General Dynamics Corp. (NYSE:GD)

The data reveals several notable trends across the analyzed financial ratios and periods.

Inventory turnover

This ratio shows a decline from 7.53 in 2015 to a low of 4.67 in 2017, followed by a modest recovery reaching 5.12 in 2019. This indicates a slowdown in inventory movement starting in 2016, improving slightly thereafter but remaining below the initial level.

Receivables turnover

The receivables turnover ratio decreased gradually from 9.13 in 2015 to 8.56 in 2017, then improved significantly to 11.1 by 2019. This suggests the company enhanced its efficiency in collecting receivables in the later years.

Payables turnover

This ratio declined sharply from 12.9 in 2015 to 7.73 in 2017, with a partial recovery to 10.21 in 2019. The decline suggests the company took longer to pay its suppliers during the middle period, with somewhat quicker payments resuming towards 2019.

Working capital turnover

The ratio dropped substantially from 14.8 in 2015 to 5.92 in 2017, then rose to 13.21 in 2019. This pattern reflects a significant decrease in the efficiency of utilizing working capital in the intervening years, followed by nearly full recovery by the end of the period.

Average inventory processing period (days)

The inventory processing period lengthened from 48 days in 2015 to 78 days in 2017, then shortened to 71 days in 2019. This longer holding period in the middle years aligns with the lower inventory turnover, indicating slower inventory movement which improved moderately thereafter.

Average receivable collection period (days)

This period increased from 40 days in 2015 to 43 days in 2017, then gradually decreased to 33 days by 2019. The shorter collection period at the end indicates enhanced receivables management and quicker cash inflow from customers.

Operating cycle (days)

The operating cycle extended from 88 days in 2015 to a peak of 121 days in 2017, then contracted to 104 days in 2019. The longer cycle denotes a slower conversion of inventory and receivables into cash in the mid-period, improving in subsequent years.

Average payables payment period (days)

This period increased from 28 days in 2015 to 47 days in 2017, indicating a longer duration to settle suppliers during that time, then decreased to 36 days by 2019. The initial lengthening may have been used as a cash flow management tool, with partial normalization later.

Cash conversion cycle (days)

The cash conversion cycle rose from 60 days in 2015 to 74 days in 2017 and 73 days in 2018, then decreased to 68 days in 2019. The prolonged cycle in the middle years indicates slower cash flow conversion, which improved modestly by the end, reflecting better overall liquidity management.

Overall, the data points to a period of reduced operational efficiency and slower cash flow conversion during 2016-2017, evident from declining turnover ratios and lengthening cycle periods. The subsequent years show a progressive improvement across most metrics, approaching or nearly reaching early period efficiency levels by 2019.

Cost of Revenue

The cost of revenue shows an overall increasing trend from 2015 to 2019. Starting at 25,339 million USD in 2015, it remains relatively stable around the 25,000 million USD range during 2016 and 2017, before rising significantly in 2018 to 29,478 million USD and further to 32,291 million USD in 2019. This indicates a growing expense related to the production of goods or services over the observed period.

Inventories

Inventories demonstrate a consistent upward trajectory across the five years. The inventory value increased from 3,366 million USD at the end of 2015 to 6,306 million USD by the end of 2019. The rate of growth accelerated particularly after 2016, with a notable jump from 3,523 million USD in 2016 to 5,303 million USD in 2017, followed by continued increases in the subsequent years. This suggests expanding stock levels, potentially reflecting higher production, stockpiling, or slower inventory turnover.

Inventory Turnover Ratio

The inventory turnover ratio decreases sharply from 7.53 in 2015 to 4.67 in 2017, indicating a slowdown in the rate at which inventory is sold or used. After reaching this low point in 2017, the ratio experiences a slight improvement, rising to 4.93 in 2018 and 5.12 in 2019. Despite this partial recovery, the turnover remains significantly lower compared to 2015, signifying that inventory management efficiency has declined overall during the period, potentially due to increased inventory levels relative to sales or cost of revenue.

The financial data presents trends in revenue, accounts receivable, and receivables turnover over a five-year period from 2015 to 2019. These metrics together provide insights into the company's sales performance and efficiency in managing receivables.

Revenue

The revenue figures show a generally positive trajectory. Starting at US$31,469 million in 2015, revenue slightly decreased in 2016 and 2017, reaching US$30,973 million in 2017. However, from 2017 onwards, there was a notable increase, with revenue rising to US$36,193 million in 2018 and further to US$39,350 million in 2019. The upward trend in the last two years indicates enhanced sales growth and potential expansion of the core business during this period.

Accounts Receivable

The accounts receivable amount exhibits relative stability throughout the period. Beginning at US$3,446 million in 2015, it increased progressively to US$3,759 million by 2018, followed by a slight decrease to US$3,544 million in 2019. This pattern suggests consistent management of receivables with no significant accumulation of unpaid customer accounts, alongside the increasing revenue in later years.

Receivables Turnover

The receivables turnover ratio, indicative of the efficiency in collecting receivables, shows moderate fluctuations. It decreased from 9.13 in 2015 to 8.56 in 2017, implying a slight slowdown in collection efficiency. Subsequently, a marked improvement occurred in 2018 and 2019, with ratios of 9.63 and 11.1 respectively. The peak ratio in 2019 highlights a strengthening collection process, enabling the company to convert its accounts receivable into cash more rapidly during the period of increased revenue.

In summary, the company experienced a period of revenue growth after 2017, accompanied by effective management of accounts receivable and enhanced collection efficiency, especially evident in the final two years. These trends collectively point to improved operational performance and liquidity management over the analyzed timeframe.

Cost of Revenue

The cost of revenue experienced a fluctuating but overall increasing trend from 2015 to 2019. It started at 25,339 million US dollars in 2015 and slightly decreased to 24,786 million in 2017 before rising significantly to 32,291 million by the end of 2019. This indicates that the expenses related to generating revenue grew substantially in the latter part of the period under review.

Accounts Payable

Accounts payable showed a consistent upward trajectory from 2015 through 2017, increasing from 1,964 million to 3,207 million US dollars. In 2018 and 2019, the balances stabilized somewhat at just over 3,100 million US dollars. This pattern suggests an expansion in the company's short-term obligations, with a leveling off in the recent two years of the data.

Payables Turnover

The payables turnover ratio declined from 12.9 in 2015 to 7.73 in 2017, indicating that the company took longer to pay its suppliers over these years. However, this trend reversed in 2018 and 2019 when the ratio increased to 10.21, suggesting an improvement in the efficiency of paying off accounts payable. Despite the recovery, the turnover ratio in 2019 remained below the 2015 level, implying that payment periods were still longer compared to the beginning of the period.

Overall Insights

The increasing cost of revenue coupled with expanding accounts payable suggests growing operational scale or higher input costs. The initial decline in payables turnover ratio could reflect stretched payment terms or cash flow management strategies, followed by partial normalization in the final two years. These trends highlight changes in operational and payment dynamics that could impact working capital management and supplier relationships.

An analysis of the financial data reveals notable fluctuations in working capital and revenue over the reported five-year period. Working capital experienced a significant increase from 2015 to 2017, more than doubling from 2,126 million US dollars to 5,229 million US dollars, before declining in 2018 and 2019 to levels closer to those recorded in 2016. This pattern indicates changes in the company's short-term liquidity and operational efficiency during these years.

Revenue has generally trended upwards, albeit with some minor variations. Starting at approximately 31,469 million US dollars in 2015, revenue showed a slight dip in 2017, reaching 30,973 million US dollars, but recovered strongly thereafter, rising to 36,193 million US dollars in 2018 and peaking at 39,350 million US dollars in 2019. This upward trend suggests growth in sales or service volume over the latter part of the period analyzed.

The working capital turnover ratio, which measures how efficiently the company utilizes its working capital to generate revenue, exhibited an inverse relationship with working capital levels. It declined sharply from 14.8 in 2015 to a low of 5.92 in 2017, coinciding with the peak in working capital, indicating reduced turnover efficiency. Subsequently, as working capital decreased in 2018 and 2019, the turnover ratio improved markedly to 13.21 by the end of 2019, reflecting enhanced efficiency in the use of working capital relative to revenue generation during these years.

Overall, the data suggests that the company experienced a period of increased working capital which may have temporarily reduced its operational efficiency, followed by an optimization phase where working capital was managed more effectively, contributing to improved turnover ratios and sustained revenue growth.

The financial data reveals notable trends in inventory management over the five-year period.

Inventory turnover

The inventory turnover ratio shows a declining trend from 7.53 in 2015 to 4.67 in 2017, indicating a slowdown in the rate at which inventory is sold or used. Following this decline, there is a moderate improvement with the ratio increasing to 4.93 in 2018 and further to 5.12 in 2019. Despite this recovery, the turnover remains lower than the initial level in 2015, suggesting a reduction in operational efficiency related to inventory management during this period.

Average inventory processing period

Consistent with the inventory turnover pattern, the average inventory processing period increased significantly from 48 days in 2015 to 78 days in 2017. This increase indicates longer holding times for inventory, which could lead to higher holding costs and potentially obsolete stock. Thereafter, the processing period decreases gradually to 74 days in 2018 and 71 days in 2019, signaling some improvement in inventory turnover speed but still remaining substantially higher than in 2015.

Overall, the data suggests that during the initial years, the company experienced reduced efficiency in inventory management, reflected by lower turnover and longer processing periods. Although there was some recovery after 2017, the inventory metrics have not returned to the earlier, more efficient levels by the end of 2019. This pattern could impact working capital management and may suggest a need to evaluate inventory control practices.

Receivables Turnover

The receivables turnover ratio shows a fluctuating yet overall increasing trend over the five-year period. It decreased slightly from 9.13 in 2015 to 8.56 in 2017, indicating a moderate slowdown in the collection efficiency during that timeframe. However, from 2017 onward, the ratio improved substantially, reaching 11.1 by the end of 2019. This suggests an enhancement in the company's ability to collect receivables more frequently within a year in the most recent years.

Average Receivable Collection Period

The average receivable collection period exhibits an inverse movement compared to the receivables turnover ratio, which aligns with typical financial behavior. Initially, the collection period increased from 40 days in 2015 to 43 days in 2017, reflecting a longer time to collect receivables and a potential decrease in collection efficiency. After 2017, this period declined steadily to 33 days by 2019, indicating faster collection of outstanding receivables and improved liquidity management.

Summary of Trends

The trends in both ratios indicate that the company faced some challenges in receivables collection efficiency during the earlier part of the period analyzed, with a decline noticeable up to 2017. Afterward, there was a clear improvement in performance, as evidenced by higher turnover and shorter collection periods, signaling better management of accounts receivable and likely contributing positively to cash flow dynamics.

Average Inventory Processing Period

The average inventory processing period shows a rising trend initially, increasing from 48 days in 2015 to a peak of 78 days in 2017. Following this peak, the period declines moderately to 74 days in 2018 and further to 71 days in 2019. This pattern suggests an initial lengthening in the time inventory remains before processing, followed by efforts to improve or stabilize inventory turnover efficiency over the later years.

Average Receivable Collection Period

The collection period for receivables exhibits a consistent downward trend throughout the five-year period. It decreases steadily from 40 days in 2015 to 33 days in 2019, indicating an improvement in the company's ability to collect payments from customers more quickly. This reduction in days outstanding can positively impact liquidity and cash flow.

Operating Cycle

The operating cycle follows a pattern largely influenced by changes in the inventory processing and receivable collection periods. It increases from 88 days in 2015 to a maximum of 121 days in 2017, reflecting the peak in inventory days. Thereafter, the cycle shortens to 104 days by 2019, paralleling the improvements seen in both inventory handling and receivables collection. Overall, this denotes an enhancement in the efficiency of working capital management over time.

Payables Turnover

The payables turnover ratio demonstrates a declining trend from 12.9 in 2015 to 7.73 in 2017, indicating a slower rate of paying off suppliers during this period. Subsequently, the ratio improves, increasing to 9.27 in 2018 and further to 10.21 in 2019, suggesting enhanced efficiency in managing payables towards the end of the observed timeline.

Average Payables Payment Period

The average payables payment period shows an inverse relationship with the payables turnover ratio. It extends from 28 days in 2015 to a peak of 47 days in 2017, reflecting longer durations taken to settle payables. Following this peak, the payment period decreases to 39 days in 2018 and further to 36 days in 2019, indicating a trend toward quicker payment of outstanding obligations.

Overall Analysis

The data depicts an initial phase of extended payment terms and slower turnover of payables up to 2017, which may point to either strategic liquidity management or challenges in cash outflows. However, the trend reverses thereafter, with the company accelerating payments and improving payables turnover, possibly signaling improved cash management or changes in supplier relationships and credit terms.

Average Inventory Processing Period

The average inventory processing period showed an increasing trend from 48 days in 2015 to a peak of 78 days in 2017. After 2017, this period gradually decreased to 74 days in 2018 and further to 71 days in 2019, indicating a partial improvement in inventory management efficiency after a significant rise.

Average Receivable Collection Period

This period exhibited a slight increase from 40 days in 2015 to 43 days in 2017, followed by a consistent decline to 38 days in 2018 and further down to 33 days in 2019. This suggests enhanced effectiveness in the collection of receivables over the latter years.

Average Payables Payment Period

The payables payment period rose notably from 28 days in 2015 to 47 days in 2017, reflecting a lengthening in the time taken to settle payables. Subsequently, it dropped to 39 days in 2018 and 36 days in 2019, indicating a move towards quicker payments compared to the 2017 peak, yet still longer than in 2015.

Cash Conversion Cycle

The cash conversion cycle showed a general increase from 60 days in 2015 to 74 days in 2017, illustrating a lengthening cash cycle. This was followed by a slight reduction to 73 days in 2018 and further decrease to 68 days in 2019, signaling an improvement in managing the time between cash outflows and inflows, but remaining above the initial 2015 value.