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Illinois Tool Works Inc. (ITW)
Analysis of Short-term (Operating) Activity Ratios
Difficulty: Beginner
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)
Illinois Tool Works Inc., short-term (operating) activity ratios
Based on: 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), 10-K (filing date: 2015-02-13).
| 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 2016 to 2017 and from 2017 to 2018. |
| Receivables turnover | An activity ratio equal to revenue divided by receivables. | Illinois Tool Works Inc.’s receivables turnover ratio deteriorated from 2016 to 2017 but then improved from 2017 to 2018 not reaching 2016 level. |
| Payables turnover | An activity ratio calculated as cost of goods sold divided by payables. | Illinois Tool Works Inc.’s payables turnover ratio declined from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level. |
| Working capital turnover | An activity ratio calculated as revenue divided by working capital. | Illinois Tool Works Inc.’s working capital turnover ratio deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 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. | |
| Average receivable collection period | An activity ratio equal to the number of days in the period divided by receivables turnover. | |
| 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 increased from 2016 to 2017 but then declined significantly from 2017 to 2018. |
| 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
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
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| Selected Financial Data (US$ in millions) | ||||||
| Cost of revenue | |
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| Inventories | |
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| Inventory turnover1 | |
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| Benchmarks | ||||||
| Inventory Turnover, Competitors2 | ||||||
| Caterpillar Inc. | |
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| Inventory Turnover, Sector | ||||||
| Industrial Engineering | |
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| Inventory Turnover, Industry | ||||||
| Industrials | |
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Based on: 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), 10-K (filing date: 2015-02-13).
1 2018 Calculation
Inventory turnover = Cost of revenue ÷ Inventories
= ÷ =
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 2016 to 2017 and from 2017 to 2018. |
Receivables Turnover
Illinois Tool Works Inc., receivables turnover calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
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| Selected Financial Data (US$ in millions) | ||||||
| Operating revenue | |
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| Trade receivables | |
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| Short-term Activity Ratio | ||||||
| Receivables turnover1 | |
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| Benchmarks | ||||||
| Receivables Turnover, Competitors2 | ||||||
| Caterpillar Inc. | |
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| Receivables Turnover, Sector | ||||||
| Industrial Engineering | |
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| Receivables Turnover, Industry | ||||||
| Industrials | |
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Based on: 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), 10-K (filing date: 2015-02-13).
1 2018 Calculation
Receivables turnover = Operating revenue ÷ Trade receivables
= ÷ =
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 deteriorated from 2016 to 2017 but then improved from 2017 to 2018 not reaching 2016 level. |
Payables Turnover
Illinois Tool Works Inc., payables turnover calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
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| Selected Financial Data (US$ in millions) | ||||||
| Cost of revenue | |
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| Accounts payable | |
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| Short-term Activity Ratio | ||||||
| Payables turnover1 | |
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| Benchmarks | ||||||
| Payables Turnover, Competitors2 | ||||||
| Caterpillar Inc. | |
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| Payables Turnover, Sector | ||||||
| Industrial Engineering | |
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| Payables Turnover, Industry | ||||||
| Industrials | |
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Based on: 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), 10-K (filing date: 2015-02-13).
1 2018 Calculation
Payables turnover = Cost of revenue ÷ Accounts payable
= ÷ =
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 declined from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level. |
Working Capital Turnover
Illinois Tool Works Inc., working capital turnover calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
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| Selected Financial Data (US$ in millions) | ||||||
| Current assets | |
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| Less: Current liabilities | |
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| Working capital | |
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| Operating revenue | |
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| Short-term Activity Ratio | ||||||
| Working capital turnover1 | |
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| Benchmarks | ||||||
| Working Capital Turnover, Competitors2 | ||||||
| Caterpillar Inc. | |
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| Working Capital Turnover, Sector | ||||||
| Industrial Engineering | |
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| Working Capital Turnover, Industry | ||||||
| Industrials | |
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Based on: 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), 10-K (filing date: 2015-02-13).
1 2018 Calculation
Working capital turnover = Operating revenue ÷ Working capital
= ÷ =
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 deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level. |
Average Inventory Processing Period
Illinois Tool Works Inc., average inventory processing period calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
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| Selected Financial Data | ||||||
| Inventory turnover | |
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| Short-term Activity Ratio (no. days) | ||||||
| Average inventory processing period1 | |
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| Benchmarks (no. days) | ||||||
| Average Inventory Processing Period, Competitors2 | ||||||
| Caterpillar Inc. | |
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| Average Inventory Processing Period, Sector | ||||||
| Industrial Engineering | |
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| Average Inventory Processing Period, Industry | ||||||
| Industrials | |
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Based on: 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), 10-K (filing date: 2015-02-13).
1 2018 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ =
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. |
Average Receivable Collection Period
Illinois Tool Works Inc., average receivable collection period calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
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| Selected Financial Data | ||||||
| Receivables turnover | |
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| Short-term Activity Ratio (no. days) | ||||||
| Average receivable collection period1 | |
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| Benchmarks (no. days) | ||||||
| Average Receivable Collection Period, Competitors2 | ||||||
| Caterpillar Inc. | |
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| Average Receivable Collection Period, Sector | ||||||
| Industrial Engineering | |
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| Average Receivable Collection Period, Industry | ||||||
| Industrials | |
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Based on: 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), 10-K (filing date: 2015-02-13).
1 2018 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ =
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. |
Operating Cycle
Illinois Tool Works Inc., operating cycle calculation, comparison to benchmarks
No. days
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
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| Selected Financial Data | ||||||
| Average inventory processing period | |
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| Average receivable collection period | |
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| Short-term Activity Ratio | ||||||
| Operating cycle1 | |
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| Benchmarks | ||||||
| Operating Cycle, Competitors2 | ||||||
| Caterpillar Inc. | |
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| Operating Cycle, Sector | ||||||
| Industrial Engineering | |
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| Operating Cycle, Industry | ||||||
| Industrials | |
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Based on: 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), 10-K (filing date: 2015-02-13).
1 2018 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= + =
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
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Payables turnover | |
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| Short-term Activity Ratio (no. days) | ||||||
| Average payables payment period1 | |
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| Benchmarks (no. days) | ||||||
| Average Payables Payment Period, Competitors2 | ||||||
| Caterpillar Inc. | |
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| Average Payables Payment Period, Sector | ||||||
| Industrial Engineering | |
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| Average Payables Payment Period, Industry | ||||||
| Industrials | |
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Based on: 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), 10-K (filing date: 2015-02-13).
1 2018 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ =
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 increased from 2016 to 2017 but then declined significantly from 2017 to 2018. |
Cash Conversion Cycle
Illinois Tool Works Inc., cash conversion cycle calculation, comparison to benchmarks
No. days
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Average inventory processing period | |
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| Average receivable collection period | |
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| Average payables payment period | |
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| Short-term Activity Ratio | ||||||
| Cash conversion cycle1 | |
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| Benchmarks | ||||||
| Cash Conversion Cycle, Competitors2 | ||||||
| Caterpillar Inc. | |
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| Cash Conversion Cycle, Sector | ||||||
| Industrial Engineering | |
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| Cash Conversion Cycle, Industry | ||||||
| Industrials | |
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Based on: 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), 10-K (filing date: 2015-02-13).
1 2018 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= + – =
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. |