Analysis of Long-term (Investment) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Long-term Activity Ratios (Summary)
Parker-Hannifin Corp., long-term (investment) activity ratios
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
- Net Fixed Asset Turnover
- The net fixed asset turnover ratio demonstrated an overall fluctuating trend between 2017 and 2022. It increased from 6.21 in 2017 to a peak of 8.1 in 2019, before declining sharply to 5.97 in 2020. Subsequently, it showed recovery in 2021 and 2022, reaching 7.47. This suggests varying efficiency in using fixed assets to generate sales, with a notable dip in 2020 possibly reflecting operational challenges in that period.
- Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Assets)
- This adjusted ratio follows a similar pattern to the net fixed asset turnover without adjustments. It rose from 6.21 in 2017 to 8.1 in 2019, then declined more noticeably to 5.63 in 2020. The gradual recovery to 7.03 by 2022 indicates adaptation to lease accounting changes, and reflects the impact of right-of-use assets on asset utilization metrics. The lower values compared to the unadjusted ratio in later years highlight the influence of including lease assets on perceived asset efficiency.
- Total Asset Turnover
- The total asset turnover ratio shows a declining trend over the six years. Starting at 0.78 in 2017, it increased marginally to 0.93 in 2018 but then decreased consistently to 0.61 by 2022. This steady decline suggests a reduced efficiency in generating revenue from total assets over time, potentially indicating asset base growth outpacing sales or operational inefficiencies developing in asset utilization.
- Equity Turnover
- Equity turnover exhibited a downward trend from 2.29 in 2017 to a low of 1.71 in 2021, followed by a slight increase to 1.79 in 2022. This decrease indicates a reduction in revenue generated per unit of shareholders' equity, which may reflect lower asset turnover or increased equity levels without corresponding revenue growth. The minor recovery in 2022 might signal early signs of improved capital efficiency.
Net Fixed Asset Turnover
Parker-Hannifin Corp., net fixed asset turnover calculation, comparison to benchmarks
| Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net sales | 15,861,608) | 14,347,640) | 13,695,520) | 14,320,324) | 14,302,392) | 12,029,312) | |
| Property, plant and equipment, net | 2,122,758) | 2,266,476) | 2,292,735) | 1,768,287) | 1,856,237) | 1,937,292) | |
| Long-term Activity Ratio | |||||||
| Net fixed asset turnover1 | 7.47 | 6.33 | 5.97 | 8.10 | 7.71 | 6.21 | |
| Benchmarks | |||||||
| Net Fixed Asset Turnover, Competitors2 | |||||||
| Boeing Co. | 6.31 | 5.70 | 4.92 | — | — | — | |
| Caterpillar Inc. | 4.70 | 3.99 | 3.15 | — | — | — | |
| Eaton Corp. plc | 6.59 | 6.41 | 6.02 | — | — | — | |
| GE Aerospace | 5.96 | 5.47 | 1.75 | — | — | — | |
| Honeywell International Inc. | 6.48 | 6.18 | 5.86 | — | — | — | |
| Lockheed Martin Corp. | 8.27 | 8.83 | 9.07 | — | — | — | |
| RTX Corp. | 4.42 | 4.30 | 3.78 | — | — | — | |
| Net Fixed Asset Turnover, Sector | |||||||
| Capital Goods | 5.79 | 5.46 | 3.55 | — | — | — | |
| Net Fixed Asset Turnover, Industry | |||||||
| Industrials | 2.94 | 2.72 | 2.17 | — | — | — | |
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
1 2022 Calculation
Net fixed asset turnover = Net sales ÷ Property, plant and equipment, net
= 15,861,608 ÷ 2,122,758 = 7.47
2 Click competitor name to see calculations.
- Net Sales
- The net sales value shows an overall upward trend from 2017 to 2022. Starting at approximately $12.03 billion in 2017, sales increased steadily, peaking at $15.86 billion in 2022. A slight decline is observed in 2020, where sales decreased to about $13.70 billion, possibly indicating external challenges during that period. Following this dip, the company experienced a robust recovery in 2021 and 2022, surpassing previous sales figures.
- Property, Plant and Equipment, Net
- The net value of property, plant, and equipment fluctuates across the years with no consistent upward or downward trajectory. The asset base declined gradually from around $1.94 billion in 2017 to approximately $1.77 billion in 2019. A notable increase occurred in 2020, rising sharply to $2.29 billion, which may reflect new investments or acquisitions. This elevated level was maintained through 2021 and 2022, with a slight decrease observed in the latest year.
- Net Fixed Asset Turnover
- This ratio exhibits variability throughout the period. Initially rising from 6.21 in 2017 to a peak of 8.10 in 2019, it then dropped significantly to 5.97 in 2020, indicating reduced efficiency in utilizing fixed assets to generate sales during that year. Following the decline, the ratio recovered to 6.33 in 2021 and further improved to 7.47 in 2022. This suggests a strengthening in asset utilization efficiency after the 2020 downturn.
- Summary
- Overall, the financial data indicates a company experiencing growth in revenue with some volatility linked to external factors, particularly in 2020. Investments in property, plant, and equipment increased sharply in 2020, likely supporting operational capacity. The fluctuations in net fixed asset turnover reflect changes in asset utilization efficiency, with a notable dip in 2020 followed by recovery in subsequent years. These patterns illustrate resilience and an adaptive response to changing business conditions over the analyzed period.
Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
Parker-Hannifin Corp., net fixed asset turnover (including operating lease, right-of-use asset) calculation, comparison to benchmarks
| Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net sales | 15,861,608) | 14,347,640) | 13,695,520) | 14,320,324) | 14,302,392) | 12,029,312) | |
| Property, plant and equipment, net | 2,122,758) | 2,266,476) | 2,292,735) | 1,768,287) | 1,856,237) | 1,937,292) | |
| Operating lease right-of-use assets (included within Investments and other assets) | 133,412) | 131,880) | 138,601) | —) | —) | —) | |
| Property, plant and equipment, net (including operating lease, right-of-use asset) | 2,256,170) | 2,398,356) | 2,431,336) | 1,768,287) | 1,856,237) | 1,937,292) | |
| Long-term Activity Ratio | |||||||
| Net fixed asset turnover (including operating lease, right-of-use asset)1 | 7.03 | 5.98 | 5.63 | 8.10 | 7.71 | 6.21 | |
| Benchmarks | |||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Competitors2 | |||||||
| Boeing Co. | 5.55 | 5.04 | 4.45 | — | — | — | |
| Caterpillar Inc. | 4.49 | 3.79 | 3.00 | — | — | — | |
| Eaton Corp. plc | 5.58 | 5.60 | 5.26 | — | — | — | |
| GE Aerospace | 5.08 | 4.55 | 1.63 | — | — | — | |
| Honeywell International Inc. | 5.58 | 5.28 | 5.15 | — | — | — | |
| Lockheed Martin Corp. | 7.27 | 7.54 | 7.96 | — | — | — | |
| RTX Corp. | 3.95 | 3.80 | 3.36 | — | — | — | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Sector | |||||||
| Capital Goods | 5.13 | 4.80 | 3.25 | — | — | — | |
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Industry | |||||||
| Industrials | 2.54 | 2.34 | 1.92 | — | — | — | |
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
1 2022 Calculation
Net fixed asset turnover (including operating lease, right-of-use asset) = Net sales ÷ Property, plant and equipment, net (including operating lease, right-of-use asset)
= 15,861,608 ÷ 2,256,170 = 7.03
2 Click competitor name to see calculations.
The annual financial data indicates several noteworthy trends over the six-year period from mid-2017 to mid-2022.
- Net Sales
- The net sales showed an overall upward trend, increasing from approximately 12.03 billion USD in 2017 to about 15.86 billion USD in 2022. This growth was not strictly linear; there was a dip between 2019 and 2020, where net sales fell from around 14.32 billion USD to 13.70 billion USD, likely reflecting external challenges during that period. However, net sales rebounded in the subsequent years, surpassing prior levels by 2022.
- Property, Plant, and Equipment, Net
- This asset category exhibited fluctuations across the years. Initially, from 2017 to 2019, there was a gradual decline in the net value from about 1.94 billion USD to 1.77 billion USD. A sharp increase occurred in 2020, jumping to approximately 2.43 billion USD, followed by a slight decrease and stabilization near 2.25 billion USD by 2022. The rise in 2020 may indicate significant capital investments or accounting adjustments related to operating lease assets.
- Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)
- The net fixed asset turnover ratio experienced variable movement. It rose from 6.21 in 2017 to a peak of 8.10 in 2019, reflecting improved efficiency in utilizing fixed assets to generate sales. Subsequently, the ratio dropped sharply to 5.63 in 2020, coinciding with the increase in asset base and dip in sales for that year. The ratio recovered gradually to 7.03 by 2022, suggesting a return toward more efficient asset use, though still below the 2019 peak.
Overall, the data depicts a company managing growth with periods of investment and adjustment. The dip in sales and fixed asset turnover in 2020 could reflect external market or economic disruptions, while the rebound in following years signals recovery and enhanced operational efficiency. The investments in property and equipment, particularly in 2020, appear aligned with the strategy to support long-term growth despite short-term challenges.
Total Asset Turnover
Parker-Hannifin Corp., total asset turnover calculation, comparison to benchmarks
| Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net sales | 15,861,608) | 14,347,640) | 13,695,520) | 14,320,324) | 14,302,392) | 12,029,312) | |
| Total assets | 25,943,943) | 20,341,200) | 19,738,189) | 17,576,690) | 15,320,087) | 15,489,904) | |
| Long-term Activity Ratio | |||||||
| Total asset turnover1 | 0.61 | 0.71 | 0.69 | 0.81 | 0.93 | 0.78 | |
| Benchmarks | |||||||
| Total Asset Turnover, Competitors2 | |||||||
| Boeing Co. | 0.49 | 0.45 | 0.38 | — | — | — | |
| Caterpillar Inc. | 0.69 | 0.58 | 0.50 | — | — | — | |
| Eaton Corp. plc | 0.59 | 0.58 | 0.56 | — | — | — | |
| GE Aerospace | 0.39 | 0.36 | 0.29 | — | — | — | |
| Honeywell International Inc. | 0.57 | 0.53 | 0.51 | — | — | — | |
| Lockheed Martin Corp. | 1.25 | 1.32 | 1.29 | — | — | — | |
| RTX Corp. | 0.42 | 0.40 | 0.35 | — | — | — | |
| Total Asset Turnover, Sector | |||||||
| Capital Goods | 0.54 | 0.50 | 0.43 | — | — | — | |
| Total Asset Turnover, Industry | |||||||
| Industrials | 0.66 | 0.58 | 0.50 | — | — | — | |
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
1 2022 Calculation
Total asset turnover = Net sales ÷ Total assets
= 15,861,608 ÷ 25,943,943 = 0.61
2 Click competitor name to see calculations.
- Net Sales
- Net sales exhibited an overall upward trajectory from 2017 to 2022. Starting at approximately $12.03 billion in 2017, sales rose steadily to reach about $15.86 billion by 2022. Despite a slight decline observed in 2020, where sales dropped to roughly $13.70 billion compared to previous years, the subsequent years saw recovery and growth, surpassing prior peaks.
- Total Assets
- Total assets demonstrated a consistent increase across the period under review. From around $15.49 billion in 2017, total assets grew modestly in the early years before exhibiting significant acceleration in the later years. The asset base expanded markedly to approximately $25.94 billion by 2022, indicating substantial asset accumulation over time.
- Total Asset Turnover Ratio
- The total asset turnover ratio, reflecting the efficiency of asset utilization to generate sales, showed a declining trend overall. The ratio peaked at 0.93 in 2018 but then steadily decreased in the following years, dropping to 0.61 by 2022. This suggests that, despite increasing sales and asset levels, the company's effectiveness in generating sales from its asset base has diminished over the specified period.
- Summary
- The combined analysis of these financial metrics indicates that while sales and asset size have grown substantially, the company's efficiency in leveraging its assets to generate revenue has declined. The reduction in total asset turnover ratio concurrent with rising assets and sales may point to increased investment in assets that have yet to proportionally contribute to sales, or potential operational inefficiencies developing over time.
Equity Turnover
Parker-Hannifin Corp., equity turnover calculation, comparison to benchmarks
| Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net sales | 15,861,608) | 14,347,640) | 13,695,520) | 14,320,324) | 14,302,392) | 12,029,312) | |
| Shareholders’ equity | 8,848,011) | 8,398,307) | 6,113,983) | 5,961,969) | 5,859,866) | 5,261,649) | |
| Long-term Activity Ratio | |||||||
| Equity turnover1 | 1.79 | 1.71 | 2.24 | 2.40 | 2.44 | 2.29 | |
| Benchmarks | |||||||
| Equity Turnover, Competitors2 | |||||||
| Boeing Co. | — | — | — | — | — | — | |
| Caterpillar Inc. | 3.57 | 2.92 | 2.55 | — | — | — | |
| Eaton Corp. plc | 1.22 | 1.20 | 1.20 | — | — | — | |
| GE Aerospace | 2.02 | 1.76 | 2.05 | — | — | — | |
| Honeywell International Inc. | 2.12 | 1.85 | 1.86 | — | — | — | |
| Lockheed Martin Corp. | 7.12 | 6.12 | 10.87 | — | — | — | |
| RTX Corp. | 0.92 | 0.88 | 0.78 | — | — | — | |
| Equity Turnover, Sector | |||||||
| Capital Goods | 2.54 | 2.28 | 2.39 | — | — | — | |
| Equity Turnover, Industry | |||||||
| Industrials | 3.06 | 2.63 | 2.75 | — | — | — | |
Based on: 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30).
1 2022 Calculation
Equity turnover = Net sales ÷ Shareholders’ equity
= 15,861,608 ÷ 8,848,011 = 1.79
2 Click competitor name to see calculations.
- Net Sales
- The net sales exhibited a general upward trend over the analyzed period. Beginning at approximately 12.0 billion USD in mid-2017, sales increased steadily to reach around 15.9 billion USD by mid-2022. Notably, there was a slight decline in sales during the year ending June 2020, which could suggest the impact of external economic factors during that period. However, this was followed by a recovery and growth in subsequent years, indicating overall revenue expansion.
- Shareholders’ Equity
- Shareholders' equity showed consistent growth across the years, rising from approximately 5.3 billion USD in 2017 to about 8.8 billion USD in 2022. A significant increase is observed between 2020 and 2021, where equity jumped from around 6.1 billion USD to nearly 8.4 billion USD, suggesting possible capital injections, retained earnings accumulation, or revaluation adjustments. The steady equity growth implies strengthening financial stability and increased net asset value.
- Equity Turnover
- The equity turnover ratio, which measures the efficiency of using shareholders' equity to generate sales, has experienced a declining trend over the timeframe. Starting at 2.29 in 2017, the ratio peaked slightly at 2.44 in 2018, then progressively decreased to a low of 1.71 in 2021 before marginally rising to 1.79 in 2022. This decline indicates that the company generated less sales per unit of equity over time, possibly due to the equity base increasing at a faster pace than sales or changes in operational efficiency.