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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- Cash Flow Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Enterprise Value (EV)
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Current Ratio since 2005
- Total Asset Turnover since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Book Value (P/BV) since 2005
- Aggregate Accruals
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Long-term Activity Ratios (Summary)
Trane Technologies plc, long-term (investment) activity ratios
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| 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: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
- Net Fixed Asset Turnover
- The net fixed asset turnover exhibited a steady increasing trend over the five-year period. Starting at 9.05 in 2018, the ratio rose gradually each year to reach 10.41 in 2022. This indicates an improving efficiency in utilizing net fixed assets to generate sales.
- Net Fixed Asset Turnover Including Operating Lease, Right-of-Use Asset
- This adjusted net fixed asset turnover ratio, which includes operating lease and right-of-use assets, showed a contrasting trend to the standard net fixed asset turnover. It started at 9.05 in 2018 but fell sharply to 7.02 in 2019 and remained relatively stable with slight increases through 2022, reaching 8.00. This suggests that when considering these additional assets, efficiency initially declined significantly but showed signs of gradual recovery thereafter.
- Total Asset Turnover
- Total asset turnover declined from 0.87 in 2018 to a low of 0.69 in 2020, indicating reduced efficiency in using total assets to generate revenue during this period. However, the ratio improved in the subsequent two years, rising to 0.78 in 2021 and further to 0.88 in 2022, surpassing the initial 2018 level. This recovery indicates an enhancement in asset utilization efficiency over the later years.
- Equity Turnover
- Equity turnover displayed some volatility but a general upward trajectory. After a slight increase from 2.23 in 2018 to 2.28 in 2019, it declined to 1.94 in 2020. It then rebounded strongly to 2.26 in 2021 and increased further to 2.63 in 2022, the highest in the observed period. This pattern may reflect fluctuations in shareholders' equity or sales, but the overall improvement suggests enhanced effectiveness in generating revenue from equity capital by the end of the period.
Net Fixed Asset Turnover
Trane Technologies plc, net fixed asset turnover calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net revenues | ||||||
| Property, plant and equipment, net | ||||||
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | ||||||
| Benchmarks | ||||||
| Net Fixed Asset Turnover, Competitors2 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| Net Fixed Asset Turnover, Sector | ||||||
| Capital Goods | ||||||
| Net Fixed Asset Turnover, Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Net fixed asset turnover = Net revenues ÷ Property, plant and equipment, net
= ÷ =
2 Click competitor name to see calculations.
- Net Revenues
- The net revenues exhibit variability over the analyzed period. Initially, there is an increase from approximately $15.7 billion in 2018 to about $16.6 billion in 2019. This is followed by a noticeable decline in 2020 to roughly $12.5 billion, which may reflect external challenges impacting the business environment during that year. Subsequently, revenues recover steadily in 2021 and 2022, reaching nearly $16.0 billion, suggesting resilience and improvement in operational performance or market conditions.
- Property, Plant, and Equipment (Net)
- The net value of property, plant, and equipment shows a declining trend starting from 2018 through 2020, decreasing from approximately $1.73 billion to about $1.35 billion. This reduction could be due to asset disposals, impairments, or depreciation exceeding capital expenditures during this timeframe. From 2020 onwards, there is a gradual increase, with the net asset base rising to around $1.54 billion by 2022, potentially indicating renewed investment in fixed assets or reduced depreciation expense.
- Net Fixed Asset Turnover Ratio
- The net fixed asset turnover ratio demonstrates a consistent upward trajectory, moving from 9.05 in 2018 to 10.41 in 2022. This trend suggests an improving efficiency in the use of fixed assets to generate revenue. Despite the dip in net revenues in 2020, the ratio continues to increase, highlighting that the company may be optimizing the utilization of its fixed assets effectively throughout the period.
- Summary
- Overall, the financial data indicates a period of revenue volatility with significant disruption in 2020, followed by recovery. The fluctuation in property, plant, and equipment values aligns with this pattern, showing reductions followed by reinvestment or asset value recovery. The continual improvement in the fixed asset turnover ratio throughout the years points to enhanced operational efficiency in leveraging the fixed asset base to drive revenue growth, which is a positive sign for fixed asset management and usage effectiveness.
Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
Trane Technologies plc, net fixed asset turnover (including operating lease, right-of-use asset) calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net revenues | ||||||
| Property, plant and equipment, net | ||||||
| Operating lease right-of-use assets (classified in Other noncurrent assets) | ||||||
| Property, plant and equipment, net (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 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Sector | ||||||
| Capital Goods | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Net fixed asset turnover (including operating lease, right-of-use asset) = Net revenues ÷ Property, plant and equipment, net (including operating lease, right-of-use asset)
= ÷ =
2 Click competitor name to see calculations.
- Net Revenues
- The net revenues showed an initial increase from 15,668,200 thousand US dollars in 2018 to 16,598,900 thousand US dollars in 2019. However, there was a notable decline in 2020 to 12,454,700 thousand US dollars, indicating a significant drop likely influenced by external factors during that period. Following this decrease, the revenue figures recovered steadily in the subsequent years, rising to 14,136,400 thousand US dollars in 2021 and further to 15,991,700 thousand US dollars in 2022, approaching the levels observed before the decline.
- Property, Plant and Equipment, Net (Including Operating Lease, Right-of-Use Asset)
- This asset category experienced fluctuations over the period. Starting at 1,730,800 thousand US dollars in 2018, it increased substantially to 2,366,200 thousand US dollars in 2019. Subsequently, the value dropped to 1,758,500 thousand US dollars in 2020 but then showed a gradual upward trajectory to 1,835,600 thousand US dollars in 2021 and 1,998,600 thousand US dollars in 2022. This pattern may suggest adjustments in capital investment or asset disposals particularly around 2020 with a normalization trend thereafter.
- Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)
- The net fixed asset turnover ratio declined from 9.05 in 2018 to 7.02 in 2019, indicating reduced efficiency in generating revenue from fixed assets. The ratio stabilized somewhat in 2020 at 7.08, then improved progressively through 2021 and 2022, reaching 7.7 and 8 respectively. This gradual improvement suggests enhanced utilization of fixed assets in generating sales post-2019, possibly reflecting operational adjustments or efficiency gains following the downturn.
Total Asset Turnover
Trane Technologies plc, total asset turnover calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net revenues | ||||||
| Total assets | ||||||
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | ||||||
| Benchmarks | ||||||
| Total Asset Turnover, Competitors2 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| Total Asset Turnover, Sector | ||||||
| Capital Goods | ||||||
| Total Asset Turnover, Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Total asset turnover = Net revenues ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
- Net Revenues
- Net revenues exhibited an overall fluctuating trend over the five-year period. Starting at approximately 15.7 billion USD in 2018, revenues increased to nearly 16.6 billion USD in 2019, marking a growth phase. However, in 2020, there was a significant decline to about 12.5 billion USD, which may reflect challenging market conditions or operational disruptions during that year. Subsequently, revenues recovered partially in 2021, reaching approximately 14.1 billion USD, and this upward trajectory continued into 2022, with revenues rising to nearly 16.0 billion USD, approaching the pre-2020 levels.
- Total Assets
- Total assets increased notably from around 17.9 billion USD in 2018 to nearly 20.5 billion USD in 2019, indicating possible asset acquisitions or expansion activities. However, from 2019 onwards, total assets declined and stabilized around the 18.1 billion USD range for the years 2020 through 2022, suggesting a period of asset consolidation or divestiture following the peak in 2019.
- Total Asset Turnover
- The total asset turnover ratio, which measures efficiency in using assets to generate revenue, started at 0.87 in 2018 and decreased gradually to 0.81 in 2019, then further down to 0.69 in 2020. This decline coincides with reduced revenue generation relative to asset base, indicating less efficient asset utilization during that period. In 2021, the ratio improved to 0.78, and in 2022, it increased further to 0.88, surpassing the initial 2018 level. This progression reflects enhanced efficiency in asset usage, with the company generating more revenue per unit of asset compared to earlier years.
Equity Turnover
Trane Technologies plc, equity turnover calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net revenues | ||||||
| Total Trane Technologies plc shareholders’ equity | ||||||
| Long-term Activity Ratio | ||||||
| Equity turnover1 | ||||||
| Benchmarks | ||||||
| Equity Turnover, Competitors2 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| Equity Turnover, Sector | ||||||
| Capital Goods | ||||||
| Equity Turnover, Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Equity turnover = Net revenues ÷ Total Trane Technologies plc shareholders’ equity
= ÷ =
2 Click competitor name to see calculations.
- Net Revenues
- The net revenues exhibited fluctuations over the five-year period. Starting at approximately 15.67 billion US dollars in 2018, revenues increased to about 16.60 billion in 2019. However, a significant decline occurred in 2020, with revenues dropping to around 12.45 billion. This decline was followed by a recovery phase, as revenues rose to roughly 14.14 billion in 2021 and further increased to nearly 15.99 billion in 2022, though not reaching the peak observed in 2019.
- Total Shareholders’ Equity
- Shareholders’ equity demonstrated a decreasing trend over the same timeframe. Beginning at approximately 7.02 billion US dollars in 2018, it slightly increased to about 7.27 billion in 2019. Afterward, equity declined consecutively each year, reaching around 6.41 billion in 2020, further decreasing to approximately 6.26 billion in 2021, and ending at nearly 6.09 billion in 2022. This persistent reduction indicates shrinking equity capital for the company over these years.
- Equity Turnover Ratio
- The equity turnover ratio experienced variations but showed an overall upward trend. The ratio started at 2.23 in 2018 and marginally increased to 2.28 in 2019. It then declined to 1.94 in 2020, correlating with the drop in revenues and the equity decrease. In subsequent years, the ratio improved to 2.26 in 2021 and further increased to 2.63 in 2022, reaching the highest level in the observed period. This suggests a more efficient utilization of equity to generate revenues in the later years despite the declining equity base.
- Overall Insights
- The company experienced revenue volatility with a notable dip in 2020, likely reflecting external challenges during that period. Despite recovering revenues in 2021 and 2022, shareholders’ equity consistently declined, which may raise concerns regarding retained earnings or capital management. The rising equity turnover ratio in the latter years indicates improved efficiency in using equity to produce revenue, which may partially offset the impact of declining equity levels. These trends collectively suggest operational resilience in recovering revenues along with potential pressures on the company’s equity position.