GE Aerospace (NYSE:GE)

The financial ratios and periods presented reflect several important trends in operational efficiency and liquidity over the analyzed timeframe.

Inventory Turnover

The inventory turnover ratio shows a gradual decline from 3.8 to around 2.29 over the periods observed, indicating slower movement of inventory relative to past periods. This suggests a lengthening in the time inventory remains on hand before being sold, further confirmed by the increasing average inventory processing period, which rises from 96 days to 160 days. Such a trend may point to challenges in inventory management or changes in demand patterns.

Receivables Turnover

Receivables turnover fluctuates with a mild downward trend from a peak near 6.13 down to 3.61 by the end of the period. This is accompanied by an increase in the average receivable collection period from around 60 days to over 100 days, revealing a slower collection of receivables. This could impact cash flow and indicates customers, on average, are taking longer to pay.

Payables Turnover

Payables turnover decreases from a high around 5.01 down to 2.72, while the average payables payment period extends from roughly 73 days to 134 days. This indicates the company is taking longer to settle its obligations to suppliers, which might be a strategic approach to preserve liquidity or may highlight cash flow pressures.

Working Capital Turnover

Working capital turnover exhibits a broadly rising trend, accelerating sharply from 2.26 to 28.44 in the final period. This indicates significant improvement in generating sales from the capital available. Such a high ratio suggests more efficient use of working capital, though the extreme rise in the last periods merits further investigation to confirm sustainability.

Operating Cycle and Cash Conversion Cycle

The operating cycle mostly trends longer, increasing from 179 to 261 days, a sign that the combined inventory and receivables periods are lengthening. The cash conversion cycle also lengthens from 79 days to 127 days, indicating the net time from outlay of cash to cash recovery is increasing. This trend suggests working capital investments are tied up for longer durations.

Overall, the data indicates that while the company has improved working capital turnover efficiency markedly, it faces challenges with slower inventory movement and extended collection and payment periods. The elongation of operating and cash conversion cycles implies increased capital requirements to support ongoing operations. These dynamics highlight the importance of continued focus on improving turnover of receivables and inventory to enhance liquidity and operational performance.

The analysis reveals several notable trends across the examined periods regarding the cost of equipment and services sold, inventories, and inventory turnover ratios.

Cost of Equipment and Services Sold

This metric exhibits a fluctuating pattern with a pronounced decrease starting from the quarter ending March 31, 2021, compared to earlier periods in 2020. Values initially decreased from above 15,000 million USD to a range generally between 12,000 and 14,000 million USD through 2021 and 2022. However, a sharp decline is observed in the periods commencing March 31, 2024, where values drop to levels around 5,700 to 6,800 million USD, which is significantly lower than previous quarters. This indicates a potential structural change or a recalibration in cost recognition during the latest periods.

Inventories, Including Deferred Inventory Costs

Inventories generally increased moderately from early 2020 through 2021, reaching a peak around 17,000 to 18,000 million USD. In 2022 and into early 2023, the levels remained relatively stable within the range of approximately 16,000 to 17,000 million USD, suggesting a consistent inventory policy during this phase. Nevertheless, from March 31, 2024, inventories show a substantial decline to figures between approximately 9,400 and 11,300 million USD, mirroring the downward trend also visible in cost of goods sold. This synchronized reduction may indicate a scaling down of operations or improved inventory management leading to lower stock levels.

Inventory Turnover Ratio

The inventory turnover ratio demonstrates variability over the observed periods. Starting at approximately 3.8 in late 2020, the ratio gradually declined to about 3.02 by the first quarter of 2023, implying slower inventory movement during this timeframe. Notably, an anomalous high turnover of over 4.0 is recorded early in 2024, suggesting a sharp increase in inventory efficiency or rapid sales outpacing inventory levels. However, subsequent quarters show a decreasing trend again toward ratios near 2.3 by mid-2025, indicating slower inventory turnover relative to earlier years, which may reflect operational shifts or market conditions affecting sales velocity or inventory accumulation.

Overall, the data points to a significant transformation beginning in early 2024 characterized by decreased costs, lower inventory levels, and an initially higher but subsequently declining inventory turnover ratio. These patterns highlight possible strategic adjustments in operations, supply chain management, or market demand affecting financial performance indicators related to inventory and related costs.

The data reveals several noteworthy trends relating to sales, receivables, and receivables turnover over the observed periods.

Sales of equipment and services (US$ in millions)

Sales exhibit a cyclic pattern with notable fluctuations across quarters. There is a visible decline in sales from early 2020 through early 2021, followed by a gradual recovery and peaks towards the end of 2022 and 2023. However, starting from the first quarter of 2024, sales figures drop sharply compared to previous years, reaching notably lower values, although there is some modest incremental growth through the quarters of 2024 and into mid-2025.

Current receivables (US$ in millions)

Current receivables display somewhat steadier values compared to sales, with moderate fluctuations. There is a gradual decline in receivables from early 2020 to mid-2021, followed by a rebound and relative stability through 2022 and 2023. However, from early 2024 onwards, receivables values decrease substantially, mirroring the decline in sales but showing a more gradual recovery trend by mid-2025.

Receivables turnover (ratio)

The receivables turnover ratio demonstrates considerable variability over the periods. It initially increases gradually through 2020 and early 2021, reaching values around 4.8 to 5. During late 2021 and 2022, the ratio declines to lower levels, between approximately 4.0 and 4.4. In 2023, it rises again slightly but drops markedly in 2024, with extreme volatility seen in the quarterly ratios, ranging from lows near 3.6 to highs exceeding 6. This increase in volatility could indicate inconsistent collection efficiency or changes in credit policies during this timeframe.

Overall, the data suggests periods of instability and recovery within the company’s sales and receivables performance, with recent quarters showing decreased sales and receivables accompanied by irregular receivables turnover. This pattern points to potential challenges in maintaining steady revenue and managing credit effectively during the most recent periods analyzed.

The cost of equipment and services sold demonstrates a fluctuating pattern over the presented quarters. Initially, the values decrease from approximately 15,696 million USD in March 2020 to around 12,538 million USD in March 2021, indicating a contraction in this expense category. Subsequently, there is a period of moderate recovery where costs rise again, peaking at about 15,467 million USD in December 2022. Following this peak, a notable decline occurs with costs falling sharply to 5,746 million USD in March 2024, before a slight upward adjustment towards slightly above 6,800 million USD by June 2025. This volatility suggests adjustments in production volume or service delivery, possibly influenced by external factors or operational restructuring.

Accounts payable values also show considerable variability but maintain a generally high level throughout the period. Starting at approximately 15,212 million USD in March 2020, payables decline somewhat by mid-2020, then rise again to peak at 18,644 million USD in December 2022. Following this peak, a marked reduction happens by March 2024, reaching around 7,707 million USD, after which a gradual increase is observed up to about 9,495 million USD by mid-2025. The changes in accounts payable align somewhat with the cost fluctuations, reflecting possible shifts in payment terms or procurement strategies.

The payables turnover ratio indicates the number of times payables are paid off during the period, reflecting efficiency in managing short-term obligations. Early data points beginning in September 2020 show a downward trend from 3.67 to around 2.72 by June 2025, indicating a lengthening in the payment cycle over the years. However, an isolated spike is observed in March 2024 at 5.01, representing a temporary acceleration in payables turnover, possibly due to a one-time operational change or improved payment efficiency. The overall declining trend in this ratio suggests a more extended period to settle accounts payable, which could impact cash flow management.

In summary, the data reveals that costs of goods sold and accounts payable experienced significant fluctuations, including periods of sharp declines and recoveries. The payables turnover ratio's overall downward trend implies a lengthening in payment cycles, albeit with occasional improvements. These patterns point to dynamic operational adjustments and financial management strategies in response to changing business conditions during the assessed timeframe.

Cost of Equipment and Services Sold

Fluctuated substantially, decreasing until early 2021, rising to a peak by late 2022, followed by a significant decline in 2024 and a moderate increase towards mid-2025.

Accounts Payable

Remained generally high with peaks towards late 2022, subsequent sharp falls in early 2024, and gradual recovery thereafter.

Payables Turnover Ratio

Displayed an overall declining trend from 2020 to 2025, indicating slower payment cycles, with a notable spike in early 2024 suggesting temporary enhanced payment activity.

The analysis of the quarterly financial data reveals several notable trends and fluctuations in key metrics over the examined periods.

Working Capital

Working capital exhibited significant volatility throughout the periods. Initially, there was a general upward trend from 9,869 million USD in March 2020, peaking at 55,517 million USD in March 2021. However, following this peak, working capital displayed a steep decline, dropping to as low as 1,335 million USD by June 2025. This pronounced reduction after the peak indicates potential tightening in operational liquidity or increased investment in non-current assets or payables.

Sales of Equipment and Services

Sales figures demonstrated cyclical behavior with noticeable seasonal peaks and troughs, but with a broader trend of fluctuation rather than consistent growth. Sales started at 18,814 million USD in March 2020, followed by declines and recoveries, reaching a low of 8,076 million USD in March 2024, and then recovering slightly to 10,150 million USD by June 2025. This pattern indicates variability in market demand or contract timing, with a notable downward trend in recent years relative to earlier periods.

Working Capital Turnover

Working capital turnover was not reported until the end of 2020, where values began at 2.26 and dropped to a low of 1.27 by March 2021. Subsequently, turnover ratios increased significantly, peaking at 28.44 in June 2025. High turnover values in the later periods suggest improved efficiency in utilizing working capital to generate sales, potentially due to the reduction in working capital levels combined with stabilized sales figures. This indicates enhanced operational efficiency or more aggressive working capital management.

Overall, the data indicates that while sales experienced fluctuations and an overall decrease in recent years, the steep reduction in working capital combined with rising turnover ratios suggests a shift toward more efficient use of capital resources. The company appears to have tightened liquidity positions significantly after March 2021, which coincides with an improvement in working capital turnover. However, the declining sales trend in the last few quarters warrants attention for potential impacts on revenue stability going forward.

The financial data exhibits discernible trends in both inventory turnover and the average inventory processing period over the reported quarters.

Inventory Turnover

Beginning from the first available data point in March 2021, inventory turnover shows a gradual declining trend from 3.8 to a low of approximately 2.29 by June 2025, with some fluctuations observed throughout the periods. There is a notable peak at 4.08 in June 2024 which interrupts the overall downtrend momentarily before it resumes its decline. This decline in inventory turnover suggests a reduced frequency in the company’s cycle of selling and replenishing inventory over time.

Average Inventory Processing Period

Inversely related to inventory turnover, the average inventory processing period has generally increased from 96 days in March 2021 to 160 days by June 2025. The duration lengthened steadily with periodic fluctuations, reaching a peak of 147 days in March 2025 and ultimately extending further to 160 days. An outlier is visible where the period drops to 89 days in March 2024, corresponding to the short-lived inventory turnover increase seen at that time. Overall, the increasing number of days indicates slower inventory movement and longer holding times.

The interplay between these two metrics points towards a trend of declining operational efficiency in inventory management, with products remaining in inventory longer and turnover rates falling. The spike in inventory turnover and concurrent decrease in processing time around early 2024 suggest a temporary improvement in inventory handling, but this did not sustain in subsequent quarters. This pattern could imply challenges in demand forecasting, supply chain delays, or changing market conditions impacting inventory levels.

The receivables turnover ratio and the average receivable collection period exhibit notable fluctuations over the observed periods, reflecting changes in the efficiency of receivables management and cash collection practices.

Receivables Turnover Ratio

From March 2020 onwards, the ratio generally displays a declining trend. It started around 4.37 and increased gradually to peak at 4.83 by December 2020. Subsequently, it declined steadily, reaching a low of 3.61 by June 2025. Occasional upticks, such as a rise to 6.13 in June 2024, indicate some temporary improvements in turnover efficiency, but the overall pattern suggests a weakening in the ability to convert receivables into cash quickly over the long term.

Average Receivable Collection Period

The average collection period initially improved, decreasing from 83 days in March 2020 to as low as 73 days by March 2023. However, after this improvement, the trend reversed with an increasingly longer collection period, rising back to 101 days by June 2025. This trend suggests increasing delays in receiving payments from customers, signaling potential challenges in credit control or customer payment behavior.

Relationship and Implications

The inverse relationship between the receivables turnover ratio and the average collection period is consistent throughout the data. Periods of higher turnover correspond with shorter collection periods and vice versa. The overall downward trend in turnover alongside lengthening collection times may indicate weakening liquidity management, potentially leading to increased credit risk and reduced cash flow efficiency.

Summary

Over the examined timeframe, there is a clear decline in receivable management efficiency characterized by decreasing turnover ratios and increasing collection periods. While short-term improvements were observed, the long-term trend points to a growing challenge in converting accounts receivable into cash promptly.

The analysis of the financial timing metrics across the specified periods reveals several discernible trends, which are indicative of evolving operational efficiency and working capital management.

Average Inventory Processing Period

This metric demonstrates a general upward trend over the timeframe, beginning at 96 days and progressively increasing to a peak at 160 days by June 2025. Notable fluctuations include some decreases in late periods but the overall pattern reflects lengthening inventory turnover times. This suggests potential challenges in inventory management or changes in inventory levels that could impact liquidity and operational responsiveness.

Average Receivable Collection Period

The average time to collect receivables shows variability but a slight overall increase is visible, starting from 83 days and reaching 101 days in the latest period. Intermittent declines, such as a notable dip to 60 days in March 2024, contrast with rises up to 98 days in September 2024, suggesting inconsistent credit control or customer payment behaviors. The increase may indicate a slower conversion of sales into cash, impacting short-term cash flow.

Operating Cycle

The operating cycle, which combines inventory processing and receivable collection periods, closely mirrors the trends in the prior two metrics. Beginning at 179 days, it extends significantly to 261 days by June 2025. This increasing cycle duration indicates that the overall time to convert resources into cash is lengthening, potentially signaling deteriorations in working capital efficiency and increased capital tied up in operations.

In summary, the data depict a consistent lengthening of both inventory and receivable periods, culminating in an extended operating cycle. Such trends warrant attention as they could affect liquidity and operational efficiency, suggesting the need for enhanced inventory controls, receivables management, and possibly revisions to credit policies or supply chain processes.

Payables Turnover Ratio

The payables turnover ratio data begins from March 31, 2021. Initially, the ratio shows a declining trend from 3.67 in March 2021 to 2.98 by March 2023, indicating a decrease in the frequency at which payables are paid during this period. Subsequently, a temporary increase occurs, reaching a peak of 5.01 in June 2024, suggesting quicker payment of payables. However, after this peak, the ratio declines steadily, ending at 2.72 by June 2025. The overall pattern is characterized by fluctuations with a general downward trajectory towards the end of the timeline.

Average Payables Payment Period

The average payables payment period shows an overall upward trend from 100 days in March 2021 to a peak of 134 days by June 2025. This increase corresponds inversely with the lower payables turnover ratio over time, indicating that payables are being settled more slowly as the period progresses. There is a noticeable dip in this metric in June 2024, dropping to 73 days, which aligns with the peak in the payables turnover ratio, suggesting a brief acceleration in payment. After this dip, the payment period resumes its increasing trend.

Relationship Between Metrics

The payables turnover ratio and the average payables payment period demonstrate a complementary inverse relationship. Periods of higher turnover ratios coincide with lower payment periods and vice versa. This suggests fluctuating payment practices across quarters, with a significant acceleration in payment timing around mid-2024 followed by a return to longer payment periods through 2025.

The analysis of the financial time series reveals several distinct trends across the key operational efficiency indicators over the reported periods.

Average inventory processing period

This metric shows a generally increasing trend, beginning at 96 days in early 2021 and peaking at 160 days by mid-2025. Notable fluctuations include a dip to 89 days in early 2024, followed by a sharp rise to 141 days by the end of the same year. The upward trend suggests a lengthening duration in inventory holding, which could imply either slower inventory turnover or changes in inventory management strategies.

Average receivable collection period

The receivable collection period exhibits some volatility but overall remains within a range of approximately 60 to 101 days. It decreased to a low point of 60 days in mid-2024, indicating improved efficiency in collecting receivables during that time, but subsequently increased to over 100 days by mid-2025. The fluctuations signal varying effectiveness in credit control and customer payment timing throughout the periods analyzed.

Average payables payment period

This period generally increases over time, starting from 100 days and reaching 134 days by mid-2025. There is a notable drop to 73 days in early 2024, followed by a recovery and further increase thereafter. The rising trend suggests the company has extended the time it takes to pay suppliers, potentially improving cash flow but also possibly affecting supplier relationships.

Cash conversion cycle

The cash conversion cycle shows variability with an overall increasing tendency from 79 days to 127 days by mid-2025. An evident spike occurs in early 2024, reaching 112 days, before a short-term decrease and subsequent rise again. The longer cash conversion cycle indicates a lengthening duration between outlays for inventory and receipt of cash from customers, which may impact liquidity and working capital management.

In summary, the data portray a pattern of longer periods for inventory processing and payables payment, alongside fluctuating receivables collection and a generally increasing cash conversion cycle. These patterns suggest that operational efficiency regarding working capital management has been declining over the recent years, potentially leading to increased capital tied up in operations and challenges in cash flow optimization.