GE Aerospace (NYSE:GE)

The analysis of the financial ratios over the observed quarters reveals notable trends in the company’s operational efficiency and cash management practices.

Inventory Turnover

This ratio shows a general declining trend from early 2021 through 2025, with some periodic fluctuations, indicating a slower rate of inventory being sold or used over time. The turnover decreases from about 3.46 to approximately 2.35 by the last period, suggesting either an accumulation of inventory or reduced sales velocity.

Receivables Turnover

The receivables turnover ratio fluctuates moderately, with peaks observed in mid-2024, indicating periods of more efficient collection of receivables. However, the overall pattern suggests a marginal weakening in collection efficiency towards 2025, as the ratio falls from early highs of around 6.13 down to near 3.61-3.78.

Payables Turnover

This ratio demonstrates a gradual decline over the period, with a significant peak in mid-2024. The general decrease indicates that the company is taking longer to pay its suppliers over time, possibly improving cash retention but also potentially stressing supplier relationships.

Working Capital Turnover

Working capital turnover exhibits considerable volatility, with substantial spikes notably in late 2021, mid-2022, and again in late 2024 and through 2025. The wide fluctuations suggest changes in the efficiency with which the company uses its working capital to generate sales, potentially reflecting shifts in sales volume or working capital structure.

Average Inventory Processing Period

The average days inventory remains relatively stable with moderate increases until early 2024 when it reaches a low point, followed by a sharp rise through 2024 and into 2025, peaking at approximately 160 days. This rise correlates with the declining inventory turnover, indicating slower movement of inventory.

Average Receivable Collection Period

The collection period hovers around the high 70s to mid-80s days for most of the timeline, with a significant reduction to around 60 days in mid-2024, improving receivable collection efficiency briefly. Afterwards, the period increases again into the high 90s, indicating slower collection near the end of the analyzed period.

Operating Cycle

The operating cycle, which sums inventory processing and receivables collection periods, reflects a broad upward trend, increasing from about 185 days to over 250 days by 2025. This increase suggests a lengthening process in converting inventory into cash, which can impact liquidity.

Average Payables Payment Period

The payment period remains quite stable around 110 to 123 days initially, with a sharp decrease to about 73 days in mid-2024, indicating faster payment to suppliers temporarily, followed by a steady increase back to the 120+ day range thereafter, implying a return to slower payments.

Cash Conversion Cycle

The cash conversion cycle remains relatively stable in the initial quarters, fluctuating between 75 and 95 days. There is a notable dip in mid-2024, indicating a shorter time to convert resources into cash, followed by a steady lengthening up to about 126-127 days towards the end of the period. The increase suggests an extension in the time the company’s cash is tied up in operating activities.

Overall, the data points to increasing challenges in managing inventory and receivables efficiently, leading to longer operating and cash conversion cycles. These developments may require attention to optimize working capital management and improve liquidity in future periods.

The financial data reveals several notable trends over the observed quarters. Cost of equipment and services sold demonstrates a fluctuating pattern with a general downward movement starting from early 2023. Initially, costs were elevated in 2021 and 2022, reaching peaks towards the end of 2022; however, from March 2023 onwards, there is a marked decline with values dropping significantly by March 2024. Although some recovery is visible from mid-2024, costs stabilize at a lower level compared to previous years, suggesting possible operational adjustments or changes in sales volume.

Inventories, including deferred inventory costs, show a seasonal variation with periodic increases and decreases. Inventory levels were comparatively high throughout 2021 and 2022, with relatively stable figures near 17,000 million US dollars. A notable dip occurs starting in the first quarter of 2024, where inventory levels sharply decrease to below 10,000 million US dollars, indicating efforts to streamline inventory or reduced procurement. However, inventory levels gradually rise again towards the end of the forecast period, reaching over 11,000 million US dollars by late 2025, which might reflect scaling operations or inventory replenishments.

Inventory turnover ratio exhibits variability correlating somewhat with inventory and cost trends. The ratio declined modestly from early 2021 through late 2022, indicating a slower rate of inventory movement during that time. An unusual spike occurs in mid-2024, where the ratio jumps above 4.0, signaling a significant acceleration in inventory turnover possibly linked to the previously noted drop in inventory levels. After this spike, the ratio then trends downwards again, settling in the low 2.3 to 2.4 range by late 2025, which suggests a return to slower inventory cycles or increased stockpiling.

Overall, the data portrays a period of adjustment in cost control and inventory management, highlighted by a reduction in costs and inventory in early 2024, followed by partial recovery in subsequent quarters. The dynamic inventory turnover ratios reflect changes in operational efficiency and inventory handling strategies across the timeframe, with a brief period of significantly increased turnover indicating possible shifts in demand or supply chain activities.

Cost of Equipment and Services Sold

Peaked in late 2022, declined sharply after early 2023, partial rebound by late 2025.

Inventories

High and stable through 2021-2022, sharp decline in early 2024, gradual increase toward 2025 end.

Inventory Turnover Ratio

Moderate decline through 2022, significant spike in mid-2024, followed by decrease and stabilization near lower historical levels by 2025.

The sales of equipment and services exhibit a fluctuating trend with notable variability over the observed periods. Initially, sales increase from $16,316 million in the first quarter of 2021 to a peak of $21,012 million by the last quarter of 2022. This growth phase is followed by a sharp decline to $13,694 million in the first quarter of 2023. Subsequently, sales partially recover, reaching $18,516 million by the last quarter of 2023. However, from 2024 onward, there is a marked downward trend in sales, with values significantly lower than in prior years, hitting a low of $8,076 million in the first quarter of 2024 before gradually increasing to $11,306 million by the third quarter of 2025. This pattern suggests periods of volatility potentially due to market conditions or company-specific factors.

Current receivables follow a somewhat similar pattern to sales, starting at $15,381 million in the first quarter of 2021 and peaking at $17,976 million in the last quarter of 2022. A decline is observed in early 2023, reaching $14,212 million, followed by fluctuations around $15,000 million through the last quarter of 2023. The year 2024 shows a significant drop to $8,370 million in the second quarter but then gradually increases through 2025, reaching $10,671 million in the third quarter. The receivables trend parallels sales but shows comparatively less volatility, indicating some lag or smoothing effect between sales and receivables.

The receivables turnover ratio, indicative of how efficiently the company collects its receivables, shows variability across the quarters. It remains relatively stable around 4.5 times per year through 2021 and most of 2022 but then displays sharper fluctuations from 2023 onwards. The ratio peaks at 6.13 in the second quarter of 2024, suggesting a period of improved collection efficiency. However, this peak is followed by a decline towards levels near 3.7–3.8 in 2025, which could signal a decrease in the speed of receivables collection or changes in credit terms.

Overall, the data reveal a business experiencing cyclical sales and receivables performance, with corresponding impacts on turnover efficiency. The period between 2023 and 2024 is marked by significant disruptions in both sales and receivables, followed by gradual recovery in subsequent quarters. The receivables turnover ratio adjustments indicate shifts in operational or market dynamics affecting working capital management during this timeframe.

Sales of Equipment and Services

Initial growth through 2021-2022, peaking late 2022, sharp drop in early 2023, partial recovery late 2023, then substantial dip in 2024 with gradual improvement into 2025.

Current Receivables

Generally aligns with sales trend but less volatile; peaks late 2022, dips early 2023, significant fall mid-2024, followed by slow recovery towards 2025.

Receivables Turnover

Stable around 4.5 in early periods, peaks above 6 in mid-2024 indicating faster collections, then declines to below 4 by 2025 reflecting slower receivables conversion.

The analysis of the financial data reveals distinct trends in the cost of equipment and services sold, accounts payable, and payables turnover ratios over the examined periods.

Cost of Equipment and Services Sold

This metric shows fluctuations with an initial increase from US$12,538 million in March 2021 to a peak of US$15,467 million in December 2021. It then experiences a notable decline in early 2023, reaching a low of US$5,746 million by March 2024. Subsequently, there is a gradual recovery through the remainder of 2024 and into 2025, culminating in a higher figure of US$7,762 million by September 2025. This pattern suggests seasonal variations or adjustments in production or service delivery volumes over the periods.

Accounts Payable

Accounts payable increased steadily from US$16,090 million in March 2021, peaking at US$18,644 million in December 2022. A significant decline is observed starting in early 2024, dropping sharply to US$7,707 million by June 2024. This downward trend continues with minor fluctuations through 2025, ending with values below US$9,500 million. The sharp decrease in accounts payable after 2023 could indicate improved payment terms, reduced procurement, or a strategic effort to manage liabilities more conservatively.

Payables Turnover Ratio

The payables turnover ratio initially declines from 3.56 in March 2021 to a low around 2.85 by September 2025, reflecting a slower rate of settling payables relative to purchases over most of the period. However, a spike is notable in mid-2024, reaching a high of 5.01 in June 2024, before reverting to lower levels. This spike corresponds temporally with the sharp drop in accounts payable, suggesting accelerated payments during that interval. Over time, the overall trend indicates a slightly slower turn in payables, possibly due to changes in supplier terms or cash flow management strategies.

In summary, the data describe a cycle of increased costs and payables up to late 2022, followed by a marked contraction in both measures starting in early 2024. The payables turnover ratio reveals a temporary acceleration in payment activity during this contraction period, with a long-term tendency toward slower payables turnover. These trends may reflect operational adjustments, shifts in purchasing strategies, or broader market conditions impacting financial management within the periods analyzed.

Working Capital

The working capital shows a downward trend overall from March 2021 through September 2025. Initially starting at 55,517 million USD in March 2021, it declines sharply to 14,395 million USD by December 2021. This decline continues with fluctuations, reaching a low point around June 2025 at 1,335 million USD before a slight recovery to 2,871 million USD in September 2025. The general pattern indicates a significant reduction in available working capital over the analyzed period.

Sales of Equipment and Services

Sales demonstrate a fluctuating but generally cyclical pattern with some growth phases. From 16,316 million USD in March 2021, sales increase steadily towards the end of 2021, peaking at 21,012 million USD in December 2021. A subsequent decline occurs in the first quarter of 2023 to 13,694 million USD, followed by variations throughout 2023 and early 2024. In 2024 and 2025, sales show a recovery trend ranging from approximately 8,000 million USD to over 11,000 million USD, indicating variability but also an upward trend in recent quarters.

Working Capital Turnover

The working capital turnover ratio, reflecting the efficiency of working capital use relative to sales, rises significantly over the period. Starting at 1.27 in March 2021, the ratio sharply increases to a peak of 13.29 by September 2022. After a dip, it again rises to reach an exceptional high of 28.44 in June 2025 before settling to 14.05 by September 2025. These increases suggest that despite the decreasing working capital, sales levels have maintained or grown in such a way that the company is utilizing its working capital more efficiently over time.

Summary Insights

The data reveals that working capital has been depleted considerably over the analyzed quarters, which could reflect strategic capital management or constraints in liquidity. At the same time, sales levels have experienced cyclical changes but show recoveries in recent periods, suggesting resilience or successful sales efforts despite lower working capital. The sharp increase in the working capital turnover ratio suggests improved operational efficiency in generating sales from available working capital. However, the low absolute value of working capital in later periods may pose liquidity risks and should be monitored carefully.

The analysis of inventory management metrics over the quarterly periods reveals notable trends and fluctuations in the operational efficiency related to inventory handling.

Inventory Turnover Ratio

The inventory turnover ratio exhibits a general declining trend from early 2021 through late 2025. Starting at a ratio of 3.46 in the first quarter of 2021, it gradually decreases with minor fluctuations, reaching a notably low point around the last quarters of the observed period, approximately 2.29 to 2.35. The period around mid-2024 shows an anomalous peak at 4.08, which suggests enhanced efficiency or changes in inventory dynamics during that quarter, but the ratio subsequently declines again. The overall decrease in this ratio implies a slower rate of inventory turnover over the longer term, signaling potential challenges in maintaining sales velocity or inventory management effectiveness.

Average Inventory Processing Period

The average inventory processing period, measured in number of days, reveals an inverse pattern relative to the inventory turnover ratio. Initially fluctuating between approximately 105 and 120 days in 2021 and 2022, this metric peaks sharply at 141 days in the first quarter of 2024, coinciding with the temporary improvement in inventory turnover ratio. Following this, the processing period extends further, notably increasing to values between 147 and 160 days in the latter quarters through 2025. This elongation indicates that inventory remains in storage longer before being processed or sold, which may correspond to decreased sales, overstocking, or inefficiencies in inventory management practices.

Overall, the inverse relationship between the inventory turnover ratio and the average inventory processing period is evident, which is consistent with typical inventory dynamics. The upward trend in processing days combined with the downward trajectory in turnover ratio suggests a growing need for improved inventory control measures to enhance operational efficiency and reduce holding costs in the future.

Receivables turnover ratio trends

Exhibits a general decline over time with temporary improvement in early 2023, reflecting fluctuating efficiency in converting receivables to cash.

Average receivable collection period trends

Displays volatility with an overall lengthening trend in collection days by the end of the report, indicating increasing delays in cash collection.

Correlation insights

The inverse relationship between turnover ratio and collection days is consistent. Periods showing a high turnover ratio coincide with shorter collection periods and vice versa.

Implications

The deteriorating turnover ratio and lengthening collection period in the later quarters could affect liquidity and cash flow management, signaling a need for improved receivables management strategies.

Average inventory processing period

The average inventory processing period shows considerable fluctuation throughout the observed quarters. Initially, there is a gradual increase from 105 days to a peak of 121 days by September 2023. This is followed by a notable drop to 89 days in June 2024, indicating improved efficiency in inventory management. However, after this low point, the period rises sharply again, reaching 160 days by September 2025. This volatility suggests inconsistent inventory turnover and potential challenges in managing stock levels effectively over time.

Average receivable collection period

The average receivable collection period generally trends upwards, starting at 80 days in March 2021 and increasing to a peak of 101 days in September 2025. There is a temporary decrease to 60 days in June 2024, representing a significant improvement in collections, but this is short-lived as the period rises again afterwards. The lengthening receivable periods imply that the company may be facing increasing delays in collecting payments from customers, which could impact liquidity.

Operating cycle

The operating cycle, the sum of the inventory processing and receivable collection periods, mirrors the patterns seen in its components. Initially, it gradually increases from 185 days in March 2021 to 207 days by December 2023. This is followed by a sharp reduction to 149 days in June 2024, indicating a phase of operational efficiency. Subsequently, the cycle expands significantly, reaching 261 days by September 2025. The lengthening operating cycle suggests increasing working capital requirements and potential pressures on cash flow management during the later periods.

Summary insights

Overall, the data reveals periods of both improvement and deterioration in operational efficiency. The mid-2024 quarter stands out as a phase where both inventory turnover and receivable collections were optimized, substantially reducing the operating cycle. However, the subsequent quarters show a concerning trend of elongation in these periods, which may necessitate focused management attention to improve inventory management and credit controls in order to enhance cash flow stability.

The payables turnover ratio exhibits notable fluctuations over the observed periods, indicating variations in the efficiency of managing payables. Initially, the ratio decreases gradually from 3.56 at the end of Q1 2021 to a low of 2.98 by the end of Q4 2022. This trend suggests a slowing pace in payables turnover, implying that the company is taking longer to pay its suppliers or is extending payment terms.

A resurgence in turnover is observed starting in Q1 2023, where the ratio rises to 3.57, peaking dramatically at 5.01 in Q2 2024. This sharp increase points to a significant acceleration in settling payables during that quarter. Following this peak, the turnover declines again, stabilizing around values slightly below 3 in subsequent quarters through Q3 2025.

Correspondingly, the average payables payment period, measured in days, reflects an inverse pattern relative to the payables turnover ratio. Payment days initially increase steadily from 103 days in Q1 2021 to a high of 123 days in Q4 2022, confirming the lengthening time taken to pay suppliers over this timeframe.

In Q1 2023, the payment period contracts sharply to 102 days, consistent with the increased payables turnover, and plummets further to 73 days in Q2 2024. This reduction indicates a much faster payment cycle in this quarter. However, after this point, the payment period expands again, reaching 134 days by Q3 2025, signifying a return to longer payment delays.

Overall, the trends reveal a cyclical pattern in payables management. The company experienced a phase of extended payment durations through 2022, followed by a brief interval of rapid payment in early 2023 to mid-2024, and subsequently reverted to longer payment periods. The sharp spike in payables turnover and corresponding drop in payment period around mid-2024 could suggest a strategic or operational change to accelerate supplier payments, which was not sustained in the later periods.

The analysis of the quarterly financial metrics reveals varying trends in the company's working capital management over the observed periods.

Average Inventory Processing Period

The average inventory processing period displayed fluctuations with a general upward trend. Initially, it increased gradually from 105 days to a peak of 120 days by the end of 2022. There is a notable spike in the first quarter of 2024 reaching 141 days, followed by a sharp decline to 89 days in the subsequent quarter. However, the inventory processing period rose again, culminating in a high of 160 days by the third quarter of 2025. This pattern indicates variability and potential challenges in inventory turnover efficiency.

Average Receivable Collection Period

The receivable collection period showed relatively moderate fluctuations. Early data show stability around 75 to 89 days, but beginning in late 2023, there is an increasing trend with the collection period rising to over 90 days several times, peaking near 101 days in late 2025. A temporary improvement occurred around mid-2024 when the period dropped to 60 days, suggesting an isolated period of improved collections before resuming the upward trend. Overall, this metric points to increasing difficulties in collecting receivables promptly.

Average Payables Payment Period

The average payables payment period consistently trended upward from 103 days in early 2021, moving steadily higher to 123 days by the end of 2022. There is a sharp decline to 73 days in the second quarter of 2024, followed by a rebounds to a peak of 134 days by the third quarter of 2025. This volatility indicates changing payment practices, with shorter payment periods temporarily adopted but generally trending towards extended payment durations, which may reflect shifts in supplier negotiation or cash management strategies.

Cash Conversion Cycle

The cash conversion cycle varied across the periods but generally remained within a range of approximately 75 to 130 days. Initially, it stabilized near 80 days with minor oscillations until a rise to 112 days in early 2024. Following another improvement period, the cycle extended significantly, reaching around 126 to 127 days by the latter part of 2025. The cash conversion cycle's upward movement in recent quarters indicates a lengthening of the time between cash outflows and inflows, potentially signaling decreasing operational efficiency or liquidity pressures.

Overall, the trends suggest increasing durations in inventory turnover, receivables collection, and payables payment over time, with intermittent periods of improvement. The elongation of the cash conversion cycle towards the end of the observed timeframe may warrant attention to optimize working capital and cash flow management.