Analysis of Short-term (Operating) Activity Ratios
Quarterly Data
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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- Analysis of Long-term (Investment) Activity Ratios
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Short-term Activity Ratios (Summary)
Trane Technologies plc, short-term (operating) activity ratios (quarterly data)
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
The analysis of the quarterly financial ratios reveals several notable trends in operational efficiency and working capital management over the examined periods.
- Inventory Turnover
- The inventory turnover ratio showed a general increase from the first quarter of 2019 through 2020, peaking around mid-2020. However, from 2021 onwards, a downward trend is evident, with the ratio declining steadily into early 2023. This suggests that the company was initially improving inventory efficiency but later experienced a slowdown in inventory movement.
- Receivables Turnover
- This ratio exhibited fluctuations during the period, with a notable increase around early 2020, indicating quicker collection of receivables at that time. Afterward, it stabilized with minor variations, and a slight upward movement is observed again towards the first quarter of 2023, implying some improvement in collections.
- Payables Turnover
- The payables turnover ratio peaked in early 2020 but has generally trended downward since then, indicating the company has been taking longer to pay its suppliers over time. The decline is gradual with occasional fluctuations, suggesting a cautious approach to cash outflows during the latter periods.
- Working Capital Turnover
- The working capital turnover ratio showed high volatility throughout the quarters, with extremely high values notably in 2019 mid-year and again in late 2021 and 2022. Periods of sharp increases followed by significant declines indicate fluctuating efficiency in utilizing working capital to generate sales. The unusually high values in certain quarters may be influenced by changes in current asset or liability components.
- Average Inventory Processing Period
- The average days inventory is held decreased steadily from early 2019 into 2020, indicating improved inventory management during that period. Starting in 2021, the processing period lengthened gradually, reaching the highest observed value in early 2023, which corresponds with the decline in inventory turnover, reflecting slower inventory movement.
- Average Receivable Collection Period
- The collection period shows fluctuations but remains mostly stable with values generally between 58 and 71 days. There was a decrease early in 2020, indicating quicker collection at that time, followed by moderate variations without a clear directional trend over later quarters.
- Operating Cycle
- The length of the operating cycle decreased notably from early 2019 into 2020, suggesting improved overall efficiency in inventory management and receivables collection. However, since mid-2020, the operating cycle has extended gradually, indicating that the combined timing of inventory turnover and receivables collection has slowed somewhat.
- Average Payables Payment Period
- The average days to pay suppliers decreased sharply in early 2020 but then rose steadily through 2021 and 2022, reaching the longest payment period in late 2021 and 2022. The trend indicates a strategy to extend payment times to conserve cash or manage liquidity during this timeframe, with a slight decrease noted in early 2023.
- Cash Conversion Cycle
- The cash conversion cycle decreased notably from 2019 into early 2020, improving cash flow efficiency. In the subsequent quarters, it fluctuated moderately but generally trended upward through 2022, indicating a lengthening in the time taken to convert resource inputs into cash flows from sales. Early 2023 shows an increase in the cash conversion cycle duration, signaling potential challenges in working capital efficiency.
Overall, the patterns indicate that the company achieved improved working capital efficiencies up to 2020, particularly with faster inventory turnover and receivable collections. However, from 2021 onward, there has been a reversal, with slower inventory movement, extended payment periods, and a longer operating and cash conversion cycle. The volatility in working capital turnover and other ratios suggests that external or internal factors have impacted operational efficiency, warranting closer monitoring and potentially targeted measures to optimize working capital management in future periods.
Turnover Ratios
Average No. Days
Inventory Turnover
Trane Technologies plc, inventory turnover calculation (quarterly data)
| Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||
| Cost of goods sold | |||||||||||||||||||||||
| Inventories | |||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||
| Inventory turnover1 | |||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||
| Inventory Turnover, Competitors2 | |||||||||||||||||||||||
| Boeing Co. | |||||||||||||||||||||||
| Caterpillar Inc. | |||||||||||||||||||||||
| Eaton Corp. plc | |||||||||||||||||||||||
| GE Aerospace | |||||||||||||||||||||||
| Honeywell International Inc. | |||||||||||||||||||||||
| Lockheed Martin Corp. | |||||||||||||||||||||||
| RTX Corp. | |||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q1 2023 Calculation
Inventory turnover
= (Cost of goods soldQ1 2023
+ Cost of goods soldQ4 2022
+ Cost of goods soldQ3 2022
+ Cost of goods soldQ2 2022)
÷ Inventories
= ( + + + )
÷ =
2 Click competitor name to see calculations.
The cost of goods sold (COGS) exhibits fluctuations over the analyzed periods with a general downward trend initiating around the first quarter of 2020, followed by intermittent increases and decreases. Notably, COGS decreased sharply from approximately 2.9 billion in December 2019 to around 1.9 billion in March 2020, likely reflecting an abrupt change in operational conditions. Afterward, a gradual recovery is observable, with values oscillating before stabilizing near 2.5 billion by the end of 2021 and fluctuating again through 2022 and early 2023.
Inventories show a clear declining trend starting from just below 2 billion in March 2019 and reaching a low point around 1.19 billion in December 2020. From early 2021 onwards, inventories increase steadily, reaching approximately 2.34 billion by March 2023. This pattern suggests efforts to rebuild inventory levels following a significant reduction through the pandemic onset, possibly to meet increasing demand or address supply chain constraints.
Inventory turnover, derived as a ratio of COGS to inventories, reflects these underlying changes. There is an increase in turnover ratio from 5.52 in March 2019 to a peak above 7.5 in the third quarter of 2020, indicating more efficient inventory management or faster inventory movement during that period. However, starting in 2021, the turnover ratio declines steadily, reaching 4.77 by March 2023. This decline corresponds to rising inventory levels relative to COGS, suggesting a slower inventory movement or potential buildup of stock.
- Cost of Goods Sold (COGS)
- Experienced a significant drop in early 2020, followed by gradual recovery and periodic fluctuations without a clear upward or downward long-term trend.
- Inventories
- Decreased markedly through 2019 and 2020, then rebounded strongly from 2021 onward, ultimately surpassing pre-pandemic levels by early 2023.
- Inventory Turnover Ratio
- Rose sharply during 2019-2020, reaching its highest efficiency in late 2020, but declined steadily from 2021 forward, indicating slower inventory sales relative to stock held.
Overall, the data suggest that inventory management efficiencies peaked during the pandemic-related stock reductions but have since softened as inventory volumes have grown. This trend may warrant attention to potential overstocking risks or changing demand dynamics moving forward.
Receivables Turnover
Trane Technologies plc, receivables turnover calculation (quarterly data)
| Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||
| Net revenues | |||||||||||||||||||||||
| Accounts and notes receivable, net | |||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||
| Receivables turnover1 | |||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||
| Receivables Turnover, Competitors2 | |||||||||||||||||||||||
| Boeing Co. | |||||||||||||||||||||||
| Caterpillar Inc. | |||||||||||||||||||||||
| Eaton Corp. plc | |||||||||||||||||||||||
| GE Aerospace | |||||||||||||||||||||||
| Honeywell International Inc. | |||||||||||||||||||||||
| Lockheed Martin Corp. | |||||||||||||||||||||||
| RTX Corp. | |||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q1 2023 Calculation
Receivables turnover
= (Net revenuesQ1 2023
+ Net revenuesQ4 2022
+ Net revenuesQ3 2022
+ Net revenuesQ2 2022)
÷ Accounts and notes receivable, net
= ( + + + )
÷ =
2 Click competitor name to see calculations.
The financial data reveals several noteworthy trends across the analyzed periods.
- Net Revenues
- Net revenues exhibit a cyclical pattern with significant fluctuations over the examined quarters. There is a marked decline from early 2020, reaching a low point in the first quarter of 2020, likely reflecting external economic disruptions. Following this dip, net revenues demonstrate a recovery phase starting mid-2020 and peaking in the third quarter of 2022. However, a gradual decrease is observed again towards the beginning of 2023.
- Accounts and Notes Receivable, Net
- The accounts and notes receivable follow a generally declining trend from early 2019 through early 2020, aligning with the contraction in net revenues. From mid-2020 onwards, receivables fluctuate moderately but show a tendency toward gradual recovery and stabilization. Despite periods of increase, particularly in 2022, there is no substantial return to the higher levels observed in early 2019, and a slight decrease is apparent in early 2023.
- Receivables Turnover Ratio
- The receivables turnover ratio exhibits variability corresponding with changes in revenue and receivables balances. A notable spike occurs in the first quarter of 2020, indicating faster collection of receivables during that period. After a decline in subsequent quarters, the ratio stabilizes around mid-2020 to early 2021, followed by minor fluctuations. In the latest quarters, an upward trend in the turnover ratio suggests improvements in collection efficiency.
Overall, the financial indicators show a significant impact around early 2020 consistent with external market challenges, followed by partial recovery and stabilization in both revenue generation and receivables management. The recent improvement in receivables turnover points to enhanced cash flow management despite continuing revenue fluctuations.
Payables Turnover
Trane Technologies plc, payables turnover calculation (quarterly data)
| Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||
| Cost of goods sold | |||||||||||||||||||||||
| Accounts payable | |||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||
| Payables turnover1 | |||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||
| Payables Turnover, Competitors2 | |||||||||||||||||||||||
| Boeing Co. | |||||||||||||||||||||||
| Caterpillar Inc. | |||||||||||||||||||||||
| Eaton Corp. plc | |||||||||||||||||||||||
| GE Aerospace | |||||||||||||||||||||||
| Honeywell International Inc. | |||||||||||||||||||||||
| Lockheed Martin Corp. | |||||||||||||||||||||||
| RTX Corp. | |||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q1 2023 Calculation
Payables turnover
= (Cost of goods soldQ1 2023
+ Cost of goods soldQ4 2022
+ Cost of goods soldQ3 2022
+ Cost of goods soldQ2 2022)
÷ Accounts payable
= ( + + + )
÷ =
2 Click competitor name to see calculations.
The cost of goods sold (COGS) demonstrates a notable seasonal fluctuation along with some longer-term trends. Initially, there is an increase from early 2019 through the third quarter of 2019, followed by a slight decline toward the end of 2019. A significant drop occurs in the first half of 2020, reflecting possible impacts on operations or market conditions during that period. From the latter half of 2020 onwards, COGS gradually increases again, peaking around the third quarter of 2022, before declining slightly in early 2023.
Accounts payable displays some overall growth throughout the analyzed timeframe. Early 2019 figures start lower but steadily rise across the years, with some fluctuations. While the second quarters of 2020 and 2021 show marginal decreases or pauses in growth, the general trend is upward, reaching the highest levels in the second and third quarters of 2022. A small decline is observed moving into the first quarter of 2023.
Payables turnover ratio trends inversely to accounts payable, generally decreasing from 2019 into 2021, which suggests that the company is taking longer to pay its suppliers over this period. The lowest turnover values are recorded in the mid-2021 period. From late 2021 onward, there is a gradual improvement in the payables turnover ratio, indicating a shortening of payment cycles. The ratio increases sharply again by early 2023, approaching levels seen before the downturn in 2020.
- Cost of Goods Sold
- Experienced growth in 2019 before a sharp decline in early 2020, likely linked to operational disruptions.
- Post-2020, a recovery and steady increase occurred, peaking in late 2022, with a subsequent moderate decrease in early 2023.
- Accounts Payable
- Overall increasing trend from 2019 through 2022 with fluctuations, suggesting an expansion in credit purchases or delayed payments.
- Peaked in 2022, indicating increased payables balances before a slight reduction in early 2023.
- Payables Turnover Ratio
- Declined from 2019 into mid-2021, indicating longer payment periods to suppliers.
- Improved from late 2021 onward, suggesting acceleration in payment to suppliers.
- Rebounded in early 2023 near pre-2020 levels, reflecting enhanced payment efficiency.
Working Capital Turnover
Trane Technologies plc, working capital turnover calculation (quarterly data)
| Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||
| Current assets | |||||||||||||||||||||||
| Less: Current liabilities | |||||||||||||||||||||||
| Working capital | |||||||||||||||||||||||
| Net revenues | |||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||
| Working capital turnover1 | |||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||
| Working Capital Turnover, Competitors2 | |||||||||||||||||||||||
| Boeing Co. | |||||||||||||||||||||||
| Caterpillar Inc. | |||||||||||||||||||||||
| Eaton Corp. plc | |||||||||||||||||||||||
| GE Aerospace | |||||||||||||||||||||||
| Honeywell International Inc. | |||||||||||||||||||||||
| Lockheed Martin Corp. | |||||||||||||||||||||||
| RTX Corp. | |||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q1 2023 Calculation
Working capital turnover
= (Net revenuesQ1 2023
+ Net revenuesQ4 2022
+ Net revenuesQ3 2022
+ Net revenuesQ2 2022)
÷ Working capital
= ( + + + )
÷ =
2 Click competitor name to see calculations.
The analysis of the financial data reveals several notable trends in the company's working capital, net revenues, and working capital turnover ratio over the examined periods.
- Working Capital
- The working capital exhibited significant fluctuations throughout the periods. From March 2019 to December 2019, it decreased from approximately 2.6 billion USD to about 1.35 billion USD. It then rose substantially in the course of 2020, peaking at around 2.8 billion USD in September before declining again toward the end of the year. During 2021, working capital generally decreased, reaching approximately 1.7 billion USD by December. In 2022, a marked reduction is observed, with working capital dropping sharply to under 500 million USD mid-year, followed by a modest recovery toward the end of 2022 and into March 2023, reaching roughly 1.24 billion USD. These variations suggest active management of short-term assets and liabilities with possible impacts from operational or external economic factors.
- Net Revenues
- Net revenues showed relative volatility but with a generally stable trend when observed over the entire period. Initial revenues in early 2019 were around 3.58 billion USD, which rose to over 4.5 billion USD mid-year. However, a decline followed heading into 2020, reaching a low point of roughly 2.6 billion USD in March 2020, coinciding with the global economic disruptions of that time. Revenues then recovered notably through late 2020 and into 2021, consistently staying above 3 billion USD. The revenue peaked again late 2021 and into 2022, reaching approximately 4.37 billion USD in September 2022 but experienced a decline again toward early 2023, settling near 3.67 billion USD. This pattern indicates sensitivity to economic cycles and possibly market demand fluctuations.
- Working Capital Turnover
- The working capital turnover ratio demonstrated considerable variability and a generally inverse relationship to working capital levels. Early in 2019, the ratio was relatively low, around 6, spiking sharply to over 13 in mid-2019, reflecting increased efficiency in using working capital to generate revenues during that period of lower capital. The ratio declined during 2020, reaching near 4.8 by the end of the year, consistent with the higher levels of working capital. In 2021, the ratio stabilized around 5, before sharply increasing in 2022 to a peak close to 30 in mid-year, signaling a rapid increase in revenue generation relative to the considerably reduced working capital base. By early 2023, the ratio decreased but remained elevated above 13, indicating sustained efficiency improvements or working capital constraints.
Overall, the data indicates that the company experienced significant working capital level fluctuations, with associated impacts on turnover efficiency. Revenue trends showed sensitivity to external economic conditions with recoveries following downturns. The working capital turnover ratios reflect the company's changing capacity to utilize its short-term assets and liabilities effectively during periods of varying operational and market conditions.
Average Inventory Processing Period
Trane Technologies plc, average inventory processing period calculation (quarterly data)
| Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||
| Inventory turnover | |||||||||||||||||||||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||||
| Average inventory processing period1 | |||||||||||||||||||||||
| Benchmarks (no. days) | |||||||||||||||||||||||
| Average Inventory Processing Period, Competitors2 | |||||||||||||||||||||||
| Boeing Co. | |||||||||||||||||||||||
| Caterpillar Inc. | |||||||||||||||||||||||
| Eaton Corp. plc | |||||||||||||||||||||||
| GE Aerospace | |||||||||||||||||||||||
| Honeywell International Inc. | |||||||||||||||||||||||
| Lockheed Martin Corp. | |||||||||||||||||||||||
| RTX Corp. | |||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q1 2023 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly data reveals notable trends in the inventory management efficiency over the observed periods.
- Inventory Turnover Ratio
- The inventory turnover ratio exhibited an upward trend from early 2019 through 2020, increasing from 5.52 to a peak around 7.59 in September 2020. This rise indicates an improvement in the speed at which inventory was sold and replaced during this timeframe. However, starting in 2021, the ratio declined gradually, dropping to 4.77 by March 2023. This downward trend suggests a slowing in the rate of inventory turnover, which may point to growing inventory levels relative to sales or less efficient inventory management.
- Average Inventory Processing Period (Days)
- The average inventory processing period decreased steadily from 66 days in March 2019 to a low of approximately 48-50 days in late 2020, aligning inversely with the peak in inventory turnover ratio. This decrease indicates faster inventory processing and improved operational efficiency during this period. Afterward, from 2021 onward, the processing period lengthened, reaching 76 days by March 2023. This increase reflects slower inventory turnover, consistent with the observed decline in the inventory turnover ratio.
- Overall Inventory Management Insights
- The data suggests that inventory management was most effective during the late 2019 to 2020 period, with optimized turnover rates and reduced inventory holding times. Conversely, from 2021 through early 2023, there has been a noticeable decline in inventory efficiency, as demonstrated by the falling turnover ratio coupled with increasing inventory processing days. This shift may indicate challenges such as reduced demand, supply chain disruptions, or less effective inventory control practices during that period.
Average Receivable Collection Period
Trane Technologies plc, average receivable collection period calculation (quarterly data)
| Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||
| Receivables turnover | |||||||||||||||||||||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||||
| Average receivable collection period1 | |||||||||||||||||||||||
| Benchmarks (no. days) | |||||||||||||||||||||||
| Average Receivable Collection Period, Competitors2 | |||||||||||||||||||||||
| Boeing Co. | |||||||||||||||||||||||
| Caterpillar Inc. | |||||||||||||||||||||||
| Eaton Corp. plc | |||||||||||||||||||||||
| GE Aerospace | |||||||||||||||||||||||
| Honeywell International Inc. | |||||||||||||||||||||||
| Lockheed Martin Corp. | |||||||||||||||||||||||
| RTX Corp. | |||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q1 2023 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
The analysis of the receivables turnover ratio and average receivable collection period reveals fluctuations in the company's efficiency in collecting accounts receivable over the observed periods.
- Receivables Turnover Ratio
- The receivables turnover ratio starts at 5.85 in the first quarter of 2019 and generally fluctuates through subsequent quarters. A notable peak occurs in the first quarter of 2020, where the ratio reaches 7.49, indicating an improvement in the efficiency of receivable collection. However, following this peak, the ratio decreases during the rest of 2020, stabilizing near 5.5-5.8 in 2021. The following year shows slight variation, with a minor dip mid-2022 and an increase up to 6.26 by the first quarter of 2023. This indicates a modest improvement in receivables turnover towards the end of the period analyzed.
- Average Receivable Collection Period
- This metric displays an inverse trend relative to the receivables turnover ratio, as expected. Initially, the average collection period is 62 days in the first quarter of 2019, extending to a peak of 71 days mid-2019, reflecting slower collections. A significant improvement is evident in the first quarter of 2020 when the average collection period drops to 49 days, consistent with the peak in receivables turnover ratio. The collection period then lengthens again during the second half of 2020, fluctuating mostly between 59 to 65 days across 2021 and 2022. By the first quarter of 2023, it decreases again to 58 days, suggesting a slight enhancement in collection efficiency at the end of the timeline.
Overall, the data indicates that the company had periods of improved receivable collections efficiency, notably in early 2020, followed by a stabilization phase with some fluctuations. The receivables turnover and average collection period trends confirm that the company has moderate control over receivable management but faces some cyclical variability in collection performance across quarters.
Operating Cycle
Trane Technologies plc, operating cycle calculation (quarterly data)
No. days
| Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||
| Average inventory processing period | |||||||||||||||||||||||
| Average receivable collection period | |||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||
| Operating cycle1 | |||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||
| Operating Cycle, Competitors2 | |||||||||||||||||||||||
| Boeing Co. | |||||||||||||||||||||||
| Caterpillar Inc. | |||||||||||||||||||||||
| Eaton Corp. plc | |||||||||||||||||||||||
| GE Aerospace | |||||||||||||||||||||||
| Honeywell International Inc. | |||||||||||||||||||||||
| Lockheed Martin Corp. | |||||||||||||||||||||||
| RTX Corp. | |||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q1 2023 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= + =
2 Click competitor name to see calculations.
The financial data reveals notable trends in the company's working capital management over the observed quarterly periods.
- Average Inventory Processing Period
- The average inventory processing period demonstrates a clear decline from 66 days in the first quarter of 2019 to a low of 48 days by the third quarter of 2020. This suggests improved efficiency in inventory turnover during that timeframe. However, from early 2021 onward, the period begins to increase steadily, reaching 76 days by the first quarter of 2023. The increase indicates a slowdown in inventory movement or potential buildup of stock, which may impact liquidity and operational efficiency negatively.
- Average Receivable Collection Period
- The receivable collection period fluctuates but remains generally stable throughout the periods, with values ranging between 49 and 71 days. There was a sharp decline to 49 days in the first quarter of 2020, marking an improvement in receivables management. Following this, the period oscillates around the mid-60s, ending at 58 days by the first quarter of 2023. The relative stability suggests consistent credit policies and collections practices, though occasional variability indicates some external or operational influence affecting collection timing.
- Operating Cycle
- The operating cycle, combining inventory and receivables periods, shows a decline from 128 days in early 2019 to the lowest point of 98 days by the first quarter of 2020, reflecting enhanced operational efficiency. After this improvement, the cycle generally lengthens, fluctuating above 120 days from 2021 onward and increasing to 134 days by the first quarter of 2023. The extension implies elongation in the total cash conversion process, likely driven by the lengthening inventory processing period. This trend might affect cash flow management and necessitates attention to inventory and receivables strategies.
Overall, the company initially improved its working capital efficiency until early 2020, followed by a gradual reversal in inventory processing times and an extended operating cycle over subsequent periods. Receivable collection remains relatively controlled, mitigating some impact on the cash conversion cycle. The trends suggest the need for a closer review of inventory management practices to sustain operational improvements and optimize cash flow.
Average Payables Payment Period
Trane Technologies plc, average payables payment period calculation (quarterly data)
| Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||
| Payables turnover | |||||||||||||||||||||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||||
| Average payables payment period1 | |||||||||||||||||||||||
| Benchmarks (no. days) | |||||||||||||||||||||||
| Average Payables Payment Period, Competitors2 | |||||||||||||||||||||||
| Boeing Co. | |||||||||||||||||||||||
| Caterpillar Inc. | |||||||||||||||||||||||
| Eaton Corp. plc | |||||||||||||||||||||||
| GE Aerospace | |||||||||||||||||||||||
| Honeywell International Inc. | |||||||||||||||||||||||
| Lockheed Martin Corp. | |||||||||||||||||||||||
| RTX Corp. | |||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q1 2023 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
The payables turnover ratio exhibits notable fluctuations over the observed periods. Initially, it maintains a moderate level around 6.0 in early 2019, peaks at 7.49 in the first quarter of 2020, and then generally declines throughout 2021 and 2022, reaching lower values near 5.1 to 5.2. By the first quarter of 2023, there is a slight recovery to 5.7. This pattern suggests an initial acceleration in payment frequency followed by a deceleration.
Correspondingly, the average payables payment period demonstrates an inverse relationship to the payables turnover. The payment period decreases from about 60 days in early 2019 to around 49 days in the first quarter of 2020, aligning with the peak in turnover ratio. Following this period, the payment duration extends substantially, reaching highs above 70 days throughout 2021 and 2022, before shortening to 64 days by the first quarter of 2023.
- Trend Analysis
- The company's payment practices accelerated in early 2020, as indicated by a higher turnover ratio and shorter payment periods.
- Starting mid-2020, payment speed slowed down significantly, reflected by a declining turnover and increasing number of days to settle payables through 2021 and 2022.
- A modest improvement towards quicker payments is evident in early 2023 as the payment period shortens and turnover increases.
- Insights
- The spike in payables turnover and reduced payment period in early 2020 may reflect operational or strategic changes, possibly to optimize supplier relationships or cash flow before the mid-2020 period.
- The lengthening of the payment period through 2021 and 2022 could indicate cash flow management strategies, negotiating longer payment terms with suppliers, or operational challenges impacting accounts payable management.
- The slight reversal in early 2023 suggests efforts to improve liquidity management and supplier payment cycles.
Cash Conversion Cycle
Trane Technologies plc, cash conversion cycle calculation (quarterly data)
No. days
| Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||
| Average inventory processing period | |||||||||||||||||||||||
| Average receivable collection period | |||||||||||||||||||||||
| Average payables payment period | |||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||
| Cash conversion cycle1 | |||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||
| Cash Conversion Cycle, Competitors2 | |||||||||||||||||||||||
| Boeing Co. | |||||||||||||||||||||||
| Caterpillar Inc. | |||||||||||||||||||||||
| Eaton Corp. plc | |||||||||||||||||||||||
| GE Aerospace | |||||||||||||||||||||||
| Honeywell International Inc. | |||||||||||||||||||||||
| Lockheed Martin Corp. | |||||||||||||||||||||||
| RTX Corp. | |||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q1 2023 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= + – =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals notable trends in the company's working capital management over the observed periods.
- Average Inventory Processing Period
- The inventory processing period experienced a general decline from 66 days in March 2019 to a low of 48 days in September 2020, indicating improved efficiency in inventory turnover during that timeframe. However, from early 2021 onwards, this period shows an increasing trend, reaching 76 days by March 2023. This uptick suggests a slowing in inventory movement or accumulation of stock in recent periods.
- Average Receivable Collection Period
- The receivable collection period exhibits fluctuations throughout the timeline. Initially, it decreased significantly from 62 days in March 2019 to 49 days by March 2020. Following this, there was variability, with peaks near the high 60s, but it ultimately demonstrates a mild decreasing trend from late 2021 through early 2023, ending at 58 days in March 2023. This suggests some variability in the efficiency of collecting receivables but with moderate improvement in the latest period.
- Average Payables Payment Period
- The payment period for payables gradually increased from about 60 days in early 2019 to a peak of 73 days in mid-2021, indicating extended payment terms or slower payments to suppliers. After this peak, there is a slight contraction in the payment period, declining to 64 days by March 2023, which may reflect a shift towards quicker payments.
- Cash Conversion Cycle
- The cash conversion cycle, a key indicator of working capital efficiency, decreased notably from 68 days in early 2019 to approximately 49 days by March 2020, suggesting improved liquidity and operational efficiency during that period. It then remained relatively stable, fluctuating around the low 50s to mid-50s until late 2021. From 2022 onward, there is a rising trend again, reaching 70 days in March 2023, indicating a lengthening cash conversion cycle that could signal increased cash tied up in the operating cycle.
In summary, the data illustrate an initial improvement in inventory management and cash cycle efficiency up to early 2020, followed by periods of variability. The more recent trend points to a lengthening of the inventory processing period and cash conversion cycle, coupled with relatively stable collection and payment periods. These shifts may warrant further analysis to understand underlying operational or market conditions contributing to the changes in working capital dynamics.