Ford Motor Co. (NYSE:F)

Inventory Turnover

Inventory turnover exhibited a slight decline from 10.43 in 2020 to 9.5 in 2021, followed by stabilization in 2022 and 2023 around 9.55 to 9.62. In 2024, there was a notable increase to 10.6, indicating an improvement in the efficiency of inventory management.

Receivables Turnover

This ratio decreased from 11.6 in 2020 to 9.48 in 2022, reflecting a slower collection of receivables over that period. However, improvements were observed afterwards, rising back to 11.73 by 2024, suggesting enhanced collection efficiency in recent years.

Payables Turnover

Payables turnover showed a steady increase from 5.08 in 2020 to 6.57 in 2024. This indicates that payables are being settled more quickly over time, possibly reflecting changes in payment policies or better liquidity management.

Working Capital Turnover

There was a consistent upward trend in working capital turnover, growing from 5.93 in 2020 to 9.8 in 2024. This suggests improved utilization of working capital to generate sales, indicating enhanced operational efficiency.

Average Inventory Processing Period

The inventory processing period was stable at 38 days from 2021 to 2023 but decreased to 34 days in 2024, improving from 35 days in 2020. This reduction corresponds with the increased inventory turnover, signifying faster inventory movement.

Average Receivable Collection Period

The collection period lengthened from 31 days in 2020 to 39 days in 2022, indicating slower collections during that time. It subsequently shortened back to 31 days by 2024, consistent with the improvement in receivables turnover.

Operating Cycle

The operating cycle increased from 66 days in 2020 to a peak of 77 days in 2022, then decreased to 65 days by 2024. The longer cycle mid-period suggests a temporary slowdown in cash flow conversion, which has since improved.

Average Payables Payment Period

There was a consistent decline in the payables payment period from 72 days in 2020 to 56 days in 2024, indicating faster payment of obligations over the years, aligning with the rising payables turnover ratio.

Cash Conversion Cycle

The cash conversion cycle data shows an increase from -6 days in 2020 (indicating a cash-positive cycle) to 9 days in 2022, remaining stable at 9 days through 2024. This shift suggests a longer duration to convert resources into cash, which could denote a cash flow timing challenge despite improvements in other areas.

Cost of Sales

The cost of sales demonstrates a consistent upward trend over the five-year period. Starting at 112,752 million US dollars at the end of 2020, it steadily increases each year, reaching 158,434 million US dollars by the end of 2024. This represents a substantial growth, indicating escalating production or procurement costs, possibly due to increased sales volume or rising input prices.

Inventories

Inventories also show an overall increasing trend, rising from 10,808 million US dollars in 2020 to a peak of 15,651 million in 2023, followed by a slight decline to 14,951 million in 2024. This pattern suggests a buildup of inventory levels through 2023, potentially indicating anticipation of higher sales or production, with a modest reduction in the final year, which may point to improved inventory management or changes in demand forecasts.

Inventory Turnover Ratio

The inventory turnover ratio fluctuates moderately throughout the period. It declines from 10.43 in 2020 to a low of 9.5 in 2021 and then experiences slight recovery in subsequent years, reaching 10.6 in 2024, its highest point in the series. This trend implies that inventory is being turned over less efficiently initially but improves significantly by 2024, indicating better sales efficiency or inventory management practices towards the end of the period.

Revenues Trend

The company’s revenues excluding Ford Credit have shown a consistent upward trend from 2020 to 2024. Starting at approximately $115.9 billion in 2020, revenues increased steadily each year, reaching about $172.7 billion by 2024. This marks a significant growth of roughly 49% over the five-year period, indicating strong sales performance and expanding operations during these years.

Receivables Trend

Trade and other receivables, less allowances, increased notably from $9.993 billion in 2020 to a peak of $15.729 billion in 2022. However, following this peak, receivables slightly declined to $15.6 billion in 2023 and further to $14.7 billion in 2024. This pattern suggests a buildup of receivables in the first half of the period followed by a modest reduction, possibly reflecting improved collection efforts or tighter credit policies in the latter years.

Receivables Turnover Analysis

Receivables turnover ratio experienced a decline from 11.6 in 2020 to a low of 9.48 in 2022, indicating that the company was collecting its receivables more slowly or that the amount of receivables was increasing faster than revenues during that year. Following 2022, the ratio rebounded to 10.63 in 2023 and further increased to 11.73 in 2024, surpassing the initial 2020 level. This improvement suggests enhanced efficiency in receivables collection or better management of credit terms towards the end of the period.

Combined Insights

The growth in revenues coupled with the initial rise and subsequent decline in receivables along with the pattern in receivables turnover ratio suggests that while the company expanded its sales significantly, it initially allowed receivables to grow, potentially impacting cash collection efficiency. However, by 2023 and 2024, measures to improve credit management appear to have been effective, leading to faster collections relative to sales and an overall healthier receivables turnover performance.

Cost of Sales

The cost of sales has exhibited a consistent upward trend over the five-year period. Starting from approximately 112.75 billion USD in 2020, it increased progressively each year, reaching around 158.43 billion USD by 2024. This represents a significant rise in the direct costs associated with goods sold, indicating either growth in production volume, inflationary impacts, or changes in input costs.

Payables

Trade payables have shown a generally stable but slightly fluctuating pattern. Beginning at about 22.20 billion USD in 2020, payables increased to a peak of roughly 25.99 billion USD in 2023, before declining to 24.13 billion USD in 2024. This suggests variations in the company's short-term liabilities to suppliers, possibly reflecting changes in credit terms, purchasing activity, or payment policies.

Payables Turnover Ratio

The payables turnover ratio, which measures how quickly the company pays off its suppliers, has shown a steady increase from 5.08 in 2020 to 6.57 in 2024. This indicates an acceleration in the company's payment rate to creditors over the period. A higher turnover ratio may imply improved liquidity or a strategic shift to faster payments, potentially to capture supplier discounts or maintain favorable supplier relationships.

Working Capital

Working capital exhibited minor fluctuations over the five-year period. It decreased from $19,552 million in 2020 to $18,269 million in 2021, then increased slightly to $19,610 million in 2022 and $19,950 million in 2023, before declining again to $17,615 million in 2024. Overall, the working capital shows variability but no significant long-term growth trend, ending slightly below the initial 2020 value.

Company Revenues Excluding Ford Credit

Revenues excluding Ford Credit displayed a consistent upward trend throughout the timeframe. Starting at $115,941 million in 2020, revenues increased steadily each year, reaching $126,268 million in 2021, then rising sharply to $149,079 million in 2022, $165,901 million in 2023, and $172,706 million in 2024. This represents substantial revenue growth, reflecting positive operational performance and possibly expansion of core business activities.

Working Capital Turnover Ratio

The working capital turnover ratio, which measures efficiency in using working capital to generate sales, improved consistently over the period. It increased from 5.93 in 2020 to 6.91 in 2021, then to 7.6 in 2022, followed by 8.32 in 2023 and notably rising to 9.8 in 2024. The rising ratio indicates enhanced effectiveness in utilizing working capital, with more revenue generated per unit of working capital over time.

Overall Analysis

The data indicates that while working capital remained relatively stable with minor declines in some years, the company significantly increased its revenues, demonstrating business growth. Concurrently, the improving working capital turnover ratio suggests enhanced operational efficiency and better management of short-term assets and liabilities. The combination of steady revenue growth alongside increased capital turnover points to an improving financial performance and potentially stronger liquidity management.

Inventory Turnover Trend

The inventory turnover ratio exhibited a decline from 10.43 in 2020 to 9.5 in 2021, followed by a relatively stable phase around 9.55 to 9.62 in 2022 and 2023, before increasing notably to 10.6 in 2024. This pattern suggests a temporary reduction in the efficiency with which inventory was sold or used, which then improved substantially by the end of the reported period.

Average Inventory Processing Period

The average inventory processing period, expressed in number of days, showed an increase from 35 days in 2020 to 38 days in 2021, maintaining this level through 2022 and 2023, before decreasing to 34 days in 2024. This indicates that the company experienced longer inventory holding times during the middle years, with an improvement reflected by a shorter processing duration in the final year.

Overall Analysis

The combined trends of inventory turnover and processing period reveal an inverse relationship: as the inventory turnover ratio fell, the average processing period increased, and vice versa. The initial deterioration in inventory management efficiency in 2021 and the following two years may have been addressed by improvements leading into 2024. The reduction in days inventory held in 2024 corresponds with a higher turnover ratio, reflecting enhanced inventory management efficiency and potentially better alignment between inventory levels and sales activities.

Receivables Turnover

The receivables turnover ratio demonstrates a fluctuating trend over the analyzed periods. Starting at 11.6 in 2020, it slightly declined to 11.11 in 2021 and further decreased more notably to 9.48 in 2022. However, the ratio improved thereafter, rising to 10.63 in 2023 and reaching a peak of 11.73 in 2024. This indicates an initial deterioration in the efficiency of managing receivables, followed by progressive improvement in the latter years.

Average Receivable Collection Period

The average collection period, expressed in days, inversely correlates with the receivables turnover ratio. It increased from 31 days in 2020 to a peak of 39 days in 2022, indicating a slower collection process. Subsequently, it decreased to 34 days in 2023 and returned to 31 days in 2024, reflecting an enhancement in the speed of receivable collection back to the initial level.

Summary

Overall, the data reflect a period of weakened receivables management around 2021 and 2022, as evidenced by a lower receivables turnover and an increased collection period. This decline could suggest challenges in credit control or customer payment delays during that time. From 2023 onward, the company appears to have implemented corrective measures, resulting in improved turnover rates and reduced collection days, thus restoring efficiency to levels comparable to those at the beginning of the period.

Average Inventory Processing Period

The average inventory processing period exhibited a slight increase from 35 days in 2020 to 38 days in 2021, maintaining that level through 2023. In 2024, the period decreased notably to 34 days, indicating improved efficiency in inventory turnover in the most recent year.

Average Receivable Collection Period

The average receivable collection period showed an initial rise from 31 days in 2020 to a peak of 39 days in 2022. Subsequently, the period shortened to 34 days in 2023 and further declined to 31 days in 2024, returning to the level observed at the beginning of the period. This suggests a recovery in the company’s receivables management and collection effectiveness after a temporary extension.

Operating Cycle

The operating cycle increased from 66 days in 2020 to a peak of 77 days in 2022, reflecting a lengthening of the combined inventory and receivables turnover process. However, it then began to shorten, retreating to 72 days in 2023 and further to 65 days in 2024. This trend aligns with the improvements noted in both inventory processing and receivables collection times.

Overall Trends and Insights

The data indicates a period of gradual lengthening in operational cycles during 2021 and 2022, largely driven by increases in both inventory processing and receivable collection periods. From 2023 onwards, there is evidence of operational improvements resulting in shortened processing and collection times. By 2024, the operating cycle not only decreased below the prior peak but also fell slightly below its 2020 level, suggesting enhanced operational efficiency and potentially better working capital management in the most recent year.

The financial data reveals notable trends in the accounts payable management over the five-year period ending December 31, 2024.

Payables Turnover

The payables turnover ratio shows a consistent upward trajectory, increasing from 5.08 in 2020 to 6.57 in 2024. This progression indicates an accelerated rate of settling accounts payable relative to purchases or cost of goods sold, suggesting enhanced efficiency in managing payables or possibly better cash flow management.

Average Payables Payment Period

Corresponding to the increase in payables turnover, the average payables payment period demonstrates a steady decline from 72 days in 2020 to 56 days in 2024. This reduction in the number of days taken to pay suppliers highlights a shortening of the company's payment cycle, which could reflect improved liquidity, stronger supplier relationships, or strategic changes in payment policies.

Overall, the data illustrates a clear pattern of improved efficiency in the management of payables, with a faster payment cycle and increased frequency of turnover. This trend may positively impact supplier relations and contribute to operational effectiveness, though it may also indicate reduced credit terms negotiated with suppliers.

Average Inventory Processing Period

The average inventory processing period exhibited a generally stable trend from 2020 to 2023, consistently around 38 days after an initial value of 35 days in 2020. This indicates a steady duration for inventory turnover. Notably, there is a decline to 34 days in 2024, suggesting improved efficiency in inventory management during that year.

Average Receivable Collection Period

The average receivable collection period showed a fluctuating pattern across the observed period. It increased from 31 days in 2020 to 39 days in 2022, implying a longer time to collect receivables during that period. Subsequently, it decreased to 34 days in 2023 and further to 31 days in 2024, signaling an improvement in the company's ability to collect payments from customers within a shorter timeframe towards the end of the period.

Average Payables Payment Period

The average payables payment period demonstrated a consistent downward trend over the five years. It decreased from 72 days in 2020 to 56 days in 2024. This suggests that the company has been paying its suppliers more quickly as time progressed, which could impact cash flow management and supplier relationships.

Cash Conversion Cycle

The cash conversion cycle data is incomplete but indicates a shift from negative values to positive values. In 2020, the cycle was negative at -6 days, indicating that the company was able to collect cash before paying suppliers. By 2022, this shifted to a positive value of 7 days and further slightly increased to 9 days in both 2023 and 2024. This change implies a transition to a longer cash conversion cycle, meaning cash remains tied up in operations for a longer period, potentially reflecting changes in operational or working capital efficiency.

Overall Insights

Over the five-year period, the company demonstrated mixed trends in working capital management. Inventory turnover efficiency improved in the final year after remaining stable. Receivables collection showed an initial worsening but improved by 2024. Payables payment accelerated consistently, reducing the average payment period each year, which may exert pressure on cash reserves. The cash conversion cycle's shift from negative to positive values indicates a lengthening period before cash is recovered from operations, suggesting increased capital requirements or changing operational dynamics.