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.
Short-term Activity Ratios (Summary)
Air Products & Chemicals Inc., short-term (operating) activity ratios (quarterly data)
Based on: 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-K (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-K (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-K (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-K (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-Q (reporting date: 2016-12-31), 10-K (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-K (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-Q (reporting date: 2014-12-31).
Over the analyzed periods, the Inventory Turnover ratio generally exhibits a decline after a peak around late 2016 and early 2017. Initially, it increased sharply from just over 10 in late 2015 to nearly 20 in late 2016 and early 2017, indicating faster inventory movement during that time. However, from 2017 onwards, the ratio gradually decreased to approximately 14.6 by mid-2021, suggesting a slower rate of inventory turnover in more recent quarters.
The Receivables Turnover ratio shows some fluctuations but remains relatively stable within a range of approximately 6 to 8 times annually. There was a moderate peak near early 2017 at around 8.5, followed by a return to levels closer to 6.5 in later periods. This stability indicates consistent collection efficiency over accounts receivable with minor volatility over the years.
Working Capital Turnover data starts from mid-2016 and displays a distinct downward trend. Initially high values around 9–14 were observed, but these declined sharply to approximately 1.5 to 1.7 in the latest quarters of 2021. This substantial reduction suggests a significant decrease in the efficiency with which the company is utilizing its working capital to generate sales.
The Average Inventory Processing Period reflects the number of days inventory remains before being sold or used. It decreased notably from 35 to about 18–20 days around early 2017, implying quicker turnover of inventory. Subsequently, it gradually increased to roughly 25 to 26 days in recent periods. This pattern coincides with the changes in the Inventory Turnover ratio, supporting the inference of slower inventory movement in recent years compared to the peak performance period.
The Average Receivable Collection Period indicates the time taken to collect payments from customers. It consistently fluctuates between approximately 49 and 60 days, with some modest increase in late 2015 and late 2019 through 2020, suggesting occasional delays in collections during those times. Despite these variances, the average collection period remains relatively stable overall.
The Operating Cycle, which sums the inventory processing and receivable collection periods, follows a somewhat parallel pattern to the individual components. It decreased from approximately 90 days in late 2015 to a low in the 60–70 day range in early 2017, demonstrating operational efficiencies. From that point, it trended upward to nearly 80 days in late 2020 and early 2021, pointing to a lengthening of the overall cycle, which aligns with slower inventory turnover and slightly longer receivable periods.
In summary, the data reveals that operational efficiency, particularly in inventory management, improved markedly up to early 2017 but then moderately declined afterwards. Working capital utilization efficiency decreased substantially in later periods. Receivable collection remained fairly steady, contributing less to the variations in the operating cycle. The overall trend reflects some challenges in sustaining earlier gains in inventory turnover and working capital productivity in recent quarters.
- Inventory Turnover Ratio
- Peaked near 20 in 2016-2017; gradually decreased to around 14.6 by mid-2021, indicating slower inventory movement over time.
- Receivables Turnover Ratio
- Stable with fluctuations between 6 and 8; minor peaks and troughs observed but overall consistent collection efficiency.
- Working Capital Turnover Ratio
- Declined sharply from highs near 14 in 2016 to approximately 1.5 by 2021, reflecting reduced efficiency in working capital use.
- Average Inventory Processing Period
- Decreased from 35 days to about 18-20 days by early 2017, then increased to about 25-26 days, indicating varied inventory holding durations.
- Average Receivable Collection Period
- Generally stable between 49 and 60 days with minor periodic increases, suggesting consistent credit policies and collection practices.
- Operating Cycle
- Fell from about 90 days to around 65 days by early 2017, then rose back near 80 days, mirroring the trends in inventory and receivables periods.
Turnover Ratios
Average No. Days
Inventory Turnover
Air Products & Chemicals Inc., inventory turnover calculation (quarterly data)
| 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 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||||||||||||||
| Cost of sales | 1,801,900) | 1,745,500) | 1,632,400) | 1,566,500) | 1,344,900) | 1,460,100) | 1,486,600) | 1,490,800) | 1,466,000) | 1,474,700) | 1,544,000) | 1,565,800) | 1,545,400) | 1,506,500) | 1,571,800) | 1,545,300) | 1,486,200) | 1,403,800) | 1,318,100) | 1,648,700) | 1,639,300) | 1,519,000) | 1,595,700) | 1,697,100) | 1,716,400) | 1,699,600) | 1,831,000) | ||||||||
| Inventories | 447,200) | 430,300) | 422,900) | 404,800) | 410,900) | 399,700) | 400,600) | 388,300) | 408,300) | 408,300) | 403,400) | 396,100) | 322,100) | 339,900) | 347,400) | 335,400) | 293,300) | 322,800) | 330,700) | 619,900) | 611,100) | 649,800) | 665,600) | 657,800) | 681,900) | 693,300) | 709,700) | ||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||||||||||||||
| Inventory turnover1 | 15.09 | 14.62 | 14.20 | 14.47 | 14.07 | 14.77 | 14.77 | 15.39 | 14.82 | 15.01 | 15.27 | 15.63 | 19.15 | 17.98 | 17.29 | 17.15 | 19.97 | 18.62 | 18.52 | 10.33 | 10.56 | 10.05 | 10.08 | 10.56 | — | — | — | ||||||||
| Benchmarks | |||||||||||||||||||||||||||||||||||
| Inventory Turnover, Competitors2 | |||||||||||||||||||||||||||||||||||
| Linde plc | 9.86 | 9.56 | 9.20 | 8.90 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||
| Sherwin-Williams Co. | 5.99 | 5.84 | 5.39 | 5.37 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||
Based on: 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-K (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-K (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-K (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-K (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-Q (reporting date: 2016-12-31), 10-K (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-K (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-Q (reporting date: 2014-12-31).
1 Q3 2021 Calculation
Inventory turnover
= (Cost of salesQ3 2021
+ Cost of salesQ2 2021
+ Cost of salesQ1 2021
+ Cost of salesQ4 2020)
÷ Inventories
= (1,801,900 + 1,745,500 + 1,632,400 + 1,566,500)
÷ 447,200 = 15.09
2 Click competitor name to see calculations.
The cost of sales demonstrates a generally declining trend from December 2014 through December 2016, starting at approximately 1,831,000 thousand US dollars and decreasing to around 1,318,100 thousand US dollars by the end of 2016. Following this period, the cost of sales stabilizes somewhat with fluctuations, showing a slight increase from early 2017 onwards and reaching approximately 1,801,900 thousand US dollars by mid-2021. This indicates a period of contraction followed by recovery and gradual growth in costs associated with goods sold.
Inventories follow a different pattern. From December 2014 until September 2016, inventories gradually decrease from about 709,700 thousand US dollars to 619,900 thousand US dollars. Subsequently, there is a marked drop by the end of 2016, with values around 330,700 thousand US dollars, approximately half the previous levels. Post-2016, inventories show a generally increasing trajectory, rising steadily to approximately 447,200 thousand US dollars by mid-2021. This pattern indicates a significant inventory reduction in late 2016, followed by replenishment and growth in stock holdings over the following years.
Inventory turnover ratios are only available from September 2015 onward. The ratio starts at a level slightly above 10, peaking near 10.56, then spikes substantially by the end of 2016 to values ranging between roughly 15 and 20. Throughout 2017 and 2018, the ratio remains relatively high, fluctuating between 15 and 19, suggesting improved efficiency in inventory management, possibly driven by the significant inventory reduction observed earlier. From 2019 to mid-2021, inventory turnover stabilizes somewhat, mostly remaining within the 14 to 15.5 range, indicating a consistent rate of inventory utilization.
Overall, the data reveal a strategic inventory reduction executed by the end of 2016, which corresponded with an increase in inventory turnover, indicating enhanced operational efficiency. The subsequent increases in both inventories and cost of sales from 2017 onward suggest expansion or scaling up following this efficiency improvement. Inventory management appears to have settled into a stable pattern in recent years, balancing inventory levels with sales activity effectively.
- Cost of Sales
- Declined from late 2014 through 2016, then increased moderately to 2021.
- Inventories
- Gradual decrease until late 2016, followed by a pronounced drop at year-end 2016, then steady increase.
- Inventory Turnover
- Improved significantly by late 2016, then stabilized at higher levels than before.
- Insights
- The reduction in inventories correlates with a sharp rise in turnover ratio, reflecting improved inventory efficiency; subsequent increases in inventories and cost of sales indicate growth and scaling up of operations post-efficiency gains.
Receivables Turnover
Air Products & Chemicals Inc., receivables turnover calculation (quarterly data)
| 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 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||||||||||||||
| Sales | 2,604,700) | 2,502,000) | 2,375,200) | 2,320,100) | 2,065,200) | 2,216,300) | 2,254,700) | 2,283,200) | 2,224,000) | 2,187,700) | 2,224,000) | 2,298,900) | 2,259,000) | 2,155,700) | 2,216,600) | 2,203,100) | 2,121,900) | 1,980,100) | 1,882,500) | 2,463,000) | 2,434,400) | 2,271,200) | 2,355,800) | 2,449,400) | 2,470,200) | 2,414,500) | 2,560,800) | ||||||||
| Trade receivables, net | 1,419,300) | 1,388,900) | 1,419,700) | 1,274,800) | 1,409,700) | 1,399,400) | 1,288,600) | 1,260,200) | 1,340,700) | 1,258,500) | 1,268,200) | 1,207,200) | 1,227,600) | 1,252,300) | 1,233,400) | 1,174,000) | 1,101,200) | 1,176,300) | 1,063,300) | 1,439,900) | 1,563,200) | 1,373,300) | 1,288,500) | 1,406,200) | 1,440,800) | 1,381,400) | 1,430,400) | ||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||||||||||||||
| Receivables turnover1 | 6.91 | 6.67 | 6.32 | 6.95 | 6.26 | 6.42 | 6.95 | 7.08 | 6.66 | 7.13 | 7.05 | 7.40 | 7.20 | 6.95 | 6.91 | 6.97 | 7.67 | 7.45 | 8.51 | 6.61 | 6.08 | 6.95 | 7.52 | 7.04 | — | — | — | ||||||||
| Benchmarks | |||||||||||||||||||||||||||||||||||
| Receivables Turnover, Competitors2 | |||||||||||||||||||||||||||||||||||
| Linde plc | 6.82 | 6.67 | 6.70 | 6.54 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||
| Sherwin-Williams Co. | 7.57 | 7.58 | 7.82 | 8.84 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||
Based on: 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-K (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-K (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-K (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-K (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-Q (reporting date: 2016-12-31), 10-K (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-K (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-Q (reporting date: 2014-12-31).
1 Q3 2021 Calculation
Receivables turnover
= (SalesQ3 2021
+ SalesQ2 2021
+ SalesQ1 2021
+ SalesQ4 2020)
÷ Trade receivables, net
= (2,604,700 + 2,502,000 + 2,375,200 + 2,320,100)
÷ 1,419,300 = 6.91
2 Click competitor name to see calculations.
The analyzed quarterly financial data reveals several patterns and trends in sales, trade receivables, and receivables turnover over the period from December 2014 to June 2021.
- Sales
- The sales figures, reported in thousands of US dollars, show a fluctuating trend over the observed quarters. Initially, sales decreased from 2,560,800 in December 2014 to a low of 1,882,500 in December 2016. Following this dip, the sales figures exhibited a general upward trend, recovering steadily and peaking at 2,604,700 in June 2021. Notably, this improvement after 2016 suggests a recovery phase or growth period in the company's operations or market demand.
- Trade Receivables, Net
- The net trade receivables also demonstrate variability, with a notable drop from 1,430,400 in December 2014 to a low of 1,063,300 by December 2016. Post this period, net receivables generally increased, reflecting higher credit extended to customers or possibly slower collections. The values rose to approximately 1,419,300 by June 2021, indicating that as sales improved, receivables also expanded, which is consistent with typical business growth dynamics.
- Receivables Turnover Ratio
- Receivables turnover ratios were provided beginning in June 2015. Initially, the ratio remained relatively steady, fluctuating between 6.08 and 8.51. The highest turnover of 8.51 occurred around December 2016, coinciding with the lowest sales and trade receivables, suggesting efficient collection during a period of reduced sales. Subsequently, the turnover ratio stabilized around the mid-6 to 7 range, with a slight decline noted towards 2020 and 2021. This decrease may indicate a modest slowdown in collection efficiency or changes in credit terms amid increasing receivables.
Overall, the data indicate that after a trough around 2016 marked by low sales and receivables but high turnover, the company experienced growth in sales and receivables through 2021. The receivables turnover ratio trend suggests a slight easing in collection effectiveness in the later years but remains within a moderate range. These patterns collectively suggest that the company managed to regain and expand its operations post-2016 while maintaining a generally consistent credit collection performance.
Working Capital Turnover
Air Products & Chemicals Inc., working capital turnover calculation (quarterly data)
| 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 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||||||||||||||
| Current assets | 8,376,800) | 8,766,600) | 8,809,800) | 8,684,900) | 9,006,500) | 4,688,500) | 4,719,700) | 4,618,300) | 4,915,200) | 4,895,200) | 5,089,900) | 5,082,200) | 5,055,500) | 5,396,300) | 5,355,500) | 5,876,700) | 5,347,000) | 5,294,100) | 3,548,800) | 4,317,300) | 3,378,800) | 3,031,200) | 2,779,000) | 2,910,800) | 3,102,300) | 3,114,500) | 3,137,200) | ||||||||
| Less: Current liabilities | 2,697,100) | 3,017,400) | 2,985,900) | 2,416,700) | 2,591,000) | 1,806,900) | 1,819,000) | 1,820,900) | 2,155,200) | 2,073,000) | 2,303,500) | 2,338,300) | 2,109,800) | 1,752,300) | 1,831,600) | 2,489,000) | 2,433,200) | 2,602,300) | 2,929,800) | 3,283,300) | 3,658,900) | 3,839,100) | 3,572,400) | 3,648,100) | 2,918,900) | 3,081,300) | 3,001,900) | ||||||||
| Working capital | 5,679,700) | 5,749,200) | 5,823,900) | 6,268,200) | 6,415,500) | 2,881,600) | 2,900,700) | 2,797,400) | 2,760,000) | 2,822,200) | 2,786,400) | 2,743,900) | 2,945,700) | 3,644,000) | 3,523,900) | 3,387,700) | 2,913,800) | 2,691,800) | 619,000) | 1,034,000) | (280,100) | (807,900) | (793,400) | (737,300) | 183,400) | 33,200) | 135,300) | ||||||||
| Sales | 2,604,700) | 2,502,000) | 2,375,200) | 2,320,100) | 2,065,200) | 2,216,300) | 2,254,700) | 2,283,200) | 2,224,000) | 2,187,700) | 2,224,000) | 2,298,900) | 2,259,000) | 2,155,700) | 2,216,600) | 2,203,100) | 2,121,900) | 1,980,100) | 1,882,500) | 2,463,000) | 2,434,400) | 2,271,200) | 2,355,800) | 2,449,400) | 2,470,200) | 2,414,500) | 2,560,800) | ||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||||||||||||||
| Working capital turnover1 | 1.73 | 1.61 | 1.54 | 1.41 | 1.37 | 3.12 | 3.09 | 3.19 | 3.24 | 3.18 | 3.21 | 3.25 | 3.00 | 2.39 | 2.42 | 2.42 | 2.90 | 3.25 | 14.62 | 9.21 | — | — | — | — | — | — | — | ||||||||
| Benchmarks | |||||||||||||||||||||||||||||||||||
| Working Capital Turnover, Competitors2 | |||||||||||||||||||||||||||||||||||
| Linde plc | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||
| Sherwin-Williams Co. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||
Based on: 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-K (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-K (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-K (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-K (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-Q (reporting date: 2016-12-31), 10-K (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-K (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-Q (reporting date: 2014-12-31).
1 Q3 2021 Calculation
Working capital turnover
= (SalesQ3 2021
+ SalesQ2 2021
+ SalesQ1 2021
+ SalesQ4 2020)
÷ Working capital
= (2,604,700 + 2,502,000 + 2,375,200 + 2,320,100)
÷ 5,679,700 = 1.73
2 Click competitor name to see calculations.
The analysis of the quarterly financial figures reveals several notable trends and fluctuations over the reported periods.
- Working Capital
- The working capital exhibits significant volatility throughout the quarters. Initially, the values start moderately positive but show a sharp downturn in late 2015, entering negative territory and remaining there through mid-2016. Following this, a strong recovery occurs, with working capital increasing substantially, peaking around early 2017 through early 2018. Thereafter, it maintains a relatively stable positive value, with slight decreases towards mid-2021. This pattern indicates periods of liquidity strain followed by improvement and stabilization.
- Sales
- The sales figures demonstrate overall stability with moderate fluctuations. There is a slight decrease from late 2014 through early 2016, followed by a recovery phase extending roughly from mid-2016 to late 2017. From 2018 onwards, sales hover in a steady range with gradual growth observed towards mid-2021. This trend suggests resilience in revenue generation despite intermittent market or operational challenges.
- Working Capital Turnover
- The working capital turnover ratio data, available from early 2016 onward, shows initially high values around 9 to 14, indicating efficient utilization of working capital relative to sales. However, from late 2016, the ratio declines markedly and stabilizes in the 2.3 to 3.3 range through 2019, implying a normalization of turnover activity. Subsequently, a significant drop occurs in 2020, falling below 2, and then gradually improving but remaining lower than in previous years, which may reflect changes in operational efficiency or working capital structure during that period.
Overall, the financial data suggests the company underwent periods of tightened liquidity followed by recovery. Sales remained relatively consistent with modest growth after a slight downturn, while working capital management efficiency experienced notable fluctuations, particularly during and after 2016. The decline in turnover ratio in 2020 could be a point of concern, warranting closer examination of working capital policies or external factors impacting performance.
Average Inventory Processing Period
Air Products & Chemicals Inc., average inventory processing period calculation (quarterly data)
| 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 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||||||||||||||
| Inventory turnover | 15.09 | 14.62 | 14.20 | 14.47 | 14.07 | 14.77 | 14.77 | 15.39 | 14.82 | 15.01 | 15.27 | 15.63 | 19.15 | 17.98 | 17.29 | 17.15 | 19.97 | 18.62 | 18.52 | 10.33 | 10.56 | 10.05 | 10.08 | 10.56 | — | — | — | ||||||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||||||||||||||||
| Average inventory processing period1 | 24 | 25 | 26 | 25 | 26 | 25 | 25 | 24 | 25 | 24 | 24 | 23 | 19 | 20 | 21 | 21 | 18 | 20 | 20 | 35 | 35 | 36 | 36 | 35 | — | — | — | ||||||||
| Benchmarks (no. days) | |||||||||||||||||||||||||||||||||||
| Average Inventory Processing Period, Competitors2 | |||||||||||||||||||||||||||||||||||
| Linde plc | 37 | 38 | 40 | 41 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||
| Sherwin-Williams Co. | 61 | 62 | 68 | 68 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||
Based on: 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-K (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-K (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-K (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-K (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-Q (reporting date: 2016-12-31), 10-K (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-K (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-Q (reporting date: 2014-12-31).
1 Q3 2021 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 15.09 = 24
2 Click competitor name to see calculations.
The inventory turnover ratio exhibits a notable fluctuation over the analyzed periods. Initially, data is missing for the early dates; however, from December 31, 2014, onwards, the ratio starts at approximately 10.56 and remains relatively stable around 10 until December 31, 2015. Subsequently, there is a significant increase beginning in March 31, 2016, where the ratio rises sharply, peaking around 19.97 by September 30, 2016, indicating improved efficiency in inventory management or accelerated sales cycles during this interval.
Following this peak, the inventory turnover ratio experiences a gradual decline, decreasing from the high teens back to the mid-teens range by the end of the period on June 30, 2021. This decline suggests a reduction in the frequency with which inventory is sold and replaced, potentially signaling changes in demand, operational adjustments, or inventory accumulation.
Correspondingly, the average inventory processing period, which reflects the average number of days required to process inventory, follows an inverse trend. Initially stable around 35-36 days, it decreases sharply to around 18-20 days during the period when inventory turnover peaks. This decrease supports the inference of enhanced inventory management efficiency during this phase, as fewer days are required to process inventory.
After reaching a low processing period, a gradual increase is observable, with the average processing period extending back to approximately 24-26 days by mid-2021. This increase aligns with the observed decline in inventory turnover ratio, indicating a lengthening of the inventory cycle and potentially reflecting a deceleration in inventory movement or adjustments in supply chain factors.
- Key observations:
- The period from early 2016 to late 2017 shows a marked improvement in inventory efficiency, evidenced by increased turnover and reduced processing days.
- Post-2017, there is a gradual reversion towards longer processing times and lower turnover ratios, suggesting a normalization or slowdown in inventory activity.
- The data indicates a cyclical pattern with improvements in operational efficiency followed by stabilization or slight declines.
- Inventory management practices appear to have been more aggressive in maintaining low inventory levels during the middle years, possibly in response to market demands or corporate strategies.
Average Receivable Collection Period
Air Products & Chemicals Inc., average receivable collection period calculation (quarterly data)
| 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 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||||||||||||||
| Receivables turnover | 6.91 | 6.67 | 6.32 | 6.95 | 6.26 | 6.42 | 6.95 | 7.08 | 6.66 | 7.13 | 7.05 | 7.40 | 7.20 | 6.95 | 6.91 | 6.97 | 7.67 | 7.45 | 8.51 | 6.61 | 6.08 | 6.95 | 7.52 | 7.04 | — | — | — | ||||||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||||||||||||||||
| Average receivable collection period1 | 53 | 55 | 58 | 53 | 58 | 57 | 53 | 52 | 55 | 51 | 52 | 49 | 51 | 53 | 53 | 52 | 48 | 49 | 43 | 55 | 60 | 53 | 49 | 52 | — | — | — | ||||||||
| Benchmarks (no. days) | |||||||||||||||||||||||||||||||||||
| Average Receivable Collection Period, Competitors2 | |||||||||||||||||||||||||||||||||||
| Linde plc | 54 | 55 | 54 | 56 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||
| Sherwin-Williams Co. | 48 | 48 | 47 | 41 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||
Based on: 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-K (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-K (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-K (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-K (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-Q (reporting date: 2016-12-31), 10-K (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-K (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-Q (reporting date: 2014-12-31).
1 Q3 2021 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 6.91 = 53
2 Click competitor name to see calculations.
The receivables turnover ratio and the average receivable collection period exhibit generally stable trends with some fluctuations over the analyzed periods.
- Receivables Turnover Ratio
-
The ratio begins at 7.04 in December 2014, reaching a peak of 8.51 in March 2017. After that, the turnover ratio fluctuates mainly between approximately 6.32 and 7.4. There is a noticeable decline after March 2017, with occasional recoveries, but it does not return to the previous peak levels. By June 2021, the ratio stands at 6.91.
This pattern indicates that the company’s efficiency in collecting receivables slightly decreased on average after early 2017 but remained relatively consistent with some variability.
- Average Receivable Collection Period (in days)
-
This metric inversely relates to the receivables turnover ratio. The collection period begins at 52 days at the end of 2014 and reaches its shortest duration of 43 days in March 2017, coinciding with the peak in turnover ratio.
Following March 2017, the collection period tends to increase gradually, with values often exceeding 50 days and reaching as high as 58 days by March and September 2020. By June 2021, the period is recorded at 55 days.
The gradual lengthening of the collection period suggests that the time required to convert receivables into cash grew modestly over time, indicating a slight easing in credit collection discipline or customer payment behavior.
Overall, from late 2014 through mid-2021, the receivables turnover ratio and average collection period reveal a pattern of initial improvement in receivables management efficiency, peaking in early 2017, followed by a moderate decline and stabilization at somewhat lower efficiency levels. These fluctuations imply that while the company generally maintains steady credit and collection policies, external or internal factors may have influenced a more lenient or prolonged collection timeline in recent years.
Operating Cycle
Air Products & Chemicals Inc., operating cycle calculation (quarterly data)
No. days
| 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 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||||||||||||||
| Average inventory processing period | 24 | 25 | 26 | 25 | 26 | 25 | 25 | 24 | 25 | 24 | 24 | 23 | 19 | 20 | 21 | 21 | 18 | 20 | 20 | 35 | 35 | 36 | 36 | 35 | — | — | — | ||||||||
| Average receivable collection period | 53 | 55 | 58 | 53 | 58 | 57 | 53 | 52 | 55 | 51 | 52 | 49 | 51 | 53 | 53 | 52 | 48 | 49 | 43 | 55 | 60 | 53 | 49 | 52 | — | — | — | ||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||||||||||||||
| Operating cycle1 | 77 | 80 | 84 | 78 | 84 | 82 | 78 | 76 | 80 | 75 | 76 | 72 | 70 | 73 | 74 | 73 | 66 | 69 | 63 | 90 | 95 | 89 | 85 | 87 | — | — | — | ||||||||
| Benchmarks | |||||||||||||||||||||||||||||||||||
| Operating Cycle, Competitors2 | |||||||||||||||||||||||||||||||||||
| Linde plc | 91 | 93 | 94 | 97 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||
| Sherwin-Williams Co. | 109 | 110 | 115 | 109 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||
Based on: 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-Q (reporting date: 2020-12-31), 10-K (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-Q (reporting date: 2019-12-31), 10-K (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-Q (reporting date: 2018-12-31), 10-K (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-Q (reporting date: 2017-12-31), 10-K (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-Q (reporting date: 2016-12-31), 10-K (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-K (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-Q (reporting date: 2014-12-31).
1 Q3 2021 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= 24 + 53 = 77
2 Click competitor name to see calculations.
The data reveals trends in three key efficiency metrics over multiple quarters, showing variability with some noticeable improvements and fluctuations.
- Average inventory processing period
- The inventory processing period exhibits a decline from 35 days in December 2015 to a low of 18 days by June 2017, indicating improved inventory turnover efficiency during this interval. Subsequently, the figure stabilizes mostly in the low 20-day range, fluctuating between 19 and 26 days. This suggests that after the initial improvement, the inventory processing period has maintained relative consistency with minor short-term variations in the subsequent quarters through mid-2021.
- Average receivable collection period
- The receivable collection period shows more variability across the observed timeline. Beginning at 52 days in December 2015, it temporarily decreases to 43 days in December 2015 but then rises and fluctuates around the 50 to 58-day range. Notably, it peaks several times—reaching as high as 60 days in September 2015 and 58 days in multiple intervals beyond 2019. This variability indicates inconsistent collection efficiency, with periods of longer receivable durations impacting working capital management.
- Operating cycle
- The operating cycle mirrors the trends seen in the underlying components, starting near 87 days in December 2015, and reaching a reduced span of around 63-66 days by early 2017, signaling enhanced overall operational efficiency. However, after this improvement phase, the operating cycle increases again, fluctuating between 70 to 84 days across later quarters. This implies that despite earlier gains, the overall working capital cycle has lengthened somewhat in recent periods, possibly influenced by the receivables collection trends.
In summary, the company experienced a marked improvement in inventory processing times during the initial years of the dataset, contributing to shorter operating cycles. Meanwhile, the receivables collection period demonstrated higher volatility, occasionally extending the operating cycle and affecting cash flow timings. The operating cycle overall reflects these dynamics with initial contraction followed by modest expansion and oscillations in later quarters.