Current assets 6,253  5,778  7,278  6,123  6,720 
Less: Current liabilities 2,154  3,542  3,053  2,760  2,368 
Working capital 4,099  2,236  4,225  3,363  4,352 
 
Operating revenue 14,109  14,768  14,314  13,599  13,405 
Short-term Activity Ratio
Working capital turnover1 3.44 6.60 3.39 4.04 3.08
Benchmarks
Working Capital Turnover, Competitors2
Caterpillar Inc. 4.04 4.99 4.58 6.13 5.44
Working Capital Turnover, Sector
Industrial Engineering 3.89 5.28 4.21 5.37 4.62
Working Capital Turnover, Industry
Industrials 7.42 7.64 5.17 5.11 5.62

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).

1 2019 Calculation
Working capital turnover = Operating revenue ÷ Working capital
= 14,109 ÷ 4,099 = 3.44

2 Click competitor name to see calculations.

Short-term activity ratio Description The company
Working capital turnover An activity ratio calculated as revenue divided by working capital. Illinois Tool Works Inc.’s working capital turnover ratio improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019 not reaching 2017 level.

Average Inventory Processing Period

Illinois Tool Works Inc., average inventory processing period calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data
Inventory turnover 7.03 6.53 6.81 7.34 7.26
Short-term Activity Ratio (no. days)
Average inventory processing period1 52 56 54 50 50
Benchmarks (no. days)
Average Inventory Processing Period, Competitors2
Caterpillar Inc. 112 114 118 111 105
Average Inventory Processing Period, Sector
Industrial Engineering 101 103 104 98 95
Average Inventory Processing Period, Industry
Industrials 101 90 85 84 89

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).

1 2019 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 7.03 = 52

2 Click competitor name to see calculations.

Short-term activity ratio Description The company
Average inventory processing period An activity ratio equal to the number of days in the period divided by inventory turnover over the period. Illinois Tool Works Inc.’s number of days of inventory outstanding deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.

Average Receivable Collection Period

Illinois Tool Works Inc., average receivable collection period calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data
Receivables turnover 5.73 5.63 5.45 5.77 6.08
Short-term Activity Ratio (no. days)
Average receivable collection period1 64 65 67 63 60
Benchmarks (no. days)
Average Receivable Collection Period, Competitors2
Caterpillar Inc. 62 62 64 61 55
Average Receivable Collection Period, Sector
Industrial Engineering 62 63 64 62 56
Average Receivable Collection Period, Industry
Industrials 46 46 57 55 55

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).

1 2019 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 5.73 = 64

2 Click competitor name to see calculations.

Short-term activity ratio Description The company
Average receivable collection period An activity ratio equal to the number of days in the period divided by receivables turnover. Illinois Tool Works Inc.’s number of days of receivables outstanding improved from 2017 to 2018 and from 2018 to 2019.

Operating Cycle

Illinois Tool Works Inc., operating cycle calculation, comparison to benchmarks

No. days

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data
Average inventory processing period 52 56 54 50 50
Average receivable collection period 64 65 67 63 60
Short-term Activity Ratio
Operating cycle1 116 121 121 113 110
Benchmarks
Operating Cycle, Competitors2
Caterpillar Inc. 174 176 182 172 160
Operating Cycle, Sector
Industrial Engineering 163 166 168 160 151
Operating Cycle, Industry
Industrials 147 136 142 139 144

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).

1 2019 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= 52 + 64 = 116

2 Click competitor name to see calculations.

Short-term activity ratio Description The company
Operating cycle Equal to average inventory processing period plus average receivables collection period.

Average Payables Payment Period

Illinois Tool Works Inc., average payables payment period calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data
Payables turnover 17.35 16.42 14.08 15.45 17.57
Short-term Activity Ratio (no. days)
Average payables payment period1 21 22 26 24 21
Benchmarks (no. days)
Average Payables Payment Period, Competitors2
Caterpillar Inc. 59 70 76 59 54
Average Payables Payment Period, Sector
Industrial Engineering 52 61 66 52 48
Average Payables Payment Period, Industry
Industrials 58 56 56 51 48

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).

1 2019 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 17.35 = 21

2 Click competitor name to see calculations.

Short-term activity ratio Description The company
Average payables payment period An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. Illinois Tool Works Inc.’s number of days of payables outstanding decreased from 2017 to 2018 and from 2018 to 2019.

Cash Conversion Cycle

Illinois Tool Works Inc., cash conversion cycle calculation, comparison to benchmarks

No. days

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data
Average inventory processing period 52 56 54 50 50
Average receivable collection period 64 65 67 63 60
Average payables payment period 21 22 26 24 21
Short-term Activity Ratio
Cash conversion cycle1 95 99 95 89 89
Benchmarks
Cash Conversion Cycle, Competitors2
Caterpillar Inc. 115 106 106 113 106
Cash Conversion Cycle, Sector
Industrial Engineering 111 105 102 108 103
Cash Conversion Cycle, Industry
Industrials 89 80 86 88 96

Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).

1 2019 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 52 + 6421 = 95

2 Click competitor name to see calculations.

Short-term activity ratio Description The company
Cash conversion cycle A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period.