Honeywell International Inc. (NASDAQ:HON)

The financial data presents several key trends over the five-year period ending in 2024, reflecting the company's operational efficiency and liquidity management.

Inventory Turnover

There is a clear downward trend in inventory turnover, decreasing steadily from 4.94 in 2020 to 3.7 in 2024. This suggests that the company is turning over its inventory less frequently, which is also supported by an increase in the average inventory processing period from 74 days in 2020 to 99 days in 2024.

Receivables Turnover

The receivables turnover ratio shows some fluctuation but remains relatively stable overall, moving from 4.78 in 2020 to 4.92 in 2024. Correspondingly, the average receivable collection period hovers around the mid-70s in days, with a slight decline from 76 days in 2020 to 74 days in 2024, indicating consistent efficiency in collecting receivables.

Payables Turnover

Payables turnover experiences minor variability, with a decline from 3.86 in 2020 to 3.4 in 2021, then a moderate recovery to 3.46 by 2024. The average payables payment period lengthens overall, increasing from 95 days in 2020 to around 105 days in 2024, suggesting a tendency to extend payment terms to suppliers.

Working Capital Turnover

Working capital turnover shows significant improvements from 3.64 in 2020 up to a peak of 7.39 in 2023, before declining to 5.79 in 2024. This indicates an overall enhancement in the efficient use of working capital, although the slight fall at the end may warrant further observation.

Operating Cycle

The operating cycle progressively lengthens, increasing from 150 days in 2020 to 173 days in 2023, and remaining stable into 2024. This extension reflects longer durations in inventory processing combined with stable receivable collection times.

Cash Conversion Cycle

The cash conversion cycle varies, decreasing from 55 days in 2020 to 50 days in 2021, then rising to 68 days in 2024. This rise indicates that the company is taking longer to convert its investments in inventory and other resources into cash, a possible concern for liquidity management.

In summary, the data indicates a weakening in inventory management efficiency and a lengthening cash conversion cycle, which could impact liquidity. Meanwhile, receivables collection remains consistent, and payables management shows a moderate increase in payment period. The improved working capital turnover suggests overall better utilization of working capital, despite some recent decline.

Cost of Products and Services Sold

The cost of products and services sold has shown a generally increasing trend from 2020 to 2024. Starting at $22,169 million in 2020, the figure slightly decreased to $22,061 million in 2021 but then consistently rose each year thereafter, reaching $23,836 million by 2024. This reflects a gradual increase in the company's expenses related to production and service delivery over the observed period.

Inventories

Inventories have increased steadily throughout the period. From $4,489 million in 2020, the inventory levels rose every year, reaching $6,442 million in 2024. This continuous growth suggests either accumulating stock levels or expanded inventory holdings, potentially due to increased production, changes in supply chain strategy, or anticipation of higher sales.

Inventory Turnover

The inventory turnover ratio shows a declining trend from 2020 to 2024. The ratio decreased from 4.94 in 2020 to 3.7 in 2024, signaling that inventory is being sold or used more slowly over time. This decline, coupled with rising inventory levels, indicates that the company might be experiencing slower inventory movement relative to its sales, which could imply less efficient inventory management or changes in demand patterns.

The financial data reveals several notable trends in the company's annual performance over the five-year period ending in 2024.

Net Sales

There is a consistent upward trajectory in net sales, increasing from $32,637 million in 2020 to $38,498 million in 2024. This reflects a steady growth trend, with an approximate cumulative increase of 18% over the period, indicating expanding business operations or increased market demand.

Accounts Receivable, Less Allowances

The accounts receivable balance shows a gradual increase from $6,827 million in 2020 to $7,819 million in 2024. The growth is relatively moderate compared to net sales, suggesting controlled credit extension or improved collection policies, but still maintaining alignment with revenue trends.

Receivables Turnover Ratio

The receivables turnover ratio displays minor fluctuations but remains relatively stable, moving from 4.78 in 2020 to 4.92 in 2024. This stability indicates consistent efficiency in collecting receivables, with the company maintaining a similar pace in converting receivables into cash despite growing sales volumes.

Overall, the data indicates solid sales growth accompanied by proportionate increases in accounts receivable, supported by steady receivables turnover. This suggests effective management of credit policies and collection processes, ensuring cash flow remains aligned with business expansion.

Cost of Products and Services Sold

The cost of products and services sold exhibits a generally increasing trend from 2020 to 2024. Starting at 22,169 million US dollars in 2020, it shows a slight decrease in 2021 to 22,061 million, followed by a steady rise each subsequent year, reaching 23,836 million in 2024. This suggests a gradual increase in operational expenses related to product and service delivery over the examined period.

Accounts Payable

Accounts payable increased from 5,750 million US dollars in 2020 to 6,484 million in 2021, representing a significant rise. This was followed by a marginal decrease to 6,329 million in 2022. Subsequently, accounts payable increased again to 6,849 million in 2023 and slightly further to 6,880 million in 2024. This pattern indicates a fluctuating but overall upward trend in short-term liabilities owed to suppliers or vendors.

Payables Turnover Ratio

The payables turnover ratio decreased from 3.86 in 2020 to 3.40 in 2021, indicating a slower rate of payment to suppliers. In 2022, the ratio improved slightly to 3.53, but then declined again to 3.36 in 2023 before rising to 3.46 in 2024. The fluctuations of this ratio imply varying efficiency in payment management, with 2021 and 2023 showing slower turnover compared to other years. This metric corresponds with changes in accounts payable and cost patterns, suggesting some variability in payment cycles and supplier negotiations.

Working Capital

The working capital exhibits a declining trend from 2020 to 2023, decreasing from 8,978 million USD in 2020 to 4,963 million USD in 2023. However, there is a notable recovery in 2024, where the figure rises to 6,652 million USD, indicating an improvement in the company's short-term financial health after a period of contraction.

Net Sales

Net sales show consistent growth throughout the five-year period, increasing steadily from 32,637 million USD in 2020 to 38,498 million USD in 2024. This suggests a positive revenue growth trajectory, reflecting possibly enhanced market demand or successful business expansion initiatives.

Working Capital Turnover

The working capital turnover ratio displays an upward trend from 2020 to 2023, rising from 3.64 to 7.39, indicating increased efficiency in utilizing working capital to generate sales. In 2024, the ratio decreases significantly to 5.79, which may reflect the partial rebound in working capital or a relative slowdown in sales growth efficiency compared to prior years.

The financial data reveals a consistent trend in inventory management metrics over the five-year period from 2020 to 2024.

Inventory Turnover Ratio

The inventory turnover ratio demonstrates a decreasing pattern, falling from 4.94 in 2020 to 3.7 in 2024. This trend indicates that the company is selling and replacing its inventory less frequently each year. The gradual decline suggests a slowdown in inventory movement or potential increases in inventory levels relative to sales.

Average Inventory Processing Period

The average inventory processing period shows a corresponding increase over the same timeframe. It rises from 74 days in 2020 to 99 days in 2024. This lengthening period indicates that inventory stays in storage longer before being sold or used. The steady increase is consistent with the decline in the turnover ratio, reinforcing the observation of slower inventory turnover.

Overall, these figures suggest a trend toward slower inventory turnover and longer holding periods. This could point to challenges in demand forecasting, potential overstocking, or changes in sales dynamics impacting how quickly inventory is cycled through. Monitoring these trends is critical for optimizing inventory management and improving operational efficiency.

Receivables Turnover

The receivables turnover ratio demonstrated a generally stable pattern over the period analyzed, with a slight increase from 4.78 in 2020 to 5.04 in 2021. This peak was followed by a modest decline to 4.77 in 2022. Subsequently, the ratio showed a gradual improvement, rising to 4.87 in 2023 and further to 4.92 in 2024. Overall, the fluctuations suggest consistent but modest changes in the efficiency of receivables collection.

Average Receivable Collection Period

The average collection period in days exhibited some variability, initially decreasing from 76 days in 2020 to 72 days in 2021, indicating faster collection. However, this was followed by an increase to 77 days in 2022, suggesting a temporary slowdown. Following 2022, the collection period improved again, shortening to 75 days in 2023 and 74 days in 2024. These movements generally correlate inversely with the receivables turnover ratio, reflecting changes in collections efficiency over time.

Overall Trend and Insights

The data indicate a relatively stable receivables management performance over the five-year period. Despite minor fluctuations, the company appears to have maintained a consistent ability to convert receivables into cash. The slight improvements in receivables turnover ratio towards the later years, coupled with the concurrent modest reductions in collection days, suggest some enhancement in working capital management. No significant anomalies or persistent declines are evident, indicating steady operational effectiveness in accounts receivable handling.

Average Inventory Processing Period

The average inventory processing period shows a consistent upward trend over the analyzed years. It increased from 74 days in 2020 to 99 days in 2024, reflecting a lengthening duration in inventory turnover. This gradual increase suggests that the company is taking more time to process and sell its inventory, which could have implications on inventory management efficiency and working capital requirements.

Average Receivable Collection Period

The average receivable collection period demonstrates minor fluctuations but remains relatively stable over the period. It decreased from 76 days in 2020 to 72 days in 2021, then increased again to 77 days in 2022, followed by slight decreases to 75 and 74 days in 2023 and 2024, respectively. This stability indicates consistent efficacy in the company's credit and collections policies with only modest changes over time.

Operating Cycle

The operating cycle exhibits a clear increasing trend, rising from 150 days in 2020 to 173 days in both 2023 and 2024. This increase aligns with the lengthening inventory processing period, as the operating cycle is a sum of inventory processing and receivable collection periods. The longer operating cycle suggests an extended duration from cash outlay for inventory to cash collection from sales, which could impact cash flow management.

Summary

Overall, the data indicates a lengthening in the time required to process inventory and complete the operating cycle, potentially indicating slower inventory turnover and a longer cash conversion cycle. In contrast, the average receivable collection period remains relatively steady, implying maintained effectiveness in receivables management. The trends suggest attention may be warranted on inventory management to optimize operational efficiency and working capital use.

Payables Turnover

The payables turnover ratio demonstrates a fluctuating trend over the analyzed period. Starting at 3.86 in 2020, it declined to 3.4 in 2021, showing a reduction in the rate at which the company paid off its suppliers. In 2022, the ratio slightly increased to 3.53 but then decreased again to 3.36 in 2023, followed by a modest rise to 3.46 in 2024. Overall, these variations suggest some inconsistency in payment efficiency, with a general tendency towards a slower turnover compared to the initial year.

Average Payables Payment Period

The average payables payment period exhibits an overall elongation across the period, reflecting a lengthening in the number of days taken to settle payables. Beginning at 95 days in 2020, the period increased to 107 days in 2021, indicating a slower payment pace. Although it shortened slightly to 103 days in 2022, it extended again to 109 days in 2023 before marginally decreasing to 105 days in 2024. This trend aligns inversely with the payables turnover ratio and suggests that the company has generally allowed more extended credit terms or delayed payments over time.

Average Inventory Processing Period

The average inventory processing period shows a consistent upward trend over the five-year span. Starting at 74 days in 2020, it increased to 99 days by 2024, indicating a lengthening duration to process inventory. This suggests that the company is holding inventory longer or experiencing slower turnover over time.

Average Receivable Collection Period

The average receivable collection period fluctuates mildly but remains relatively stable. It started at 76 days in 2020, declined to 72 days in 2021, then slightly increased to 77 days in 2022 before gradually decreasing to 74 days by 2024. This indicates consistent efficiency in collecting customer receivables, with minor variations year-to-year.

Average Payables Payment Period

The average payables payment period increased notably from 95 days in 2020 to a peak of 109 days in 2023, then slightly decreased to 105 days in 2024. This indicates a tendency to extend payment terms with suppliers over the years, improving short-term cash flow but potentially affecting supplier relationships.

Cash Conversion Cycle

The cash conversion cycle initially decreased from 55 days in 2020 to 50 days in 2021, suggesting an improvement in overall working capital efficiency. However, from 2022 onwards, it increased steadily to 68 days by 2024. This upward movement implies a gradual weakening in the conversion of inventory and receivables into cash, reflecting longer cash tied up in operations.