GE Aerospace (NYSE:GE)

The short-term operating activity ratios exhibit varied trends over the observed period. Generally, the period from March 31, 2022, through December 31, 2023, demonstrates relative stability, followed by more pronounced fluctuations beginning in March 31, 2024. Several ratios show a distinct shift in performance during the latter part of the analyzed timeframe.

Inventory Management

Inventory turnover generally remained within a narrow range between 3.02 and 3.32 from March 31, 2022, to December 31, 2023. However, a notable decrease is observed starting in March 31, 2024, falling to 2.58, followed by a temporary increase to 4.08 in June 30, 2024, before declining again to 2.44 by December 31, 2025. This suggests potential challenges in inventory management, possibly related to demand forecasting or supply chain disruptions, particularly in the later periods. The average inventory processing period correspondingly increased from 112 days in March 31, 2022, to 150 days by December 31, 2025, reinforcing the slower inventory movement.

Receivables Management

Receivables turnover showed an upward trend through March 31, 2023, peaking at 5.00, indicating improved efficiency in collecting receivables. However, it subsequently declined, reaching 3.59 by December 31, 2025. The average receivable collection period decreased from 82-89 days between March 31, 2022, and December 31, 2022, to 73 days by March 31, 2023, but then increased to 102 days by December 31, 2025, suggesting a lengthening of the time required to collect payments in recent periods.

Payables Management

Payables turnover exhibited relative stability between 2.98 and 3.57 from March 31, 2022, to March 31, 2024. A significant increase to 5.01 is observed in June 30, 2024, followed by a return to levels around 2.85-2.87 by December 31, 2025. The average payables payment period decreased from 110-123 days between March 31, 2022, and December 31, 2022, to 73 days in June 30, 2024, before increasing to 127 days by December 31, 2025. This suggests a potential shift in payment terms or supplier relationships.

Overall Efficiency

Working capital turnover demonstrated significant volatility. It peaked at 13.29 in September 30, 2022, and then experienced a substantial increase to 28.44 in June 30, 2025, followed by a decrease to 26.19 by December 31, 2025. This suggests a considerable change in the efficiency with which working capital is utilized, potentially driven by the fluctuations observed in the other ratios. The operating cycle generally remained between 183 and 207 days through March 31, 2023, but increased to 252-254 days by December 31, 2025. The cash conversion cycle followed a similar pattern, increasing from 80-89 days to 125-127 days over the same period. These increases indicate a longer time frame required to convert investments in inventory and receivables into cash.

In summary, the analyzed ratios suggest a period of relative stability in operating activity through early 2023, followed by increasing volatility and, in many cases, declining efficiency in the later periods. The changes in inventory turnover, receivables collection, and payables payment periods warrant further investigation to understand the underlying causes and potential implications for the business.

Inventory turnover exhibited fluctuating behavior over the observed period, spanning from March 31, 2022, to December 31, 2025. Initial values indicated a relatively stable turnover rate, followed by a period of decline and subsequent volatility.

Initial Period (Mar 31, 2022 – Dec 31, 2022)

The inventory turnover ratio began at 3.25 and demonstrated modest fluctuations, ranging between 3.04 and 3.32. This suggests a consistent, though not rapidly increasing, rate at which inventory was being sold and replenished during this timeframe. The ratio peaked at 3.32 in March 2023 before declining slightly.

Decline and Volatility (Mar 31, 2023 – Dec 31, 2024)

A noticeable downward trend commenced in March 2023. The ratio decreased to 2.58 by March 2024, representing a significant drop from the prior year. A subsequent increase to 4.08 in June 2024 was followed by a further decline to 2.49 by December 2024. This period is characterized by substantial volatility, indicating potential shifts in sales patterns, inventory management strategies, or external market conditions.

Recent Period (Mar 31, 2025 – Dec 31, 2025)

The ratio continued to fluctuate, moving from 2.34 in March 2025 to 2.44 in December 2025. While showing some recovery from the low of 2.34, the ratio remained below the levels observed in the earlier part of the analyzed period. The most recent value suggests a slight stabilization, but further monitoring is needed to confirm a sustained trend.

Cost of Equipment and Services Sold Correlation

The cost of equipment and services sold generally increased from March 2022 through December 2022, then decreased in the first half of 2023. It then increased again through December 2023, and decreased significantly in the first half of 2024. The final period shows an increase. This pattern does not directly correlate with the inventory turnover fluctuations, suggesting factors beyond sales volume are influencing the turnover rate.

Inventory Levels

Inventory levels remained relatively stable between March 2022 and December 2022, fluctuating between US$16.57 million and US$17.553 million. A significant decrease in inventory was observed in March 2024, dropping to US$9.469 million, which likely contributed to the spike in inventory turnover in June 2024. Inventory levels then increased again through December 2025.

In summary, the inventory turnover ratio demonstrates a complex pattern. While initially stable, it experienced a period of decline and volatility, followed by a slight stabilization in the most recent quarters. The fluctuations appear to be influenced by both changes in the cost of goods sold and inventory levels, but a more detailed investigation would be required to determine the underlying drivers.

The receivables turnover ratio exhibits fluctuations over the observed period, spanning from March 31, 2022, to December 31, 2025. An initial decline is noted from 4.43 in the first quarter of 2022 to 4.09 by the end of that year. Subsequently, the ratio increased to 5.00 in the first quarter of 2023, before decreasing again to 4.17 in the fourth quarter of 2023. The period from early 2024 through the end of 2025 demonstrates a generally lower range, with the ratio fluctuating between 3.59 and 6.13.

Overall Trend

The receivables turnover ratio generally decreased over the entire period. While there were short-term increases, the ratio ended lower than where it began. This suggests a potential lengthening of the collection period for receivables.

2022-2023 Performance

From March 2022 to December 2023, the ratio experienced volatility. The initial decline in 2022 was followed by a notable increase in early 2023, potentially indicating improved collection efficiency or a change in sales terms. However, this improvement was not sustained, and the ratio decreased again by the end of 2023.

2024-2025 Performance

The period from 2024 to 2025 shows a more consistent, albeit lower, range of receivables turnover. A peak of 6.13 was observed in the first quarter of 2024, followed by a return to values generally below 4.00. This suggests a potential shift in credit policies or customer payment behavior. The ratio’s final value of 3.59 in December 2025 represents the lowest point in the observed period.

Correlation with Sales

A review of sales figures alongside the receivables turnover ratio reveals a complex relationship. While sales generally increased from 2022 to 2023, the receivables turnover did not consistently follow suit. The decrease in sales in early 2024 appears to coincide with a temporary increase in the ratio, but this was not sustained. The continued sales growth in late 2024 and 2025 occurred alongside a consistently lower receivables turnover, suggesting a potential issue with collecting on increased sales volume.

Further investigation into the underlying factors driving these trends, such as changes in credit terms, customer mix, or collection efforts, would be beneficial for a more comprehensive understanding.

The accounts payable turnover ratio exhibits fluctuations over the observed period, spanning from March 31, 2022, to December 31, 2025. Initial values indicate a generally decreasing trend throughout 2022, followed by a period of relative instability and then a more pronounced shift in subsequent periods.

Overall Trend

From March 2022 through December 2022, the payables turnover ratio declined from 3.32 to 2.98. A subsequent increase was observed in the first half of 2023, peaking at 3.57 in March 2023, before settling back to around 3.3 during the remainder of the year. A significant increase occurred in March 2024, reaching 5.01, followed by a decline and stabilization around 2.8 to 2.9 in the latter half of 2024 and the first three quarters of 2025. The final reported value for December 2025 is 2.87.

2022 Performance

The ratio decreased steadily throughout 2022, suggesting a lengthening of the time taken to pay suppliers. This could be attributable to a variety of factors, including increased negotiating power with suppliers, a deliberate strategy to manage cash flow, or potentially, emerging liquidity concerns. The cost of equipment and services sold increased throughout the year, while accounts payable increased at a slower rate.

2023 Fluctuations

The first half of 2023 showed a recovery in the payables turnover ratio, indicating a faster rate of payment. However, the ratio then stabilized, suggesting a return to more consistent payment practices. The cost of equipment and services sold also fluctuated, with a decrease in the first quarter of 2023, followed by increases in subsequent quarters.

2024-2025 Shift

The substantial increase in the ratio in March 2024 is notable. This suggests a significant acceleration in the rate at which obligations to suppliers were settled. However, this was not sustained, and the ratio decreased in subsequent quarters, stabilizing around 2.8 to 2.9. The accounts payable balance decreased significantly in March 2024, contributing to the higher turnover ratio. The cost of equipment and services sold remained relatively stable in the latter half of 2024 and the first three quarters of 2025.

In summary, the payables turnover ratio demonstrates a complex pattern of change. While a general downward trend was evident in 2022, subsequent periods show volatility, with a notable spike in early 2024 followed by a return to lower levels. These fluctuations warrant further investigation to understand the underlying operational and financial drivers.

The working capital turnover ratio exhibits considerable fluctuation over the observed period, spanning from March 31, 2022, to December 31, 2025. Initial values demonstrate an increasing trend, followed by periods of decline and subsequent resurgence. A detailed examination reveals distinct phases in the ratio’s behavior.

Initial Increasing Trend (Mar 31, 2022 – Sep 30, 2022)

The working capital turnover ratio increased from 7.14 in March 2022 to a peak of 13.29 in September 2022. This suggests an improving efficiency in utilizing working capital to generate sales during this period. The company was able to support higher sales volumes with a relatively stable level of working capital.

Subsequent Decline (Sep 30, 2022 – Jun 30, 2023)

Following the peak, the ratio decreased to 5.87 by March 2023, and remained relatively stable at 5.70 in June 2023. This decline could indicate a buildup of working capital relative to sales, potentially due to increased inventory levels or slower collection of receivables. The decrease in sales during this period also contributed to the lower turnover.

Moderate Fluctuations (Jun 30, 2023 – Dec 31, 2024)

From June 2023 through December 2024, the ratio experienced moderate fluctuations, ranging from 7.24 to 11.15. This period suggests a stabilization in the relationship between working capital and sales, although the ratio remained below the peak observed in September 2022. The ratio generally trended upwards during this period.

Significant Volatility and Increase (Mar 31, 2025 – Dec 31, 2025)

The final period demonstrates significant volatility. The ratio increased dramatically to 28.44 in June 2025, before decreasing to 14.05 in September 2025, and then rising again to 26.19 in December 2025. This substantial fluctuation suggests a significant shift in the company’s operating cycle or a temporary distortion in the relationship between working capital and sales. The large increase in turnover in June and December 2025 may be attributable to a significant reduction in working capital, or a surge in sales, or a combination of both.

Overall, the working capital turnover ratio demonstrates a dynamic relationship with sales. While periods of efficient working capital utilization are evident, the latter portion of the observed period is characterized by substantial volatility, warranting further investigation into the underlying drivers of these fluctuations.

The average inventory processing period exhibited fluctuations over the observed timeframe. Initially, the period remained relatively stable, followed by a period of increasing inefficiency, and then a return towards, but not to, initial levels.

Initial Stability (Mar 31, 2022 – Dec 31, 2022)

The average inventory processing period began at 112 days and fluctuated within a narrow range, peaking at 120 days in June 2022 before decreasing to 114 days by the end of 2022. This suggests a consistent, though not optimized, inventory management process during this period.

Increasing Inefficiency (Mar 31, 2023 – Dec 31, 2023)

From March 2023 through December 2023, a clear upward trend in the average inventory processing period is observed. The period increased from 110 days to 147 days, indicating a lengthening of the time required to convert inventory into sales. This could be attributable to factors such as decreased demand, supply chain disruptions, or inefficiencies in inventory control.

Continued Elevated Levels & Recent Stabilization (Mar 31, 2024 – Dec 31, 2025)

The period remained elevated in the first half of 2024, reaching a peak of 160 days in June 2025. However, a slight downward trend is apparent in the latter half of the period, with the average inventory processing period decreasing to 150 days by December 2025. While still higher than the levels observed in 2022, this suggests potential improvements in inventory management or a response to changing market conditions. The period has not returned to the earlier levels of efficiency.

Correlation with Inventory Turnover

The observed trends in the average inventory processing period are inversely correlated with the inventory turnover ratio. As the processing period increased, the inventory turnover ratio generally decreased, and vice versa. This relationship is expected, as a longer processing period implies slower inventory movement and fewer turnovers within the observed timeframe.

Overall, the analysis indicates a period of increasing inventory management challenges followed by a potential, but incomplete, recovery. Further investigation into the underlying causes of these fluctuations is recommended.

The average receivable collection period exhibited fluctuations over the observed timeframe. Initially, the period increased from 82 days in March 2022 to 89 days by December 2022, indicating a lengthening in the time taken to collect receivables. A subsequent decrease to 73 days was noted in March 2023, suggesting improved collection efficiency. However, the period then trended upwards again, peaking at 102 days in December 2025.

Overall Trend

The period generally demonstrated volatility rather than a consistent directional trend. While there were periods of improvement, the overall movement suggests a potential challenge in maintaining consistent collection speeds. The latter half of the period, from March 2024 onwards, shows a clear upward trend, culminating in the highest observed value.

Short-Term Fluctuations

A notable decrease occurred between December 2022 (87 days) and March 2023 (73 days), representing a 16% reduction in the collection period. This improvement was not sustained, as the period increased to 78 days in June 2023. A similar pattern is observed between September 2024 (75 days) and December 2024 (97 days), followed by further increases in 2025.

Recent Performance

The most recent quarters show a consistent increase in the average receivable collection period. From March 2024 (60 days) to December 2025 (102 days), the period has risen by 70%. This sustained increase warrants further investigation to determine the underlying causes, such as changes in credit policies, customer payment behavior, or potential issues with the receivables collection process.

The observed variations in the average receivable collection period suggest a dynamic relationship between sales, credit terms, and collection effectiveness. Continued monitoring of this metric is recommended to identify potential risks and opportunities for improvement in working capital management.

The operating cycle, along with its component parts, exhibits notable fluctuations over the observed period. Generally, the initial period through December 2022 demonstrates relative stability, followed by increasing variability and, in some cases, lengthening durations from March 2023 onward.

Average Inventory Processing Period

The average inventory processing period generally remained between 112 and 121 days from March 2022 through September 2023. A significant decrease to 89 days was observed in June 2024, followed by a return to higher values, peaking at 160 days in June 2025, before decreasing slightly to 150 days by December 2025. This suggests potential inefficiencies in inventory management during certain periods, particularly in the latter half of the observation window.

Average Receivable Collection Period

The average receivable collection period showed a gradual increase from 82 days in March 2022 to 89 days in December 2022. A substantial decrease to 60 days occurred in June 2024, indicating improved efficiency in collecting receivables. However, this improvement was not sustained, with the period increasing to 102 days by December 2025. This variability could be linked to changes in credit policies, customer payment behavior, or the composition of sales.

Operating Cycle

The operating cycle mirrored the trends in its components. It remained relatively stable between 194 and 207 days through December 2022. A notable decrease to 149 days was seen in June 2024, coinciding with the reduced receivable collection period. However, the operating cycle then increased, reaching a peak of 261 days in June 2025, before decreasing slightly to 252 days by December 2025. The increase in the operating cycle in the latter periods suggests a lengthening of the time required to convert investments in inventory and receivables into cash, potentially impacting liquidity.

The pronounced fluctuations observed from March 2023 through December 2025 warrant further investigation. Understanding the underlying causes of these changes – whether related to operational factors, market conditions, or strategic decisions – is crucial for optimizing working capital management and maintaining financial health.

The average payables payment period exhibited fluctuations over the observed period, spanning from March 31, 2022, to December 31, 2025. An initial increasing trend is followed by a period of volatility and then a stabilization towards the end of the period.

Initial Trend (Mar 31, 2022 – Dec 31, 2022)

From March 31, 2022, to December 31, 2022, the average payables payment period generally increased, moving from 110 days to 123 days. This suggests a lengthening in the time taken to settle obligations to suppliers during this timeframe. The increase was relatively gradual, with a slight acceleration in the final quarter of 2022.

Volatility and Decrease (Mar 31, 2023 – Jun 30, 2024)

The period from March 31, 2023, to June 30, 2024, demonstrates considerable volatility. The payment period decreased significantly to 73 days by June 30, 2024, from 102 days at the beginning of 2023. This represents a substantial improvement in payment efficiency. However, this decrease was preceded by increases to 107 and 112 days in the second and third quarters of 2023, respectively, indicating inconsistent payment practices.

Stabilization (Sep 30, 2024 – Dec 31, 2025)

From September 30, 2024, through December 31, 2025, the average payables payment period stabilized, fluctuating between 119 and 134 days. The period peaked at 134 days in June 2025, before decreasing slightly to 127 days by the end of 2025. This suggests a return to a more consistent, albeit longer, payment timeframe.

Overall Observation

The observed pattern indicates a shift in payment behavior. Initially, the company took longer to pay its suppliers. Subsequently, a period of improved efficiency was observed, followed by a return to a longer, relatively stable payment period. The fluctuations suggest potential changes in supplier relationships, cash flow management, or negotiation strategies.

The short-term operating activity ratios reveal fluctuations in the company’s efficiency in managing its working capital over the observed period. Specifically, the average inventory processing period, average receivable collection period, and average payables payment period, and their combined effect on the cash conversion cycle, demonstrate notable shifts.

Average Inventory Processing Period

The average inventory processing period generally remained between 110 and 121 days from March 2022 through September 2023. A significant decrease to 89 days was observed in June 2024, followed by increases to 141 days in March 2025, peaking at 160 days in June 2025, and decreasing slightly to 156 days in September 2025, and 150 days in December 2025. This suggests potential inconsistencies in inventory management, possibly influenced by supply chain dynamics or changes in sales patterns.

Average Receivable Collection Period

The average receivable collection period exhibited relative stability between 73 and 93 days from March 2023 through March 2025. Prior to this, the period ranged from 82 to 89 days between March 2022 and December 2022. A notable decrease to 60 days occurred in June 2024, followed by an increase to 102 days in December 2025. This indicates varying effectiveness in collecting payments from customers, potentially linked to credit policies or customer payment behavior.

Average Payables Payment Period

The average payables payment period showed a general increase from 110 days in March 2022 to 134 days in June 2025. The period fluctuated between 102 and 123 days from March 2023 through December 2024. The increase suggests a potential shift in the company’s negotiation power with suppliers or a deliberate strategy to extend payment terms, potentially to improve short-term cash flow.

Cash Conversion Cycle

The cash conversion cycle remained relatively stable between 80 and 95 days from March 2022 through December 2023. A decrease to 76 days was observed in June 2024, followed by an increase to 127 days in June 2025, and a slight decrease to 125 days in December 2025. The cycle’s fluctuations correlate with the changes in the individual components, with the increase in the cycle in the latter part of the period driven by increases in inventory processing and receivable collection periods, partially offset by the payables payment period. The lengthening of the cash conversion cycle in the most recent periods suggests a potential need to optimize working capital management to improve liquidity.

Overall, the observed trends indicate a dynamic working capital environment. The company experienced periods of efficient working capital management, as evidenced by the lower cash conversion cycle in June 2024, but also periods of increasing inefficiency, particularly in the latter half of the observed period. Continued monitoring of these ratios is recommended to identify the underlying causes of these fluctuations and implement appropriate strategies to optimize working capital performance.