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
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Dividend Discount Model (DDM)
- Selected Financial Data since 2005
- Operating Profit Margin since 2005
- Debt to Equity since 2005
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Long-term Activity Ratios (Summary)
Waste Management Inc., long-term (investment) activity ratios
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| 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: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Net Fixed Asset Turnover
- The net fixed asset turnover ratio remained stable at 1.25 in 2017 and 2018, followed by a slight decline to 1.2 in 2019 and a more noticeable decrease to 1.08 in 2020. In 2021, the ratio rebounded to 1.24, nearly returning to the initial levels seen in 2017 and 2018. This trend indicates a temporary reduction in efficiency in using fixed assets to generate sales, with improvement observed in the most recent year.
- Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)
- This adjusted ratio exhibited a similar pattern to the standard net fixed asset turnover, starting at 1.25 in both 2017 and 2018, then decreasing to 1.16 in 2019 and further down to 1.04 in 2020. In 2021, there was a recovery to 1.21. The slight differences compared to the unadjusted ratio suggest the incorporation of operating leases and right-of-use assets moderately impacts the turnover calculations but follows the same overall trend of initial stability, decline, and subsequent improvement.
- Total Asset Turnover
- The total asset turnover ratio exhibited a downward trend from 0.66 in both 2017 and 2018 to 0.56 in 2019 and further down to 0.52 in 2020, indicating a decreasing efficiency in generating revenue from total assets over these periods. However, in 2021, the ratio increased to 0.62, showing a recovery but still below the levels observed in the initial years.
- Equity Turnover
- Equity turnover showed a gradual decline from 2.41 in 2017 to 2.38 in 2018, 2.19 in 2019, and 2.04 in 2020, reflecting a trend of diminishing efficiency in generating sales relative to shareholders' equity. Notably, 2021 marked a significant increase to 2.52, surpassing the values recorded in previous years. This suggests an improved use of equity to drive revenue.
Net Fixed Asset Turnover
Waste Management Inc., net fixed asset turnover calculation, comparison to benchmarks
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Net fixed asset turnover = Operating revenues ÷ Property and equipment, net of accumulated depreciation and amortization
= ÷ =
- Operating Revenues
- Operating revenues demonstrated a general upward trend over the examined five-year period. Starting at $14,485 million in 2017, revenues increased steadily each year, except for a slight decline in 2020 to $15,218 million. By the end of 2021, operating revenues had risen sharply to $17,931 million, reflecting strong recovery and growth beyond prior levels.
- Property and Equipment, Net
- The net value of property and equipment showed consistent growth from $11,559 million in 2017 to $14,419 million in 2021. This indicates ongoing investment in fixed assets throughout the period. The largest year-over-year increases occurred between 2019 and 2020, evidencing accelerated capital expenditure during that timeframe.
- Net Fixed Asset Turnover Ratio
- The net fixed asset turnover ratio exhibited some variability over the period. It remained stable at 1.25 in both 2017 and 2018, then declined to 1.2 in 2019 and further dropped to 1.08 in 2020, suggesting a decrease in the efficiency of fixed asset utilization during this interval. However, the ratio rebounded to 1.24 in 2021, indicating a recovery in asset productivity correlating with the increase in operating revenues.
Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
Waste Management Inc., net fixed asset turnover (including operating lease, right-of-use asset) calculation, comparison to benchmarks
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Net fixed asset turnover (including operating lease, right-of-use asset) = Operating revenues ÷ Property and equipment, net of accumulated depreciation and amortization (including operating lease, right-of-use asset)
= ÷ =
- Operating Revenues
- The operating revenues demonstrate an overall upward trend during the analyzed period. Beginning at 14,485 million US dollars in 2017, revenues increased steadily through 2018 and 2019, reaching 15,455 million US dollars. Although there was a slight dip in 2020 to 15,218 million US dollars, possibly reflecting external market or operational challenges, the revenues rebounded strongly in 2021, reaching a peak of 17,931 million US dollars. This recovery indicates resilience in revenue generation capabilities and suggests effective adaptation to changing conditions.
- Property and Equipment (Net, including Operating Lease, Right-of-Use Asset)
- This asset category exhibited consistent growth throughout the period under review. Starting at 11,559 million US dollars in 2017, the net property and equipment value increased each subsequent year, reaching 14,870 million US dollars in 2021. The steady asset base expansion may reflect ongoing investments in fixed assets, including infrastructure and technology, aligned with operational growth strategies.
- Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
- The net fixed asset turnover ratio reveals a fluctuating efficiency in generating revenues from fixed assets over the five years. Initially stable at 1.25 in both 2017 and 2018, the ratio declined to 1.16 in 2019 and further to 1.04 in 2020, indicating a reduction in asset utilization efficiency during this interval. However, a recovery to 1.21 in 2021 demonstrates an improvement in using fixed assets to generate revenue, though it remains slightly below the peak levels observed at the beginning of the period. This suggests that while asset investments have increased, the efficiency in leveraging these assets has varied, potentially influenced by market conditions or operational adjustments.
Total Asset Turnover
Waste Management Inc., total asset turnover calculation, comparison to benchmarks
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Total asset turnover = Operating revenues ÷ Total assets
= ÷ =
- Operating Revenues
- The operating revenues show a generally positive trend from 2017 to 2021. The revenues increased steadily from US$14,485 million in 2017 to US$15,455 million in 2019. There was a slight decline in 2020 to US$15,218 million, likely influenced by external factors impacting that year, followed by a significant recovery and growth in 2021, reaching US$17,931 million. This suggests resilience and an ability to rebound after a downturn.
- Total Assets
- Total assets exhibit a consistent upward trend over the observed period, rising from US$21,829 million in 2017 to US$29,097 million in 2021. The most notable increase occurred between 2018 and 2019, where total assets rose sharply from US$22,650 million to US$27,743 million. After 2019, the total assets continued to grow but at a slower pace, indicating ongoing investments or asset accumulation over the years.
- Total Asset Turnover
- Total asset turnover ratio, which measures how efficiently assets generate revenue, decreased from 0.66 in 2017 and 2018 to 0.56 in 2019 and further declined to 0.52 in 2020. This indicates a reduction in asset utilization efficiency during these years. However, in 2021, there was a partial recovery of this ratio to 0.62, reflecting improved efficiency in generating sales from assets. Despite this improvement, the 2021 ratio remained below the levels seen in 2017 and 2018.
- Overall Insights
- While the company demonstrated growth in operating revenues and total assets over the five-year period, the decline in asset turnover ratio in 2019 and 2020 suggests that the expansion in assets was not matched proportionally by revenue generation efficiency during those years. The recovery in both revenue and asset turnover in 2021 may indicate improved operational performance or better asset management following a period of less efficient utilization.
Equity Turnover
Waste Management Inc., equity turnover calculation, comparison to benchmarks
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Equity turnover = Operating revenues ÷ Total Waste Management, Inc. stockholders’ equity
= ÷ =
The financial data reveals several notable trends over the analyzed five-year period.
- Operating Revenues
- Operating revenues exhibited a generally upward trend from 2017 to 2021. Starting at $14,485 million in 2017, revenues increased steadily each year, except for a slight dip in 2020 where revenues fell marginally from $15,455 million in 2019 to $15,218 million. However, in 2021, revenues rebounded significantly to $17,931 million, representing the highest level recorded in the period.
- Total Stockholders' Equity
- Total stockholders’ equity showed an overall increase through the period from $6,019 million in 2017 to a peak of $7,452 million in 2020. In 2021, equity decreased slightly to $7,124 million after the prior year's peak. This indicates steady equity growth with a minor contraction in the final year.
- Equity Turnover Ratio
- The equity turnover ratio experienced a declining trend from 2.41 in 2017 to 2.04 in 2020, suggesting decreasing efficiency in generating revenues from equity during these years. This trend reversed in 2021, where the ratio increased sharply to 2.52, the highest in the period, indicating improved utilization of equity to generate revenues in the last year analyzed.
In summary, the data suggest enhanced revenue generation capacity in 2021 after a temporary stagnation in 2020, paired with a small decline in equity at the end of the period. The equity turnover ratio trend complements this narrative, reflecting a dip in operational efficiency through 2020 followed by a marked recovery in 2021. These dynamics imply a resilience and potential structural improvements in the company’s operational leverage on equity during the latest period.