Analysis of Short-term (Operating) Activity Ratios
Beginner level
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: 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
| 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
| 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
| 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
| 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
| 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
| 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
| 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
| 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
| 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 + 64 – 21 = 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. |