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Analysis of Short-term (Operating) Activity Ratios
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)
Sherwin-Williams Co., short-term (operating) activity ratios
Based on: 10-K (filing date: 2021-02-19), 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-22).
| Short-term activity ratio | Description | The company |
|---|---|---|
| Inventory turnover | An activity ratio calculated as cost of goods sold divided by inventory. | Sherwin-Williams Co.’s inventory turnover ratio deteriorated from 2018 to 2019 but then slightly improved from 2019 to 2020. |
| Receivables turnover | An activity ratio equal to revenue divided by receivables. | Sherwin-Williams Co.’s receivables turnover ratio deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level. |
| Payables turnover | An activity ratio calculated as cost of goods sold divided by payables. | Sherwin-Williams Co.’s payables turnover ratio decreased from 2018 to 2019 and from 2019 to 2020. |
| 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. | Sherwin-Williams Co.’s number of days of inventory outstanding deteriorated from 2018 to 2019 but then slightly improved from 2019 to 2020. |
| Average receivable collection period | An activity ratio equal to the number of days in the period divided by receivables turnover. | Sherwin-Williams Co.’s number of days of receivables outstanding deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level. |
| Operating cycle | Equal to average inventory processing period plus average receivables collection period. | Sherwin-Williams Co.’s operating cycle deteriorated from 2018 to 2019 but then improved from 2019 to 2020 not reaching 2018 level. |
| 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. | Sherwin-Williams Co.’s number of days of payables outstanding increased from 2018 to 2019 and from 2019 to 2020. |
| 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. | Sherwin-Williams Co.’s cash conversion cycle deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level. |
Inventory Turnover
Sherwin-Williams Co., inventory turnover calculation, comparison to benchmarks
Based on: 10-K (filing date: 2021-02-19), 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-22).
1 2020 Calculation
Inventory turnover = Cost of goods sold ÷ Inventories
= ÷ =
| Short-term activity ratio | Description | The company |
|---|---|---|
| Inventory turnover | An activity ratio calculated as cost of goods sold divided by inventory. | Sherwin-Williams Co.’s inventory turnover ratio deteriorated from 2018 to 2019 but then slightly improved from 2019 to 2020. |
Receivables Turnover
Sherwin-Williams Co., receivables turnover calculation, comparison to benchmarks
Based on: 10-K (filing date: 2021-02-19), 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-22).
1 2020 Calculation
Receivables turnover = Net sales ÷ Accounts receivable, less allowance
= ÷ =
| Short-term activity ratio | Description | The company |
|---|---|---|
| Receivables turnover | An activity ratio equal to revenue divided by receivables. | Sherwin-Williams Co.’s receivables turnover ratio deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level. |
Payables Turnover
Sherwin-Williams Co., payables turnover calculation, comparison to benchmarks
Based on: 10-K (filing date: 2021-02-19), 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-22).
1 2020 Calculation
Payables turnover = Cost of goods sold ÷ Accounts payable
= ÷ =
| Short-term activity ratio | Description | The company |
|---|---|---|
| Payables turnover | An activity ratio calculated as cost of goods sold divided by payables. | Sherwin-Williams Co.’s payables turnover ratio decreased from 2018 to 2019 and from 2019 to 2020. |
Working Capital Turnover
Sherwin-Williams Co., working capital turnover calculation, comparison to benchmarks
Based on: 10-K (filing date: 2021-02-19), 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-22).
1 2020 Calculation
Working capital turnover = Net sales ÷ Working capital
= ÷ =
Average Inventory Processing Period
Sherwin-Williams Co., average inventory processing period calculation, comparison to benchmarks
Based on: 10-K (filing date: 2021-02-19), 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-22).
1 2020 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ =
| 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. | Sherwin-Williams Co.’s number of days of inventory outstanding deteriorated from 2018 to 2019 but then slightly improved from 2019 to 2020. |
Average Receivable Collection Period
Sherwin-Williams Co., average receivable collection period calculation, comparison to benchmarks
Based on: 10-K (filing date: 2021-02-19), 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-22).
1 2020 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ =
| 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. | Sherwin-Williams Co.’s number of days of receivables outstanding deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level. |
Operating Cycle
Sherwin-Williams Co., operating cycle calculation, comparison to benchmarks
No. days
Based on: 10-K (filing date: 2021-02-19), 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-22).
1 2020 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= + =
| Short-term activity ratio | Description | The company |
|---|---|---|
| Operating cycle | Equal to average inventory processing period plus average receivables collection period. | Sherwin-Williams Co.’s operating cycle deteriorated from 2018 to 2019 but then improved from 2019 to 2020 not reaching 2018 level. |
Average Payables Payment Period
Sherwin-Williams Co., average payables payment period calculation, comparison to benchmarks
Based on: 10-K (filing date: 2021-02-19), 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-22).
1 2020 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ =
| 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. | Sherwin-Williams Co.’s number of days of payables outstanding increased from 2018 to 2019 and from 2019 to 2020. |
Cash Conversion Cycle
Sherwin-Williams Co., cash conversion cycle calculation, comparison to benchmarks
No. days
Based on: 10-K (filing date: 2021-02-19), 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-22).
1 2020 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= + – =
| 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. | Sherwin-Williams Co.’s cash conversion cycle deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level. |