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.
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- Income Statement
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Analysis of Profitability Ratios
- Enterprise Value (EV)
- Price to FCFE (P/FCFE)
- Present Value of Free Cash Flow to Equity (FCFE)
- Debt to Equity since 2005
- Total Asset Turnover since 2005
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Long-term Activity Ratios (Summary)
Sherwin-Williams Co., long-term (investment) activity ratios
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Net fixed asset turnover | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset) | ||||||
| Total asset turnover | ||||||
| Equity turnover |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
An examination of long-term activity ratios reveals consistent declines in asset utilization efficiency between 2021 and 2025. The ratios indicate a weakening relationship between revenue generation and the level of assets employed. Several ratios demonstrate this trend, with varying degrees of impact.
- Net Fixed Asset Turnover
- The net fixed asset turnover ratio exhibits a pronounced downward trend, decreasing from 10.68 in 2021 to 5.45 in 2025. This suggests a diminishing ability to generate sales revenue from its fixed asset base. The rate of decline appears to be accelerating in later years.
- Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)
- Including operating leases and right-of-use assets, the turnover ratio also declines, moving from 5.41 in 2021 to 3.73 in 2025. While lower in magnitude than the standard net fixed asset turnover, this ratio mirrors the same downward trajectory, indicating that the inclusion of these assets does not offset the overall trend of decreasing efficiency. The decline is consistent year-over-year.
- Total Asset Turnover
- The total asset turnover ratio remains relatively stable between 2021 and 2023, fluctuating around 0.97 to 1.00. However, a noticeable decrease is observed in 2025, falling to 0.91. This suggests that while overall asset utilization was initially consistent, a decline began in the latter part of the period, impacting the ability to generate sales from the total asset base.
- Equity Turnover
- The equity turnover ratio demonstrates a consistent, though less dramatic, decline from 8.18 in 2021 to 5.13 in 2025. This indicates a decreasing ability to generate sales revenue relative to the amount of shareholder equity invested in the business. The decline is steady and proportional across the observed period.
Collectively, these ratios suggest a growing inefficiency in asset utilization. The consistent declines across multiple metrics warrant further investigation to determine the underlying causes, which could include factors such as overinvestment in assets, declining sales, or changes in operational strategies.
Net Fixed Asset Turnover
Sherwin-Williams Co., net fixed asset turnover calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net sales | ||||||
| Property, plant and equipment, net, including finance lease right-of-use assets | ||||||
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | ||||||
| Benchmarks | ||||||
| Net Fixed Asset Turnover, Competitors2 | ||||||
| Linde plc | ||||||
| Net Fixed Asset Turnover, Sector | ||||||
| Chemicals | ||||||
| Net Fixed Asset Turnover, Industry | ||||||
| Materials | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Net fixed asset turnover = Net sales ÷ Property, plant and equipment, net, including finance lease right-of-use assets
= ÷ =
2 Click competitor name to see calculations.
The net fixed asset turnover ratio demonstrates a consistent decline over the five-year period. This indicates a decreasing efficiency in generating sales from the company’s net fixed assets. While net sales experienced growth between 2021 and 2025, the growth in property, plant, and equipment, net, outpaced sales growth, resulting in the observed ratio trend.
- Net Fixed Asset Turnover Trend
- The ratio decreased from 10.68 in 2021 to 5.45 in 2025. This represents a substantial reduction in the amount of sales generated for each dollar invested in fixed assets.
- Sales Growth vs. Fixed Asset Growth
- Net sales increased from US$19,944,600 thousand in 2021 to US$23,574,300 thousand in 2025, representing a cumulative growth of approximately 18.17%. However, property, plant, and equipment, net, increased from US$1,867,300 thousand in 2021 to US$4,321,900 thousand in 2025, a significantly larger increase of approximately 131.73%. This disparity explains the declining turnover ratio.
The most significant decrease in the net fixed asset turnover ratio occurred between 2022 and 2023, falling from 10.04 to 8.13. The rate of decline accelerated between 2023 and 2025, with the ratio decreasing from 8.13 to 5.45. This suggests that investments in fixed assets are not translating into proportional sales increases, and the company may be experiencing diminishing returns on its fixed asset base.
- Potential Implications
- The declining ratio could indicate overinvestment in fixed assets, inefficient asset utilization, or a shift in the company’s business model requiring more capital-intensive operations. Further investigation is warranted to determine the underlying causes and potential corrective actions.
Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
Sherwin-Williams Co., net fixed asset turnover (including operating lease, right-of-use asset) calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net sales | ||||||
| Property, plant and equipment, net, including finance lease right-of-use assets | ||||||
| Operating lease right-of-use assets | ||||||
| Property, plant and equipment, net, including finance lease right-of-use assets (including operating lease, right-of-use asset) | ||||||
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset)1 | ||||||
| Benchmarks | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Competitors2 | ||||||
| Linde plc | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Sector | ||||||
| Chemicals | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Industry | ||||||
| Materials | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Net fixed asset turnover (including operating lease, right-of-use asset) = Net sales ÷ Property, plant and equipment, net, including finance lease right-of-use assets (including operating lease, right-of-use asset)
= ÷ =
2 Click competitor name to see calculations.
The net fixed asset turnover ratio, calculated including operating lease right-of-use assets, demonstrates a consistent decline over the five-year period. While net sales generally increased, the growth in net fixed assets outpaced sales growth, resulting in decreasing efficiency in generating revenue from fixed assets.
- Net Sales Trend
- Net sales exhibited an increasing trend from US$19,944.6 million in 2021 to US$23,574.3 million in 2025. However, the rate of increase slowed in later years, with relatively modest growth between 2023 and 2025.
- Net Fixed Asset Trend
- Property, plant, and equipment, net, including finance lease right-of-use assets, increased steadily throughout the period, rising from US$3,687.9 million in 2021 to US$6,317.1 million in 2025. This represents a more substantial percentage increase than the growth in net sales.
- Net Fixed Asset Turnover Ratio Trend
- The net fixed asset turnover ratio began at 5.41 in 2021 and decreased to 3.73 in 2025. A slight increase was observed from 2021 to 2022 (5.41 to 5.44), but subsequent years show a clear downward trajectory. The ratio decreased from 4.88 in 2023 to 4.07 in 2024, and further to 3.73 in 2025.
The declining ratio suggests that the company is becoming less efficient in utilizing its fixed assets to generate sales. This could be due to several factors, including increased investment in fixed assets without a corresponding increase in sales, or potentially, an over-expansion of fixed assets relative to demand. Further investigation would be required to determine the underlying causes of this trend.
Total Asset Turnover
Sherwin-Williams Co., total asset turnover calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net sales | ||||||
| Total assets | ||||||
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | ||||||
| Benchmarks | ||||||
| Total Asset Turnover, Competitors2 | ||||||
| Linde plc | ||||||
| Total Asset Turnover, Sector | ||||||
| Chemicals | ||||||
| Total Asset Turnover, Industry | ||||||
| Materials | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Total asset turnover = Net sales ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
The total asset turnover ratio exhibited a generally stable pattern over the five-year period, with minor fluctuations. Initial values indicated a ratio of 0.97 in 2021, increasing to 0.98 in 2022, and reaching a peak of 1.00 in 2023. A slight decrease to 0.98 was observed in 2024, followed by a more noticeable decline to 0.91 in 2025.
- Total Asset Turnover Trend
- The ratio demonstrates an initial improvement in asset utilization, peaking in 2023. However, the subsequent decrease in 2025 suggests a potential reduction in the efficiency with which assets are being employed to generate sales. This warrants further investigation to determine the underlying causes.
The increase from 2021 to 2023 suggests the company was becoming more efficient at utilizing its assets to generate revenue. The leveling off and subsequent decline in the latter years could be attributable to several factors, including an increase in assets without a corresponding increase in sales, or a decrease in sales relative to the asset base. The decline in 2025 is the most pronounced change within the observed period.
- Sales and Asset Relationship
- Net sales increased consistently from 2021 to 2025. However, total assets increased at a faster rate in 2025, contributing to the observed decrease in the total asset turnover ratio. This indicates that the growth in assets did not translate into a proportional increase in sales during that year.
Overall, while the ratio remained relatively close to 1.0 for most of the period, the downward trend in 2025 signals a potential area of concern regarding asset efficiency. Continued monitoring of this ratio, alongside related performance indicators, is recommended.
Equity Turnover
Sherwin-Williams Co., equity turnover calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net sales | ||||||
| Shareholders’ equity | ||||||
| Long-term Activity Ratio | ||||||
| Equity turnover1 | ||||||
| Benchmarks | ||||||
| Equity Turnover, Competitors2 | ||||||
| Linde plc | ||||||
| Equity Turnover, Sector | ||||||
| Chemicals | ||||||
| Equity Turnover, Industry | ||||||
| Materials | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Equity turnover = Net sales ÷ Shareholders’ equity
= ÷ =
2 Click competitor name to see calculations.
An analysis of the provided financial information reveals a consistent decline in equity turnover over the five-year period from 2021 to 2025. This indicates a decreasing efficiency in generating sales revenue relative to the amount of shareholders’ equity invested in the business.
- Equity Turnover Trend
- The equity turnover ratio decreased steadily from 8.18 in 2021 to 5.13 in 2025. This represents a substantial reduction in the rate at which the company is utilizing its equity to generate sales. The largest single-year decrease occurred between 2022 and 2023, falling from 7.14 to 6.20.
While net sales experienced growth between 2021 and 2025, the growth in shareholders’ equity outpaced the growth in sales. This disparity is the primary driver of the declining equity turnover. The increase in shareholders’ equity suggests either retained earnings accumulation or new equity contributions, or a combination of both.
- Sales Growth vs. Equity Growth
- Net sales increased from US$19,944,600 thousand in 2021 to US$23,574,300 thousand in 2025, representing an overall increase of approximately 18.2%. However, shareholders’ equity grew more significantly, increasing from US$2,437,200 thousand to US$4,598,300 thousand, an increase of roughly 88.3% over the same period. This differential growth rate explains the observed decline in equity turnover.
The decreasing equity turnover suggests that the company is becoming less efficient in its use of equity financing to generate revenue. Further investigation would be needed to determine the underlying causes of this trend and assess its potential implications for future profitability and investment strategies.