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)
3M Co., short-term (operating) activity ratios
Based on: 10-K (filing date: 2020-02-06), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11).
| Short-term activity ratio | Description | The company |
|---|---|---|
| Inventory turnover | An activity ratio calculated as cost of goods sold divided by inventory. | 3M Co.’s inventory turnover ratio deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level. |
| Receivables turnover | An activity ratio equal to revenue divided by receivables. | 3M Co.’s receivables turnover ratio improved from 2017 to 2018 and from 2018 to 2019. |
| Payables turnover | An activity ratio calculated as cost of goods sold divided by payables. | 3M Co.’s payables turnover ratio decreased from 2017 to 2018 but then slightly increased from 2018 to 2019. |
| Working capital turnover | An activity ratio calculated as revenue divided by working capital. | 3M Co.’s working capital turnover ratio improved from 2017 to 2018 and from 2018 to 2019. |
| 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. | 3M Co.’s number of days of inventory outstanding deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level. |
| Average receivable collection period | An activity ratio equal to the number of days in the period divided by receivables turnover. | 3M Co.’s number of days of receivables outstanding improved from 2017 to 2018 and from 2018 to 2019. |
| Operating cycle | Equal to average inventory processing period plus average receivables collection period. | 3M Co.’s operating cycle deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 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. | |
| 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. | 3M Co.’s cash conversion cycle improved from 2017 to 2018 and from 2018 to 2019. |
Inventory Turnover
3M Co., inventory turnover calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cost of sales | 17,136 | 16,682 | 16,001 | 15,040 | 15,383 | |
| Inventories | 4,134 | 4,366 | 4,034 | 3,385 | 3,518 | |
| Short-term Activity Ratio | ||||||
| Inventory turnover1 | 4.15 | 3.82 | 3.97 | 4.44 | 4.37 | |
| Benchmarks | ||||||
| Inventory Turnover, Competitors2 | ||||||
| General Electric Co. | 4.97 | 4.81 | 4.19 | 3.91 | 3.67 | |
| Honeywell International Inc. | 5.51 | 6.71 | 5.98 | 6.22 | 6.05 | |
| Inventory Turnover, Sector | ||||||
| General Industrials | 4.92 | 4.95 | 4.43 | 4.31 | 4.10 | |
| Inventory Turnover, Industry | ||||||
| Industrials | 3.69 | 4.14 | 4.36 | 4.42 | 4.19 | |
Based on: 10-K (filing date: 2020-02-06), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11).
1 2019 Calculation
Inventory turnover = Cost of sales ÷ Inventories
= 17,136 ÷ 4,134 = 4.15
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Inventory turnover | An activity ratio calculated as cost of goods sold divided by inventory. | 3M Co.’s inventory turnover ratio deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level. |
Receivables Turnover
3M Co., receivables turnover calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | 32,136 | 32,765 | 31,657 | 30,109 | 30,274 | |
| Accounts receivable, net of allowances | 4,791 | 5,020 | 4,911 | 4,392 | 4,154 | |
| Short-term Activity Ratio | ||||||
| Receivables turnover1 | 6.71 | 6.53 | 6.45 | 6.86 | 7.29 | |
| Benchmarks | ||||||
| Receivables Turnover, Competitors2 | ||||||
| General Electric Co. | 5.22 | 5.71 | 4.63 | 4.59 | 3.92 | |
| Honeywell International Inc. | 4.90 | 5.57 | 4.57 | 4.81 | 4.78 | |
| Receivables Turnover, Sector | ||||||
| General Industrials | 5.38 | 5.81 | 4.85 | 4.91 | 4.45 | |
| Receivables Turnover, Industry | ||||||
| Industrials | 7.86 | 7.99 | 6.39 | 6.60 | 6.64 | |
Based on: 10-K (filing date: 2020-02-06), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11).
1 2019 Calculation
Receivables turnover = Net sales ÷ Accounts receivable, net of allowances
= 32,136 ÷ 4,791 = 6.71
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Receivables turnover | An activity ratio equal to revenue divided by receivables. | 3M Co.’s receivables turnover ratio improved from 2017 to 2018 and from 2018 to 2019. |
Payables Turnover
3M Co., payables turnover calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cost of sales | 17,136 | 16,682 | 16,001 | 15,040 | 15,383 | |
| Accounts payable | 2,228 | 2,266 | 1,945 | 1,798 | 1,694 | |
| Short-term Activity Ratio | ||||||
| Payables turnover1 | 7.69 | 7.36 | 8.23 | 8.36 | 9.08 | |
| Benchmarks | ||||||
| Payables Turnover, Competitors2 | ||||||
| General Electric Co. | 4.40 | 5.40 | 6.07 | 6.06 | 6.04 | |
| Honeywell International Inc. | 4.25 | 5.18 | 4.19 | 4.77 | 4.79 | |
| Payables Turnover, Sector | ||||||
| General Industrials | 4.67 | 5.53 | 5.72 | 5.91 | 5.96 | |
| Payables Turnover, Industry | ||||||
| Industrials | 6.37 | 6.56 | 6.59 | 7.22 | 7.64 | |
Based on: 10-K (filing date: 2020-02-06), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11).
1 2019 Calculation
Payables turnover = Cost of sales ÷ Accounts payable
= 17,136 ÷ 2,228 = 7.69
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Payables turnover | An activity ratio calculated as cost of goods sold divided by payables. | 3M Co.’s payables turnover ratio decreased from 2017 to 2018 but then slightly increased from 2018 to 2019. |
Working Capital Turnover
3M Co., working capital turnover calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current assets | 12,971 | 13,709 | 14,277 | 11,726 | 10,986 | |
| Less: Current liabilities | 9,222 | 7,244 | 7,687 | 6,219 | 7,118 | |
| Working capital | 3,749 | 6,465 | 6,590 | 5,507 | 3,868 | |
| Net sales | 32,136 | 32,765 | 31,657 | 30,109 | 30,274 | |
| Short-term Activity Ratio | ||||||
| Working capital turnover1 | 8.57 | 5.07 | 4.80 | 5.47 | 7.83 | |
| Benchmarks | ||||||
| Working Capital Turnover, Competitors2 | ||||||
| General Electric Co. | 1.74 | 2.15 | 1.73 | 1.47 | 1.69 | |
| Honeywell International Inc. | 5.92 | 7.69 | 5.68 | 5.84 | 22.94 | |
| Working Capital Turnover, Sector | ||||||
| General Industrials | 2.60 | 2.91 | 2.34 | 2.06 | 2.56 | |
| Working Capital Turnover, Industry | ||||||
| Industrials | 7.36 | 7.81 | 5.30 | 5.23 | 5.74 | |
Based on: 10-K (filing date: 2020-02-06), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11).
1 2019 Calculation
Working capital turnover = Net sales ÷ Working capital
= 32,136 ÷ 3,749 = 8.57
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Working capital turnover | An activity ratio calculated as revenue divided by working capital. | 3M Co.’s working capital turnover ratio improved from 2017 to 2018 and from 2018 to 2019. |
Average Inventory Processing Period
3M Co., average inventory processing period calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Inventory turnover | 4.15 | 3.82 | 3.97 | 4.44 | 4.37 | |
| Short-term Activity Ratio (no. days) | ||||||
| Average inventory processing period1 | 88 | 96 | 92 | 82 | 83 | |
| Benchmarks (no. days) | ||||||
| Average Inventory Processing Period, Competitors2 | ||||||
| General Electric Co. | 74 | 76 | 87 | 93 | 99 | |
| Honeywell International Inc. | 66 | 54 | 61 | 59 | 60 | |
| Average Inventory Processing Period, Sector | ||||||
| General Industrials | 74 | 74 | 82 | 85 | 89 | |
| Average Inventory Processing Period, Industry | ||||||
| Industrials | 99 | 88 | 84 | 83 | 87 | |
Based on: 10-K (filing date: 2020-02-06), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11).
1 2019 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 4.15 = 88
2 Click competitor name to see calculations.
| 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. | 3M Co.’s number of days of inventory outstanding deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level. |
Average Receivable Collection Period
3M Co., average receivable collection period calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Receivables turnover | 6.71 | 6.53 | 6.45 | 6.86 | 7.29 | |
| Short-term Activity Ratio (no. days) | ||||||
| Average receivable collection period1 | 54 | 56 | 57 | 53 | 50 | |
| Benchmarks (no. days) | ||||||
| Average Receivable Collection Period, Competitors2 | ||||||
| General Electric Co. | 70 | 64 | 79 | 80 | 93 | |
| Honeywell International Inc. | 75 | 66 | 80 | 76 | 76 | |
| Average Receivable Collection Period, Sector | ||||||
| General Industrials | 68 | 63 | 75 | 74 | 82 | |
| Average Receivable Collection Period, Industry | ||||||
| Industrials | 46 | 46 | 57 | 55 | 55 | |
Based on: 10-K (filing date: 2020-02-06), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11).
1 2019 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 6.71 = 54
2 Click competitor name to see calculations.
| 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. | 3M Co.’s number of days of receivables outstanding improved from 2017 to 2018 and from 2018 to 2019. |
Operating Cycle
3M Co., operating cycle calculation, comparison to benchmarks
No. days
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Average inventory processing period | 88 | 96 | 92 | 82 | 83 | |
| Average receivable collection period | 54 | 56 | 57 | 53 | 50 | |
| Short-term Activity Ratio | ||||||
| Operating cycle1 | 142 | 152 | 149 | 135 | 133 | |
| Benchmarks | ||||||
| Operating Cycle, Competitors2 | ||||||
| General Electric Co. | 144 | 140 | 166 | 173 | 192 | |
| Honeywell International Inc. | 141 | 120 | 141 | 135 | 136 | |
| Operating Cycle, Sector | ||||||
| General Industrials | 142 | 137 | 157 | 159 | 171 | |
| Operating Cycle, Industry | ||||||
| Industrials | 145 | 134 | 141 | 138 | 142 | |
Based on: 10-K (filing date: 2020-02-06), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11).
1 2019 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= 88 + 54 = 142
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Operating cycle | Equal to average inventory processing period plus average receivables collection period. | 3M Co.’s operating cycle deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level. |
Average Payables Payment Period
3M Co., average payables payment period calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Payables turnover | 7.69 | 7.36 | 8.23 | 8.36 | 9.08 | |
| Short-term Activity Ratio (no. days) | ||||||
| Average payables payment period1 | 47 | 50 | 44 | 44 | 40 | |
| Benchmarks (no. days) | ||||||
| Average Payables Payment Period, Competitors2 | ||||||
| General Electric Co. | 83 | 68 | 60 | 60 | 60 | |
| Honeywell International Inc. | 86 | 70 | 87 | 76 | 76 | |
| Average Payables Payment Period, Sector | ||||||
| General Industrials | 78 | 66 | 64 | 62 | 61 | |
| Average Payables Payment Period, Industry | ||||||
| Industrials | 57 | 56 | 55 | 51 | 48 | |
Based on: 10-K (filing date: 2020-02-06), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11).
1 2019 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 7.69 = 47
2 Click competitor name to see calculations.
| 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. |
Cash Conversion Cycle
3M Co., cash conversion cycle calculation, comparison to benchmarks
No. days
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Average inventory processing period | 88 | 96 | 92 | 82 | 83 | |
| Average receivable collection period | 54 | 56 | 57 | 53 | 50 | |
| Average payables payment period | 47 | 50 | 44 | 44 | 40 | |
| Short-term Activity Ratio | ||||||
| Cash conversion cycle1 | 95 | 102 | 105 | 91 | 93 | |
| Benchmarks | ||||||
| Cash Conversion Cycle, Competitors2 | ||||||
| General Electric Co. | 61 | 72 | 106 | 113 | 132 | |
| Honeywell International Inc. | 55 | 50 | 54 | 59 | 60 | |
| Cash Conversion Cycle, Sector | ||||||
| General Industrials | 64 | 71 | 93 | 97 | 110 | |
| Cash Conversion Cycle, Industry | ||||||
| Industrials | 88 | 78 | 86 | 87 | 94 | |
Based on: 10-K (filing date: 2020-02-06), 10-K (filing date: 2019-02-07), 10-K (filing date: 2018-02-08), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-11).
1 2019 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 88 + 54 – 47 = 95
2 Click competitor name to see calculations.
| 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. | 3M Co.’s cash conversion cycle improved from 2017 to 2018 and from 2018 to 2019. |