Boeing Co. (NYSE:BA)

An analysis of short-term operating activity ratios reveals several noteworthy trends between 2021 and 2025. Generally, the company demonstrates increasing efficiency in managing its working capital, although fluctuations are present. Inventory management shows improvement over the period, while accounts receivable collection becomes more efficient. Accounts payable management remains relatively stable, with a slight improvement towards the end of the period. Overall, the cash conversion cycle demonstrates a positive trend, indicating a shorter time to convert investments in inventory and other resources into cash.

Inventory Management

Inventory turnover gradually increased from 0.75 in 2021 to 1.01 in 2025, suggesting improved efficiency in managing inventory levels. This is further supported by the average inventory processing period, which decreased from 486 days in 2021 to 363 days in 2025. The decrease in processing period indicates that inventory is being sold more quickly, reducing storage costs and the risk of obsolescence. A slight dip in inventory turnover is observed in 2024, but the overall trend remains positive.

Receivables Management

Receivables turnover consistently increased from 23.58 in 2021 to 30.63 in 2025, indicating a more efficient collection of receivables. Correspondingly, the average receivable collection period decreased from 15 days in 2021 to 12 days in 2025, demonstrating a faster conversion of credit sales into cash. A slight decrease in receivables turnover is noted in 2024, but the collection period remains consistent with prior years.

Payables Management

Payables turnover exhibited a slight decline from 6.40 in 2021 to 5.86 in 2023, before recovering to 6.50 in 2025. The average payables payment period increased from 57 days in 2021 to 62 days in 2023, then decreased to 56 days in 2025. These fluctuations suggest a relatively stable relationship with suppliers, with a slight tendency towards extending payment terms, followed by a return to quicker payments.

Working Capital & Cash Conversion

Working capital turnover experienced significant volatility, increasing substantially from 2.34 in 2021 to 5.78 in 2023, then decreasing to 2.15 in 2024, before rising again to 4.40 in 2025. This suggests fluctuating efficiency in utilizing working capital to generate sales. The operating cycle decreased from 501 days in 2021 to 375 days in 2025, indicating a shorter time to convert raw materials into finished goods and collect cash. The cash conversion cycle decreased from 444 days in 2021 to 319 days in 2025, demonstrating an improved ability to efficiently manage the entire cash flow process.

In conclusion, the company generally improved its short-term operating efficiency between 2021 and 2025, particularly in inventory and receivables management. While working capital turnover experienced some volatility, the overall trend in the cash conversion cycle is positive, suggesting a strengthening of the company’s operational performance.

The inventory turnover ratio exhibits fluctuations over the five-year period. Initially, the ratio demonstrates an increasing trend, followed by a decline and subsequent recovery.

Inventory Turnover Trend

The inventory turnover ratio began at 0.75 in 2021 and increased to 0.81 in 2022, indicating a slightly improved efficiency in converting inventories into revenue. This upward momentum continued into 2023, with the ratio reaching 0.88, suggesting further gains in inventory management. However, in 2024, the ratio decreased to 0.78, potentially signaling slower sales or an increase in inventory levels. The ratio then experienced a notable increase in 2025, rising to 1.01, representing the highest value within the observed period.

Cost of Products and Services

The cost of products and services generally increased throughout the period. From 2021 to 2023, the cost rose from US$59,237 million to US$70,070 million. A slight decrease was observed in 2024 to US$68,508 million, before increasing significantly to US$85,174 million in 2025. This increase in cost aligns with the final year’s increase in inventory turnover, suggesting increased sales volume.

Inventory Levels

Inventory levels remained relatively stable between 2021 and 2023, fluctuating around US$78-80 billion. A substantial increase was noted in 2024, with inventories reaching US$87,550 million. This increase likely contributed to the lower inventory turnover ratio observed in that year. Inventory levels decreased slightly in 2025 to US$84,679 million, coinciding with the improved turnover ratio.

The combined trends suggest a complex relationship between inventory management, cost of goods sold, and sales activity. The increase in inventory turnover in 2025, coupled with the higher cost of products and services, indicates a potentially positive shift in operational efficiency and sales volume.

The receivables turnover ratio exhibits an overall increasing trend between 2021 and 2025, though with some fluctuation. This indicates changes in the efficiency with which the company converts its receivables into cash.

Overall Trend

From 2021 to 2023, the receivables turnover ratio demonstrates consistent growth, rising from 23.58 to 29.37. This suggests an improving ability to collect receivables during this period. However, 2024 saw a decrease to 25.28, before rebounding strongly to 30.63 in 2025, reaching its highest point in the observed timeframe.

Year-over-Year Changes

The largest year-over-year increase occurred between 2022 and 2023, with a rise of 2.91. The decrease in 2024, representing a decline of 4.09 from 2023, is the most significant downward movement. The subsequent increase in 2025, of 5.35, more than offsets the prior year’s decline.

Relationship to Revenue

Revenues increased substantially from 2021 to 2023, and again in 2025, while accounts receivable remained relatively stable. The increase in receivables turnover alongside revenue growth suggests that the company is effectively managing its credit and collection processes, even with higher sales volumes. The dip in revenue in 2024 corresponds with the decrease in receivables turnover, indicating a potential correlation between sales levels and the speed of receivables collection.

In conclusion, the receivables turnover ratio indicates generally improving efficiency in collecting receivables, with a temporary setback in 2024. The strong finish in 2025 suggests a return to efficient receivables management practices.

The accounts payable activity demonstrates a generally stable pattern over the five-year period, with some fluctuations. Cost of products and services increased overall, while accounts payable and the resulting payables turnover exhibited more moderate changes.

Cost of Products and Services

Cost of products and services increased from US$59,237 million in 2021 to US$85,174 million in 2025. The most significant increase occurred between 2022 and 2023, followed by a further substantial rise between 2024 and 2025. A slight decrease was observed between 2023 and 2024.

Accounts Payable

Accounts payable increased from US$9,261 million in 2021 to US$13,109 million in 2025. The increase was relatively consistent year-over-year, although the rate of increase slowed between 2023 and 2024. The largest absolute increase occurred between 2021 and 2022.

Payables Turnover

The payables turnover ratio decreased from 6.40 in 2021 to 5.86 in 2023, indicating a lengthening of the time it takes to pay suppliers. A slight recovery to 6.03 was noted in 2024, followed by an increase to 6.50 in 2025. This final increase suggests improved efficiency in managing payments or a change in purchasing practices. Despite these fluctuations, the ratio remained within a relatively narrow range throughout the period.

The increase in cost of products and services outpaced the increase in accounts payable, contributing to the initial decline in payables turnover. The subsequent stabilization and increase in the payables turnover ratio in later years suggest a potential improvement in the management of supplier payments relative to purchasing activity.

The working capital turnover ratio exhibits considerable fluctuation over the five-year period. Initial values indicate a relatively stable, though modest, level, followed by a period of significant increase, and then a return to a lower value before rising again.

Working Capital Trend

Working capital decreased from US$26,674 million in 2021 to US$13,448 million in 2023, representing a substantial reduction. A significant increase occurred in 2024, reaching US$30,920 million, before decreasing again to US$20,344 million in 2025. This volatility suggests potential shifts in the company’s short-term asset and liability management strategies.

Revenue Trend

Revenues generally increased over the period, rising from US$62,286 million in 2021 to US$89,463 million in 2025. However, a decrease was observed between 2023 and 2024, falling to US$66,517 million before recovering strongly in the final year. This revenue pattern influences the interpretation of the working capital turnover ratio.

Working Capital Turnover Ratio Analysis

The working capital turnover ratio increased from 2.34 in 2021 to 3.42 in 2022, indicating improved efficiency in utilizing working capital to generate sales. A marked increase to 5.78 in 2023 suggests a further substantial improvement in this efficiency. However, the ratio decreased to 2.15 in 2024, coinciding with the revenue decline, implying a less efficient use of working capital during that year. The ratio recovered to 4.40 in 2025, aligning with the renewed revenue growth, suggesting a return to more efficient working capital management.

The fluctuations in the ratio suggest a strong correlation with revenue levels. The significant increase in 2023, despite the decrease in working capital, indicates a particularly effective utilization of available resources. The subsequent decline in 2024, even with a lower level of working capital, highlights the impact of reduced sales on turnover efficiency.

Overall, the analysis reveals a dynamic relationship between working capital, revenues, and the resulting turnover ratio. The company’s ability to efficiently convert its working capital into sales appears to be sensitive to changes in revenue, and the observed volatility warrants further investigation into the underlying operational and financial factors driving these trends.

The average inventory processing period exhibited a generally decreasing trend over the five-year period, though with some fluctuation. Inventory turnover showed an initial increase followed by a decline and then a recovery.

Average Inventory Processing Period

The average inventory processing period decreased from 486 days in 2021 to 415 days in 2023, indicating an improvement in inventory management efficiency. A slight increase to 466 days was observed in 2024, potentially due to unforeseen supply chain disruptions or changes in production schedules. However, the period continued to decline in 2025, reaching a low of 363 days. This final decrease suggests a renewed focus on, or success in, optimizing inventory levels and accelerating the conversion of inventory into sales.

Inventory Turnover

Inventory turnover increased from 0.75 in 2021 to 0.88 in 2023, aligning with the decreasing inventory processing period. This suggests that inventory was being sold more quickly. A decrease to 0.78 in 2024 coincided with the slight increase in the average inventory processing period, indicating a potential slowdown in sales or an accumulation of inventory. The ratio then recovered to 1.01 in 2025, demonstrating a return to improved inventory liquidation and potentially reflecting increased demand or more effective inventory control measures.

The relationship between the average inventory processing period and inventory turnover suggests a correlation; as one decreases, the other generally increases, and vice versa. The fluctuations in 2024 warrant further investigation to understand the underlying causes and assess their potential impact on future performance.

The average receivable collection period exhibited a generally positive trend over the observed five-year period, indicating improvements in the efficiency of collecting receivables. While fluctuations occurred, the overall pattern suggests a strengthening of the company’s ability to convert credit sales into cash.

Average Receivable Collection Period

The average receivable collection period decreased from 15 days in 2021 to 14 days in 2022, representing a slight improvement in collection efficiency. This trend continued with a further reduction to 12 days in 2023, the lowest value observed during the period. A slight increase to 14 days occurred in 2024, before returning to 12 days in 2025. The consistency of 12 days in both 2023 and 2025 suggests a stable and efficient collection process during those years.

The observed fluctuations in the average collection period appear to correlate with changes in the receivables turnover ratio. A higher receivables turnover generally corresponds to a shorter collection period, and vice versa. The slight increase in the collection period in 2024 coincides with a decrease in the receivables turnover ratio for that year.

Relationship to Receivables Turnover

The receivables turnover ratio increased from 23.58 in 2021 to 26.46 in 2022, then to 29.37 in 2023, supporting the decrease in the average collection period during those years. A decrease to 25.28 in 2024 was followed by an increase to 30.63 in 2025. This suggests that the company’s ability to collect receivables is closely tied to its overall sales and collection processes, and that the observed changes are not random but rather reflect underlying business dynamics.

Overall, the company demonstrates a strong ability to manage its receivables, as evidenced by the generally decreasing average collection period and increasing receivables turnover. The return to a 12-day collection period in the most recent year suggests a sustained improvement in collection efficiency.

The operating cycle exhibited fluctuations over the five-year period. Generally, the operating cycle decreased, though not consistently year-over-year. A review of the components reveals differing trends in inventory processing and receivable collection.

Average Inventory Processing Period

The average inventory processing period demonstrated a decreasing trend from 486 days in 2021 to 415 days in 2023. An increase to 466 days was observed in 2024, followed by a substantial decrease to 363 days in 2025. This suggests improving efficiency in inventory management, punctuated by a temporary reversal in 2024 before a further improvement in the most recent year.

Average Receivable Collection Period

The average receivable collection period remained relatively stable, fluctuating between 12 and 15 days throughout the period. A slight decrease was noted from 15 days in 2021 to 14 days in 2022, followed by a further reduction to 12 days in 2023. This remained consistent through 2024 and 2025. This indicates consistent effectiveness in collecting receivables.

Operating Cycle

The operating cycle followed the trend of the inventory processing period, decreasing from 501 days in 2021 to 427 days in 2023. Similar to the inventory processing period, an increase to 480 days occurred in 2024, before a significant decrease to 375 days in 2025. The operating cycle’s movement is largely driven by changes in the inventory processing period, as the receivable collection period remained comparatively stable.

The decrease in the operating cycle, particularly the substantial reduction in 2025, suggests improved liquidity management. However, the increase observed in 2024 warrants further investigation to understand the underlying causes and whether it represents a temporary anomaly or a developing trend.

The average payables payment period exhibited a generally increasing trend from 2021 to 2023, followed by a slight decrease in subsequent years. This indicates a shifting pattern in how long it takes the company to settle its obligations to suppliers.

Payables Turnover

Payables turnover decreased from 6.40 in 2021 to 5.86 in 2023, suggesting a slower rate at which the company paid off its suppliers. A slight recovery was observed in 2024 (6.03) and further improvement in 2025 (6.50), indicating a return towards faster payment processing.

Average Payables Payment Period

The average payables payment period lengthened from 57 days in 2021 to 62 days in 2023. This suggests the company took longer to pay its suppliers during this period. The period then decreased to 61 days in 2024 and 56 days in 2025, indicating a shortening of the time taken to settle supplier invoices. The 2025 value represents a return to a level comparable to that observed in 2021.

The observed correlation between payables turnover and the average payables payment period is expected; a decreasing turnover generally corresponds to an increasing payment period, and vice versa. The recent trend suggests a potential shift in supplier relationships or internal payment processing efficiency, with a return to more rapid payments by 2025.

The fluctuations observed between 2021 and 2025 warrant further investigation to determine the underlying causes. Factors such as changes in supplier terms, inventory management practices, or cash flow management strategies could be contributing to these shifts.

An examination of short-term operating activity reveals fluctuations in the components of the cash conversion cycle over the five-year period. Generally, the cycle demonstrates a decreasing trend, though with some intermediate increases. The individual components – inventory processing, receivable collection, and payable payment – contribute to this overall pattern.

Average Inventory Processing Period

The average time to process inventory exhibited a decline from 486 days in 2021 to 415 days in 2023. A slight increase to 466 days occurred in 2024, followed by a more substantial decrease to 363 days in 2025. This suggests improving efficiency in inventory management, though the 2024 result indicates potential temporary disruptions. The significant reduction in 2025 is noteworthy.

Average Receivable Collection Period

The average number of days to collect receivables remained relatively stable, fluctuating between 12 and 15 days throughout the period. A slight decrease from 15 days in 2021 to 12 days in 2023 is observed, with a return to 14 days in 2024 before stabilizing at 12 days in 2025. This indicates consistent credit and collection policies.

Average Payables Payment Period

The average time taken to pay suppliers showed a gradual increase from 57 days in 2021 to 62 days in 2023. This was followed by a slight decrease to 61 days in 2024 and a further reduction to 56 days in 2025. The lengthening of the payment period in the earlier years may reflect efforts to optimize cash flow, while the recent decrease suggests a potential shift in supplier relationships or financing terms.

Cash Conversion Cycle

The cash conversion cycle decreased from 444 days in 2021 to 365 days in 2023, indicating an improvement in the efficiency of converting investments in inventory and other resources into cash. An increase to 419 days occurred in 2024, before a substantial decrease to 319 days in 2025. This overall downward trend suggests improved working capital management, although the cyclical fluctuations warrant further investigation. The 2025 value represents the most efficient cycle within the observed period.

In summary, the observed trends suggest a general improvement in the speed at which cash flows through the business, particularly evident in the reduction of the cash conversion cycle in 2025. However, the intermediate increases in both the cash conversion cycle and inventory processing period in 2024 suggest potential areas for continued monitoring and optimization.