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)
Generac Holdings Inc., short-term (operating) activity ratios (quarterly data)
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
The analysis of the quarterly financial ratios and periods reveals several key trends in the company's operational efficiency and cash flow management over the observed timeframe.
- Inventory Turnover
- The inventory turnover ratio exhibits fluctuations, with a general range between approximately 2.16 and 2.70. A moderate decline is noticeable towards the later periods, dropping from about 2.65 in early 2021 to near 2.16 by mid-2022, indicating a slower rate of inventory movement and potentially slower sales or higher inventory levels.
- Receivables Turnover
- Receivables turnover ratios generally maintain a range of approximately 5.7 to around 7.4. An initial increase is noted in early 2019, peaking around 7.36, suggesting enhanced collection effectiveness. However, slight variability persists with a minor downward trend towards mid-2022, implying some fluctuations in accounts receivable collection speed.
- Payables Turnover
- The payables turnover ratio shows a declining trend from mid-2018 through 2021, reaching lows near 3.49 to 3.71, followed by a recovery to around 4.76 by mid-2022. This suggests the company extended payment periods for suppliers during the central period of observation, potentially to manage cash outflows, before improving payment speed later on.
- Working Capital Turnover
- Working capital turnover demonstrates considerable variation; stable around 3.8 in earlier periods, it declines steadily to approximately 2.4 during late 2020, indicating decreased efficiency in using working capital to generate sales. Notably, there is a significant increase in 2021 up to 5.4, reflecting improved utilization of working capital, followed by a decrease toward 3.36 by mid-2022.
- Average Inventory Processing Period
- Inventory processing period remains relatively stable within the range of approximately 135 to 167 days. There is a slight upward trend from about 138 days in early 2021 to peaks near 169 days by mid-2022, consistent with the declining inventory turnover ratio, indicating longer holding periods for inventory.
- Average Receivable Collection Period
- The average receivable collection period fluctuates moderately between about 50 and 64 days, with no significant long-term trend. This stability suggests consistent effectiveness in collecting receivables over the periods analyzed.
- Operating Cycle
- The operating cycle spans from roughly 188 to 224 days, with an observable increase in 2021 and 2022, peaking near 224 days. This indicates an extension in the time taken from inventory acquisition through to cash collection, potentially as a result of longer inventory holding or receivable collection periods.
- Average Payables Payment Period
- The payables payment period shows an increasing trend from early 2018, rising from 74 days to above 100 days around late 2021, before declining to 77 days by mid-2022. The lengthening payables period suggests a deliberate management of outflows to preserve cash, followed by a return to quicker supplier payments.
- Cash Conversion Cycle
- The cash conversion cycle varies from about 102 to 140 days. After a peak near 140 days in mid-2019, the cycle shortens to about 102 days in mid-2021, indicating improved cash flow efficiency. However, it lengthens again to approximately 135 days by mid-2022, reflecting a slowdown in converting investments in inventory and receivables back into cash.
In summary, the data suggest that while the company has generally maintained consistent receivables collection, there have been notable shifts in inventory turnover and payables management impacting operational efficiency and cash conversion. Strategic extensions of the payables period have been employed at times likely to optimize liquidity, accompanied by corresponding changes in the cash conversion cycle. Recent periods show some reduction in operational velocity, particularly slower inventory processing and increased operating cycle length, which may warrant closer monitoring.
Turnover Ratios
Average No. Days
Inventory Turnover
Generac Holdings Inc., inventory turnover calculation (quarterly data)
| Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | 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 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||
| Costs of goods sold | 834,406) | 775,108) | 704,532) | 606,704) | 580,246) | 485,620) | 460,880) | 425,206) | 337,865) | 303,595) | 368,710) | 383,618) | 346,078) | 308,178) | 359,098) | 362,054) | 319,108) | 258,164) | ||||||
| Inventories | 1,240,524) | 1,236,772) | 1,089,705) | 934,948) | 772,861) | 644,576) | 603,317) | 532,952) | 544,372) | 559,695) | 522,024) | 517,232) | 570,327) | 588,380) | 544,750) | 496,088) | 479,880) | 439,745) | ||||||
| Short-term Activity Ratio | ||||||||||||||||||||||||
| Inventory turnover1 | 2.35 | 2.16 | 2.18 | 2.28 | 2.53 | 2.65 | 2.53 | 2.69 | 2.56 | 2.50 | 2.69 | 2.70 | 2.41 | 2.29 | 2.38 | 2.51 | 2.47 | 2.56 | ||||||
| Benchmarks | ||||||||||||||||||||||||
| Inventory Turnover, Competitors2 | ||||||||||||||||||||||||
| Boeing Co. | 0.74 | 0.74 | 0.75 | 0.77 | 0.76 | 0.74 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Caterpillar Inc. | 2.40 | 2.46 | 2.53 | 2.44 | 2.49 | 2.46 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Eaton Corp. plc | 3.87 | 4.03 | 4.48 | 4.73 | 4.86 | 5.12 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| GE Aerospace | 3.04 | 3.25 | 3.40 | 3.21 | 3.28 | 3.46 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Honeywell International Inc. | 4.06 | 4.20 | 4.55 | 4.72 | 4.88 | 4.85 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Lockheed Martin Corp. | 16.20 | 18.12 | 19.45 | 19.81 | 18.64 | 17.58 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| RTX Corp. | 5.14 | 5.33 | 5.65 | 5.57 | 5.49 | 5.48 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q2 2022 Calculation
Inventory turnover
= (Costs of goods soldQ2 2022
+ Costs of goods soldQ1 2022
+ Costs of goods soldQ4 2021
+ Costs of goods soldQ3 2021)
÷ Inventories
= (834,406 + 775,108 + 704,532 + 606,704)
÷ 1,240,524 = 2.35
2 Click competitor name to see calculations.
The financial data over the examined periods shows several notable trends in costs of goods sold, inventories, and inventory turnover for the company.
- Costs of Goods Sold (COGS)
- The cost of goods sold exhibits a general upward trend from March 2018 through June 2022. Starting at approximately $258 million in early 2018, COGS rose consistently across most quarters, reaching a high of about $834 million by mid-2022. There are some fluctuations, with slight decreases in certain quarters, such as from December 2018 to March 2019, and from December 2019 to March 2020, but the overall movement is upward, indicating growing production or sales volume, increased input costs, or a combination of both over the observed period.
- Inventories
- Inventory levels also show a continuous increase throughout the periods. Beginning near $440 million in the first quarter of 2018, inventories grew steadily, with occasional moderate declines or plateaus, to exceed $1.24 billion by June 2022. The significant rise in inventory holdings, especially pronounced from 2020 onwards, suggests accumulation possibly tied to greater sales expectations, supply chain considerations, or potential stockpiling of materials and finished goods.
- Inventory Turnover Ratio
- The inventory turnover ratio, which measures how efficiently inventory is sold and replaced over a period, displays minor fluctuations but an overall declining trend from 2018 through mid-2022. Initially fluctuating around 2.5, the ratio peaks slightly at 2.7 towards late 2019 but generally trends downward thereafter, reaching around 2.16 in mid-2022. This decrease indicates that inventory is being turned over less frequently, which could imply slower sales relative to inventory levels, an increase in stock holding periods, or shifts in inventory management strategies.
In summary, the company’s costs of goods sold and inventories have grown substantially over the observed timeframe, reflecting expansion in scale or increased input and inventory investment. However, the reduction in inventory turnover suggests potential inventory management challenges or slower movement of goods, which may require further scrutiny to optimize working capital efficiency.
Receivables Turnover
Generac Holdings Inc., receivables turnover calculation (quarterly data)
| Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||
| Net sales | 1,291,391) | 1,135,856) | 1,067,071) | 942,698) | 919,981) | 807,434) | 761,082) | 701,355) | 546,848) | 475,915) | 590,932) | 601,135) | 541,916) | 470,353) | 563,404) | 562,388) | 497,581) | 400,091) | ||||||
| Accounts receivable, less allowance for credit losses | 692,291) | 609,870) | 546,466) | 510,670) | 480,889) | 428,702) | 374,906) | 398,240) | 322,937) | 312,013) | 319,538) | 373,591) | 341,535) | 284,612) | 326,133) | 341,758) | 311,668) | 262,170) | ||||||
| Short-term Activity Ratio | ||||||||||||||||||||||||
| Receivables turnover1 | 6.41 | 6.67 | 6.84 | 6.72 | 6.63 | 6.57 | 6.63 | 5.81 | 6.86 | 7.08 | 6.90 | 5.83 | 6.26 | 7.36 | 6.20 | 5.70 | 5.91 | 6.64 | ||||||
| Benchmarks | ||||||||||||||||||||||||
| Receivables Turnover, Competitors2 | ||||||||||||||||||||||||
| Boeing Co. | 20.27 | 25.37 | 23.58 | 27.95 | 24.76 | 23.97 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Caterpillar Inc. | 6.10 | 5.46 | 5.68 | 5.97 | 5.51 | 5.07 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Eaton Corp. plc | 5.15 | 5.39 | 5.95 | 5.75 | 5.72 | 5.79 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| GE Aerospace | 4.39 | 4.43 | 4.55 | 4.83 | 4.74 | 4.59 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Honeywell International Inc. | 4.45 | 4.82 | 5.04 | 4.78 | 4.89 | 4.89 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Lockheed Martin Corp. | 18.87 | 26.02 | 34.15 | 29.27 | 25.59 | 29.81 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| RTX Corp. | 6.28 | 7.15 | 6.66 | 6.69 | 6.99 | 6.03 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q2 2022 Calculation
Receivables turnover
= (Net salesQ2 2022
+ Net salesQ1 2022
+ Net salesQ4 2021
+ Net salesQ3 2021)
÷ Accounts receivable, less allowance for credit losses
= (1,291,391 + 1,135,856 + 1,067,071 + 942,698)
÷ 692,291 = 6.41
2 Click competitor name to see calculations.
- Net Sales Trend
- Net sales demonstrated a generally upward trend from March 2018 through June 2022. Initial quarterly sales rose from approximately $400 million in early 2018 to over $1.29 billion by mid-2022. This growth was characterized by some fluctuations, notably a decline during the first quarter of 2019 and sporadic dips in early 2020, but the overall trajectory remained positive, indicating expanding revenue generation over the observed period.
- Accounts Receivable Trend
- Accounts receivable, net of credit loss allowances, increased steadily across the timeframe, rising from about $262 million in March 2018 to nearly $692 million by June 2022. The increase aligns with the growth in net sales, suggesting consistent credit sales and collection policies. Occasional minor decreases, such as in late 2018 and mid-2020, were temporary and promptly followed by subsequent rises.
- Receivables Turnover Ratio Analysis
- The receivables turnover ratio exhibited variability throughout the quarters, fluctuating between approximately 5.7 and 7.36. Higher turnover ratios, seen notably in early 2019 and through parts of 2021, imply improved efficiency in collecting accounts receivable. Conversely, lower ratios, for example in late 2018 and late 2020, suggest a relative slowdown in collection efficiency during those periods. Despite these fluctuations, the ratio maintained an overall moderate range, reflecting stable management of receivables in relation to sales.
- Integrated Insights
- The concurrent increase in net sales and accounts receivable, along with the relatively stable receivables turnover ratio, indicates that as the company expanded sales volume, it effectively managed credit and collections to sustain a consistent turnover pace. The rising receivables balance is proportional to sales growth, minimizing risk of receivables aging deterioration. This pattern suggests competent credit control practices complementing revenue expansion.
Payables Turnover
Generac Holdings Inc., payables turnover calculation (quarterly data)
| Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||
| Costs of goods sold | 834,406) | 775,108) | 704,532) | 606,704) | 580,246) | 485,620) | 460,880) | 425,206) | 337,865) | 303,595) | 368,710) | 383,618) | 346,078) | 308,178) | 359,098) | 362,054) | 319,108) | 258,164) | ||||||
| Accounts payable | 614,009) | 697,486) | 674,208) | 611,181) | 526,375) | 387,933) | 330,247) | 272,745) | 230,229) | 266,917) | 261,977) | 241,290) | 259,696) | 290,871) | 328,091) | 287,718) | 274,234) | 228,070) | ||||||
| Short-term Activity Ratio | ||||||||||||||||||||||||
| Payables turnover1 | 4.76 | 3.82 | 3.53 | 3.49 | 3.71 | 4.41 | 4.63 | 5.26 | 6.05 | 5.25 | 5.37 | 5.79 | 5.30 | 4.64 | 3.96 | 4.34 | 4.32 | 4.94 | ||||||
| Benchmarks | ||||||||||||||||||||||||
| Payables Turnover, Competitors2 | ||||||||||||||||||||||||
| Boeing Co. | 6.17 | 6.73 | 6.40 | 6.20 | 5.45 | 4.90 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Caterpillar Inc. | 4.72 | 4.43 | 4.36 | 4.61 | 4.57 | 4.46 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Eaton Corp. plc | 4.43 | 4.67 | 4.75 | 5.11 | 5.22 | 5.66 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| GE Aerospace | 3.14 | 3.32 | 3.32 | 3.33 | 3.35 | 3.56 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Honeywell International Inc. | 3.63 | 3.66 | 3.61 | 3.83 | 3.76 | 3.86 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Lockheed Martin Corp. | 24.07 | 21.92 | 74.34 | 37.83 | 36.15 | 30.31 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| RTX Corp. | 5.36 | 6.28 | 5.93 | 6.06 | 6.52 | 5.67 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q2 2022 Calculation
Payables turnover
= (Costs of goods soldQ2 2022
+ Costs of goods soldQ1 2022
+ Costs of goods soldQ4 2021
+ Costs of goods soldQ3 2021)
÷ Accounts payable
= (834,406 + 775,108 + 704,532 + 606,704)
÷ 614,009 = 4.76
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals distinct trends in costs of goods sold, accounts payable, and payables turnover ratios over the observed period.
- Costs of Goods Sold (COGS)
- There is a generally upward trend in costs of goods sold from March 2018 through June 2022. Starting at approximately 258 million USD in Q1 2018, COGS increased steadily with some fluctuations, reaching over 834 million USD by mid-2022. Notable quarterly increases appear especially from early 2020 onwards, indicating rising production or procurement costs in recent years. This may suggest expanding operations or inflationary pressures impacting input expenses.
- Accounts Payable
- Accounts payable demonstrate a fluctuating but overall rising pattern throughout the period. Initial levels near 228 million USD in Q1 2018 gradually increased, showing significant jumps especially from late 2020 into 2021 with payables exceeding 674 million USD by Q3 2021 before dipping slightly in mid-2022. This upward movement corresponds with the rising COGS, reflecting increased outstanding obligations to suppliers. The recent decrease after a peak could indicate improved payment management or changes in credit terms.
- Payables Turnover Ratio
- The payables turnover ratio, indicating how frequently the company pays its suppliers over a period, shows varied movement. Starting above 4.9 times in early 2018, it declined over subsequent quarters to a low near 3.5 in late 2021, signaling slower payment cycles or extended credit periods during this time. However, there is a rebound to approximately 4.76 by mid-2022, suggesting a faster payment pace returning. The fluctuations imply changes in working capital management and supplier relationships.
Overall, the data indicates growth in business scale with rising costs and payables. The declining payables turnover ratio during 2020–2021 suggests longer payment terms or liquidity management adjustments amid a period of rapid cost increases, while the subsequent improvement points to a normalization of payment practices. These patterns reflect evolving operational and financial dynamics within the company during the examined timeframe.
Working Capital Turnover
Generac Holdings Inc., working capital turnover calculation (quarterly data)
| Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | 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 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||||||||||||||||||||
| Current assets | 2,491,311) | 2,125,401) | 1,848,464) | 1,923,572) | 1,692,533) | 1,857,607) | 1,669,733) | 1,480,336) | 1,297,106) | 1,208,721) | 1,195,829) | 1,137,431) | 1,051,710) | 1,062,795) | 1,120,769) | 1,039,957) | 930,436) | 866,845) | ||||||
| Less: Current liabilities | 1,172,176) | 1,253,158) | 1,155,907) | 1,018,014) | 836,249) | 710,265) | 641,524) | 556,258) | 486,720) | 483,016) | 497,064) | 476,016) | 480,363) | 515,979) | 560,706) | 553,113) | 480,049) | 412,637) | ||||||
| Working capital | 1,319,135) | 872,243) | 692,557) | 905,558) | 856,284) | 1,147,342) | 1,028,209) | 924,078) | 810,386) | 725,705) | 698,765) | 661,415) | 571,347) | 546,816) | 560,063) | 486,844) | 450,387) | 454,208) | ||||||
| Net sales | 1,291,391) | 1,135,856) | 1,067,071) | 942,698) | 919,981) | 807,434) | 761,082) | 701,355) | 546,848) | 475,915) | 590,932) | 601,135) | 541,916) | 470,353) | 563,404) | 562,388) | 497,581) | 400,091) | ||||||
| Short-term Activity Ratio | ||||||||||||||||||||||||
| Working capital turnover1 | 3.36 | 4.66 | 5.40 | 3.79 | 3.73 | 2.45 | 2.42 | 2.51 | 2.73 | 3.05 | 3.15 | 3.29 | 3.74 | 3.83 | 3.61 | 4.00 | 4.09 | 3.83 | ||||||
| Benchmarks | ||||||||||||||||||||||||
| Working Capital Turnover, Competitors2 | ||||||||||||||||||||||||
| Boeing Co. | 2.87 | 2.51 | 2.34 | 2.02 | 2.00 | 1.88 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Caterpillar Inc. | 3.93 | 3.83 | 3.54 | 2.87 | 2.80 | 2.52 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Eaton Corp. plc | — | — | 65.65 | 12.41 | 21.65 | 5.34 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| GE Aerospace | 10.55 | 7.14 | 4.94 | 1.57 | 1.57 | 1.27 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Honeywell International Inc. | 8.84 | 8.07 | 5.86 | 5.94 | 4.52 | 4.27 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Lockheed Martin Corp. | 14.28 | 15.14 | 11.52 | 10.48 | 12.30 | 11.93 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| RTX Corp. | 17.77 | 11.41 | 9.75 | 8.11 | 10.24 | 9.77 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q2 2022 Calculation
Working capital turnover
= (Net salesQ2 2022
+ Net salesQ1 2022
+ Net salesQ4 2021
+ Net salesQ3 2021)
÷ Working capital
= (1,291,391 + 1,135,856 + 1,067,071 + 942,698)
÷ 1,319,135 = 3.36
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several notable trends across working capital, net sales, and working capital turnover for the periods presented.
- Working Capital
- Working capital shows a general upward trend over the entire period, increasing from approximately $454 million at the beginning of 2018 to about $1.32 billion by mid-2022. This increase is not perfectly steady; there are fluctuations such as a peak at the end of 2020 nearing $1.03 billion, followed by a decline during 2021 with a notable dip to around $693 million by the end of that year. After this decline, working capital rose again markedly in 2022. This overall growth indicates an expansion in the company’s short-term assets relative to its short-term liabilities, suggesting improved liquidity and operational capacity over time.
- Net Sales
- Net sales demonstrated growth with some volatility. Beginning at roughly $400 million in the first quarter of 2018, sales increased to around $1.29 billion by mid-2022. However, the growth was interrupted in early 2020 when sales dropped to about $476 million in the first quarter, likely reflecting external adverse factors impacting the business during that period. Recovery commenced quickly with net sales rebounding and consistently increasing from mid-2020 onwards, reaching record highs by 2022. This pattern suggests resilience and an ability to regain market strength following downturns.
- Working Capital Turnover Ratio
- The working capital turnover ratio exhibits a general declining trend from early 2018 through 2020, decreasing from roughly 3.83 to a low near 2.42. This indicates that the efficiency in generating sales from available working capital diminished during this timeframe. In 2021, there was a pronounced rebound, with the ratio increasing sharply to 5.4 by the fourth quarter, signifying improved operational efficiency and higher sales per unit of working capital. Although it slightly declined in mid-2022 to around 3.36, the ratio remains higher than the levels seen in 2019 and 2020.
In summary, the data show that the company has significantly increased its working capital and net sales over the observed period, despite some periods of volatility. The working capital turnover ratio’s fluctuation points to variations in the company’s operational efficiency, with notable improvement after 2020. The trends suggest an overall enhancement in liquidity and sales generation capability, coupled with temporary challenges that were managed effectively to resume growth and operational effectiveness.
Average Inventory Processing Period
Generac Holdings Inc., average inventory processing period calculation (quarterly data)
| Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | 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 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||||||||||||||||||||
| Inventory turnover | 2.35 | 2.16 | 2.18 | 2.28 | 2.53 | 2.65 | 2.53 | 2.69 | 2.56 | 2.50 | 2.69 | 2.70 | 2.41 | 2.29 | 2.38 | 2.51 | 2.47 | 2.56 | ||||||
| Short-term Activity Ratio (no. days) | ||||||||||||||||||||||||
| Average inventory processing period1 | 155 | 169 | 167 | 160 | 145 | 138 | 144 | 136 | 143 | 146 | 135 | 135 | 151 | 159 | 153 | 145 | 148 | 142 | ||||||
| Benchmarks (no. days) | ||||||||||||||||||||||||
| Average Inventory Processing Period, Competitors2 | ||||||||||||||||||||||||
| Boeing Co. | 494 | 493 | 486 | 475 | 478 | 496 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Caterpillar Inc. | 152 | 148 | 144 | 150 | 146 | 149 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Eaton Corp. plc | 94 | 90 | 82 | 77 | 75 | 71 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| GE Aerospace | 120 | 112 | 107 | 114 | 111 | 105 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Honeywell International Inc. | 90 | 87 | 80 | 77 | 75 | 75 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Lockheed Martin Corp. | 23 | 20 | 19 | 18 | 20 | 21 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| RTX Corp. | 71 | 69 | 65 | 65 | 66 | 67 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q2 2022 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 2.35 = 155
2 Click competitor name to see calculations.
The analysis of the inventory management metrics reveals several notable trends over the observed periods.
- Inventory Turnover Ratio
- The inventory turnover ratio shows moderate fluctuations throughout the quarters. Starting at 2.56 in March 2018, the ratio dips and rises within a narrow band, peaking at 2.7 in September 2019 and again near that level in September 2020. However, a downward trend is evident beginning in late 2021 through mid-2022, with the ratio decreasing to its lowest point of 2.16 in March 2022 before slightly recovering to 2.35 in June 2022. This indicates a general slowdown in the rate at which inventory is sold or used over the latest periods.
- Average Inventory Processing Period
- The average inventory processing period, expressed in number of days, inversely corresponds to the turnover ratio trends. Initially, the period fluctuates around 140 to 150 days from March 2018 to mid-2019. Subsequently, a more distinct increase occurs starting in the first quarter of 2021, reaching a peak of 169 days by March 2022. This increase suggests that inventory is remaining in stock for longer durations, consistent with the reduced turnover ratio over the same timeline. The slight decline to 155 days in June 2022 hints at an early sign of improvement or normalization.
Overall, the inventory management data reflects a pattern of stable turnover and processing periods in the early years, followed by a period of declining efficiency starting around 2021. The longer holding periods and reduced turnover ratios may indicate challenges in inventory movement possibly due to demand shifts, supply chain constraints, or strategic stockpiling during the more recent quarters. The slight recovery observed in the latest quarter may merit further monitoring to assess if the trend reverses.
Average Receivable Collection Period
Generac Holdings Inc., average receivable collection period calculation (quarterly data)
| Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | 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 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||||||||||||||||||||
| Receivables turnover | 6.41 | 6.67 | 6.84 | 6.72 | 6.63 | 6.57 | 6.63 | 5.81 | 6.86 | 7.08 | 6.90 | 5.83 | 6.26 | 7.36 | 6.20 | 5.70 | 5.91 | 6.64 | ||||||
| Short-term Activity Ratio (no. days) | ||||||||||||||||||||||||
| Average receivable collection period1 | 57 | 55 | 53 | 54 | 55 | 56 | 55 | 63 | 53 | 52 | 53 | 63 | 58 | 50 | 59 | 64 | 62 | 55 | ||||||
| Benchmarks (no. days) | ||||||||||||||||||||||||
| Average Receivable Collection Period, Competitors2 | ||||||||||||||||||||||||
| Boeing Co. | 18 | 14 | 15 | 13 | 15 | 15 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Caterpillar Inc. | 60 | 67 | 64 | 61 | 66 | 72 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Eaton Corp. plc | 71 | 68 | 61 | 63 | 64 | 63 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| GE Aerospace | 83 | 82 | 80 | 76 | 77 | 80 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Honeywell International Inc. | 82 | 76 | 72 | 76 | 75 | 75 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Lockheed Martin Corp. | 19 | 14 | 11 | 12 | 14 | 12 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| RTX Corp. | 58 | 51 | 55 | 55 | 52 | 61 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q2 2022 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 6.41 = 57
2 Click competitor name to see calculations.
The analysis of the receivables turnover ratio reveals fluctuating performance over the examined periods. Initially, there is a decline from 6.64 to 5.7 between March and September 2018, suggesting a slower turnover of receivables. However, a recovery follows towards the end of 2018, peaking at 7.36 in March 2019, indicating improved efficiency in collecting receivables. This is succeeded by a downward trend through mid to late 2019, reaching 5.83 in September, before rising again to 6.9 by December 2019. The year 2020 shows variability, with the ratio dipping to 5.81 in September, then recovering to 6.63 by year-end. The pattern from 2021 to mid-2022 is relatively stable, maintaining levels mostly between 6.4 and 6.8, which implies a consistent management of receivables turnover during this period.
Examining the average receivable collection period, there is an observable inverse relationship with the turnover ratio, as anticipated. The number of days increases from 55 to 64 in 2018, corresponding to the decrease in turnover ratio, indicating slower collections. The period then decreases to 50 days by March 2019, aligning with the peak in turnover ratio, reflecting quicker collection processes. Subsequently, a rise to 63 days in September 2019 coincides with the turnover decline. The year 2020 again reflects variability, with collection days peaking at 63 in September and falling back to 55 at the end of the year. From 2021 through mid-2022, the average collection period remains fairly steady between 53 and 57 days, suggesting a stabilized receivables management approach.
Overall, the data indicates fluctuations in receivables efficiency with periods of improvement and deterioration, but a trend toward stabilization in both turnover ratio and collection days in the most recent quarters analyzed.
Operating Cycle
Generac Holdings Inc., operating cycle calculation (quarterly data)
No. days
| Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | 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 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||||||||||||||||||||
| Average inventory processing period | 155 | 169 | 167 | 160 | 145 | 138 | 144 | 136 | 143 | 146 | 135 | 135 | 151 | 159 | 153 | 145 | 148 | 142 | ||||||
| Average receivable collection period | 57 | 55 | 53 | 54 | 55 | 56 | 55 | 63 | 53 | 52 | 53 | 63 | 58 | 50 | 59 | 64 | 62 | 55 | ||||||
| Short-term Activity Ratio | ||||||||||||||||||||||||
| Operating cycle1 | 212 | 224 | 220 | 214 | 200 | 194 | 199 | 199 | 196 | 198 | 188 | 198 | 209 | 209 | 212 | 209 | 210 | 197 | ||||||
| Benchmarks | ||||||||||||||||||||||||
| Operating Cycle, Competitors2 | ||||||||||||||||||||||||
| Boeing Co. | 512 | 507 | 501 | 488 | 493 | 511 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Caterpillar Inc. | 212 | 215 | 208 | 211 | 212 | 221 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Eaton Corp. plc | 165 | 158 | 143 | 140 | 139 | 134 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| GE Aerospace | 203 | 194 | 187 | 190 | 188 | 185 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Honeywell International Inc. | 172 | 163 | 152 | 153 | 150 | 150 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Lockheed Martin Corp. | 42 | 34 | 30 | 30 | 34 | 33 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| RTX Corp. | 129 | 120 | 120 | 120 | 118 | 128 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q2 2022 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= 155 + 57 = 212
2 Click competitor name to see calculations.
The analysis of the reported financial periods reveals several notable trends in the company's operational efficiency, as measured by average inventory processing period, average receivable collection period, and the operating cycle.
- Average Inventory Processing Period
- This metric showed a gradual increase from 142 days at the beginning of 2018 to a peak of 169 days midway through 2022. Notably, there was a slight dip in the latter quarters of 2019 and 2020, where the period decreased to around 135-144 days. However, the overall trend indicates that inventory is being held for longer durations over time, potentially reflecting slower inventory turnover or changes in inventory management practices.
- Average Receivable Collection Period
- The collection period exhibited modest fluctuations throughout the analyzed timeline, beginning at 55 days in early 2018 and generally oscillating between 50 and 64 days across the quarters. The data suggests relative stability in receivables management, with no significant upward or downward trend, indicating consistent effectiveness in collecting outstanding payments.
- Operating Cycle
- The operating cycle, derived from the sum of inventory and receivables periods, generally increased over time. Starting at 197 days in early 2018, the metric peaked at 224 days in late 2021 before slightly decreasing to 212 days by mid-2022. This upward movement corresponds largely with the rising inventory processing period, implying lengthening time frames for converting resources into cash. The operating cycle's lengthening could impact cash flow, highlighting the importance of monitoring working capital requirements.
In summary, while receivables collection remained largely steady, the lengthening inventory periods contributed to an extended operating cycle. This suggests potential challenges in inventory turnover, which may warrant further investigation to optimize operational efficiency and maintain healthy cash flow dynamics.
Average Payables Payment Period
Generac Holdings Inc., average payables payment period calculation (quarterly data)
| Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | 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 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||||||||||||||||||||
| Payables turnover | 4.76 | 3.82 | 3.53 | 3.49 | 3.71 | 4.41 | 4.63 | 5.26 | 6.05 | 5.25 | 5.37 | 5.79 | 5.30 | 4.64 | 3.96 | 4.34 | 4.32 | 4.94 | ||||||
| Short-term Activity Ratio (no. days) | ||||||||||||||||||||||||
| Average payables payment period1 | 77 | 95 | 104 | 105 | 98 | 83 | 79 | 69 | 60 | 69 | 68 | 63 | 69 | 79 | 92 | 84 | 84 | 74 | ||||||
| Benchmarks (no. days) | ||||||||||||||||||||||||
| Average Payables Payment Period, Competitors2 | ||||||||||||||||||||||||
| Boeing Co. | 59 | 54 | 57 | 59 | 67 | 74 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Caterpillar Inc. | 77 | 82 | 84 | 79 | 80 | 82 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Eaton Corp. plc | 82 | 78 | 77 | 71 | 70 | 65 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| GE Aerospace | 116 | 110 | 110 | 109 | 109 | 103 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Honeywell International Inc. | 101 | 100 | 101 | 95 | 97 | 95 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Lockheed Martin Corp. | 15 | 17 | 5 | 10 | 10 | 12 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| RTX Corp. | 68 | 58 | 62 | 60 | 56 | 64 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q2 2022 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 4.76 = 77
2 Click competitor name to see calculations.
The analysis of the payables turnover ratio over the observed periods shows noticeable fluctuations. Initially, the ratio declined from 4.94 to 3.96 from the first quarter of 2018 to the fourth quarter of the same year. This indicates a slower rate of payables turnover, suggesting an increase in the time the company takes to pay its suppliers. However, in 2019, the company exhibited an improved payables turnover, peaking at 5.79 in the third quarter, suggesting a faster payment cycle. The ratio again decreased during 2020 and into 2021, reaching its lowest at 3.49 in the third quarter of 2021, before somewhat rebounding to 4.76 by mid-2022.
Concurrently, the average payables payment period, expressed in days, inversely mirrors the turnover ratio trends. It started at 74 days in early 2018 and increased to a peak of 92 days by the year's end, corroborating the slower payment pace inferred from the decreasing turnover ratio. Throughout 2019, the payment period shortened significantly, reaching 63 days by the third quarter, aligning with the peak in payables turnover. During 2020, the payment period saw variations but mostly stayed below 80 days until it rose steeply in 2021, attaining a high of 105 days in the third quarter. This extension suggests the company delayed payments during this period. By mid-2022, the payment period shortened again to 77 days.
Overall, the data reflect periods of both accelerated and delayed payments to suppliers, with the company notably lengthening its payment terms around 2021. This could be indicative of strategic working capital management or responses to external financial pressures during that timeframe. The subsequent improvement in the turnover ratio and reduction in payment days by 2022 may suggest a return to more standard payment practices.
Cash Conversion Cycle
Generac Holdings Inc., cash conversion cycle calculation (quarterly data)
No. days
| Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | 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 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||||||||||||||||||||
| Average inventory processing period | 155 | 169 | 167 | 160 | 145 | 138 | 144 | 136 | 143 | 146 | 135 | 135 | 151 | 159 | 153 | 145 | 148 | 142 | ||||||
| Average receivable collection period | 57 | 55 | 53 | 54 | 55 | 56 | 55 | 63 | 53 | 52 | 53 | 63 | 58 | 50 | 59 | 64 | 62 | 55 | ||||||
| Average payables payment period | 77 | 95 | 104 | 105 | 98 | 83 | 79 | 69 | 60 | 69 | 68 | 63 | 69 | 79 | 92 | 84 | 84 | 74 | ||||||
| Short-term Activity Ratio | ||||||||||||||||||||||||
| Cash conversion cycle1 | 135 | 129 | 116 | 109 | 102 | 111 | 120 | 130 | 136 | 129 | 120 | 135 | 140 | 130 | 120 | 125 | 126 | 123 | ||||||
| Benchmarks | ||||||||||||||||||||||||
| Cash Conversion Cycle, Competitors2 | ||||||||||||||||||||||||
| Boeing Co. | 453 | 453 | 444 | 429 | 426 | 437 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Caterpillar Inc. | 135 | 133 | 124 | 132 | 132 | 139 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Eaton Corp. plc | 83 | 80 | 66 | 69 | 69 | 69 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| GE Aerospace | 87 | 84 | 77 | 81 | 79 | 82 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Honeywell International Inc. | 71 | 63 | 51 | 58 | 53 | 55 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Lockheed Martin Corp. | 27 | 17 | 25 | 20 | 24 | 21 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| RTX Corp. | 61 | 62 | 58 | 60 | 62 | 64 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q2 2022 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 155 + 57 – 77 = 135
2 Click competitor name to see calculations.
The analysis of the quarterly financial ratios reveals several noteworthy trends in the operational efficiency and working capital management over the observed periods.
- Average Inventory Processing Period
- The average inventory processing period exhibited fluctuations over time, beginning at 142 days and generally increasing through the years. A noticeable increase occurred from mid-2021 onwards, peaking at 169 days in mid-2022 before slightly declining to 155 days. This upward trend may indicate slower inventory turnover or changes in inventory management policies in recent periods.
- Average Receivable Collection Period
- The receivable collection period remained relatively stable with minor fluctuations. Starting near 55 days, it peaked briefly at 64 days in late 2018 but mostly oscillated between 50 and 63 days. In the most recent quarters, it stayed around the mid-to-high 50s, implying a consistent pace in collecting receivables without significant deterioration or improvement.
- Average Payables Payment Period
- The payables payment period showed considerable variability. It began around 74 days and generally increased to a peak of 105 days by late 2021, suggesting extended payment terms to suppliers. However, there was a notable decline in 2022, bringing the period down to 77 days. This indicates a behavior shift back toward quicker payments or perhaps changes in supplier contracts or cash management strategies.
- Cash Conversion Cycle
- The cash conversion cycle (CCC) mirrored some of the variability seen in the inventory processing and payables periods. CCC fluctuated moderately around the range of 110 to 140 days, with a reduction noted between 2020 and early 2021, reaching a low of 102 days. Subsequently, the CCC lengthened again to 135 days by mid-2022, implying that the company’s net working capital tied in operations saw variations but generally increased towards later periods, potentially impacting liquidity.
Overall, the data indicates a gradual lengthening of inventory turnover and cash conversion cycle over the longer term, alongside fluctuating payment and collection cycles. These trends suggest shifts in operational and financial strategies affecting working capital dynamics, with potential implications for liquidity and operational efficiency that may warrant further detailed investigation.