General Motors Co. (NYSE:GM)

The short-term operating activity ratios demonstrate notable shifts over the observed period. Generally, efficiency metrics improved from 2022 through 2025, though with some quarterly fluctuations. Inventory management, accounts receivable handling, and accounts payable management all exhibited evolving patterns, impacting the overall operating cycle and cash conversion cycle.

Inventory Turnover

Inventory turnover generally increased throughout the period, rising from 7.06 in March 2022 to 11.00 in December 2025. This indicates improving efficiency in managing inventory levels. There were minor dips in the first half of 2022 and early 2024, but the overall trend is positive. The average inventory processing period correspondingly decreased, moving from 52 days in March 2022 to 33 days in December 2025, further supporting improved inventory management.

Receivables Turnover & Collection Period

Receivables turnover showed a consistent upward trend, increasing from 9.82 in March 2022 to 12.87 in December 2025. This suggests a strengthening ability to efficiently collect receivables. The average receivable collection period decreased from 37 days in March 2022 to 28 days in December 2025, confirming faster collection times. A slight weakening is observed in the first half of 2025, with the collection period increasing to 36 and 37 days respectively.

Payables Turnover & Payment Period

Payables turnover also increased over the period, rising from 4.15 in March 2022 to 6.65 in December 2025. This indicates the company is utilizing its credit terms more efficiently. The average payables payment period decreased from 88 days in March 2022 to 55 days in December 2025, suggesting improved management of supplier payments.

Working Capital Turnover

Working capital turnover experienced significant volatility. It peaked at 15.52 in December 2022 and 21.98 in December 2023, then declined to 10.89 in December 2025. This suggests fluctuations in the efficiency with which working capital is used to generate sales. The decline in later periods warrants further investigation.

Operating & Cash Conversion Cycles

The operating cycle generally decreased, moving from 89 days in March 2022 to 61 days in December 2025, indicating a faster overall conversion of raw materials into cash. The cash conversion cycle exhibited more dramatic swings, even becoming negative in September and December 2022, and again in December 2023. This suggests periods where cash was collected from customers before payments were made to suppliers. The cash conversion cycle increased to 4 days in March 2025, and 8 and 9 days in June and September 2025, before decreasing to 6 days in December 2025. These fluctuations require further analysis to understand the underlying drivers.

In summary, the company demonstrated improvements in inventory and receivable management, alongside efficient management of payables. However, the volatility in working capital turnover and the fluctuations in the cash conversion cycle suggest potential areas for further scrutiny and optimization.

Inventory turnover exhibited fluctuations over the observed period, generally trending upwards with some quarterly variations. Initial values indicated a decline followed by a period of improvement, and then a more pronounced increase towards the end of the analyzed timeframe.

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

The inventory turnover ratio began at 7.06 and decreased to 6.33 by June 30, 2022. A subsequent recovery was observed, reaching 7.32 by September 30, 2022, and further increasing to 8.26 by December 31, 2022. This initial period suggests potential challenges in efficiently managing inventory during the first half of 2022, followed by improvements in the latter half.

Stabilization and Moderate Growth (Mar 31, 2023 - Dec 31, 2023)

From March 31, 2023, to December 31, 2023, the ratio demonstrated relative stability with a gradual upward trend. It moved from 7.31 to 8.59, indicating a consistent, though moderate, improvement in inventory management efficiency. The cost of sales increased during this period, but inventories were managed effectively to support the higher turnover.

Accelerated Improvement (Mar 31, 2024 - Dec 31, 2025)

A more significant increase in inventory turnover was evident from March 31, 2024, through December 31, 2025. The ratio rose from 8.16 to 11.00. This suggests a substantial enhancement in the speed at which inventory is sold and replenished. The cost of sales continued to rise, but the inventory levels decreased, contributing to the increased turnover. The most recent value of 11.00 represents the highest point observed throughout the entire period.

Relationship to Cost of Sales

The automotive and other cost of sales generally increased over the period. However, the inventory turnover ratio’s upward trend, particularly in the later quarters, indicates that the increase in sales outpaced the increase in inventory investment. This suggests improved demand management and/or supply chain efficiencies.

Overall, the observed trend in inventory turnover suggests improving operational efficiency in managing inventory levels. The acceleration in turnover during the latter part of the period is a positive indicator of enhanced sales and inventory control.

The receivables turnover ratio exhibits fluctuations over the observed period, generally indicating changes in the efficiency with which the company converts its receivables into cash. An initial period of relative stability is followed by an increase, then a period of decline, and a final increase.

Overall Trend

From March 31, 2022, through December 31, 2022, the receivables turnover ratio remained relatively stable, fluctuating between 9.60 and 10.80. A noticeable upward trend commenced in March 31, 2023, peaking at 12.74 by December 31, 2023. This was followed by a decline through September 30, 2025, reaching a low of 9.96. The ratio then increased significantly to 12.87 by December 31, 2025.

Peak and Trough

The highest recorded receivables turnover ratio was 12.74, observed on December 31, 2023. The lowest ratio occurred on September 30, 2025, at 9.96. These represent the most and least efficient periods for collecting receivables, respectively, within the analyzed timeframe.

Recent Performance

The most recent two periods, September 30, 2025, and December 31, 2025, show a substantial increase in the receivables turnover ratio, moving from 9.96 to 12.87. This suggests a recent improvement in the speed of receivables collection, potentially due to changes in credit policies, collection efforts, or sales terms.

Correlation with Sales

While not a direct analysis of sales, the automotive net sales and revenue generally increased alongside the receivables turnover ratio during the period of growth from March 31, 2023, to December 31, 2023. The subsequent decline in the ratio coincided with a period of relatively stable or slightly decreasing sales. The final increase in the ratio in December 2025 occurred with a decrease in sales, suggesting improved collection efficiency despite lower revenue.

The payables turnover ratio for the analyzed period demonstrates a generally increasing trend, with some quarterly fluctuations. Initially, the ratio remained relatively stable between 4.12 and 4.62 from March 2022 through December 2022. A noticeable increase began in the first quarter of 2023 and continued through December 2025, culminating in a ratio of 6.65.

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

The payables turnover ratio exhibited limited variation during this period, fluctuating between 4.12 and 4.62. This suggests a consistent pattern in the timing of payments to suppliers relative to purchases. The ratio remained within a narrow range, indicating a stable relationship between cost of sales and accounts payable.

Ascending Trend (Mar 31, 2023 – Dec 31, 2025)

From March 2023 onward, the payables turnover ratio began a sustained upward trajectory. The ratio increased from 4.49 to 6.65 over the course of ten quarters. This indicates that the company is either paying its suppliers more quickly, reducing its accounts payable balance, or increasing its cost of sales at a faster rate than its payables. The most significant increase occurred between September 2024 and December 2025, moving from a ratio of 5.71 to 6.65.

Quarterly Variations

While the overall trend is upward, quarterly variations are present. For example, a slight decrease was observed between December 2022 (4.62) and March 2023 (4.49). Similarly, a minor dip occurred between September 2023 (4.58) and December 2023 (5.03). These fluctuations may be attributable to seasonal factors, changes in supplier terms, or variations in purchasing patterns.

Relationship to Cost of Sales and Accounts Payable

The payables turnover ratio is calculated using Automotive and other cost of sales and Accounts payable, principally trade. The increasing ratio suggests a potential decrease in the average time taken to settle outstanding invoices, or an increase in the rate at which inventory is sold and replaced, leading to higher cost of sales relative to payables. Further investigation into the underlying drivers of these changes would be beneficial.

In summary, the payables turnover ratio demonstrates a clear upward trend over the analyzed period, indicating a shift in the company’s payment practices or a change in the relationship between its cost of sales and accounts payable. The initial stability followed by a sustained increase warrants further investigation to understand the underlying causes and potential implications.

The working capital turnover ratio exhibits considerable fluctuation throughout the observed period, spanning from March 31, 2022, to December 31, 2025. Initial values indicate a relatively high turnover, followed by periods of decline and subsequent increases, suggesting shifts in the efficiency with which working capital is utilized to generate sales.

Overall Trend

From March 2022 through December 2022, the ratio initially decreased from 12.98 to 10.19, then increased to 15.52. This suggests an initial period of potentially slower working capital utilization followed by improved efficiency towards the end of the year. The period from March 2023 to September 2023 shows a decline to 7.99, indicating a weakening in the relationship between working capital and sales. A subsequent recovery is observed through December 2025, reaching a ratio of 10.89.

Peak and Trough Values

The highest recorded ratio is 17.09, occurring in March 2023. This signifies a period where the company effectively generated sales relative to its working capital investment. Conversely, the lowest ratio is 7.99, recorded in September 2025, indicating a less efficient utilization of working capital during that quarter.

Recent Performance (2024-2025)

The ratio demonstrates a generally decreasing trend from March 2024 (10.90) to September 2025 (7.99). However, a recovery is seen in December 2025, with the ratio increasing to 10.89. This recent volatility warrants further investigation to determine the underlying causes, such as changes in inventory management, accounts receivable collection periods, or accounts payable payment terms.

Relationship to Working Capital Levels

Fluctuations in the working capital turnover ratio do not appear to be directly correlated with the absolute levels of working capital. For example, working capital increased significantly between March 2024 and June 2024 (from US$14,693 million to US$16,701 million), but the turnover ratio decreased from 10.90 to 9.76. This suggests that the increase in working capital did not translate into a proportional increase in sales, potentially indicating inefficiencies in working capital management.

In conclusion, the working capital turnover ratio demonstrates a dynamic pattern over the analyzed period. While periods of efficient working capital utilization are evident, there are also instances of declining performance. Continued monitoring of this ratio, alongside related financial metrics, is recommended to identify potential areas for improvement in working capital management.

The average inventory processing period demonstrates a generally decreasing trend over the observed period, with some quarterly fluctuations. Initially, the period stood at 52 days in March 2022, and has generally trended downward to 33 days by December 2025. This suggests increasing efficiency in managing inventory.

Overall Trend

A consistent downward trend in the average inventory processing period is evident from March 2022 through December 2025. The period decreased from 52 days to 33 days, representing a substantial reduction in the time inventory is held before being sold.

Short-Term Fluctuations

While the overall trend is downward, there are some quarterly variations. An increase from 52 days in March 2022 to 58 days in June 2022 is observed, followed by a decrease to 50 days in September 2022. Similar minor fluctuations occur throughout the period, indicating potential seasonal or operational influences on inventory levels.

Acceleration of Improvement

The rate of decrease appears to accelerate in the later periods. The period decreased by 15 days between March 2022 and December 2023, but decreased by a further 8 days between December 2023 and December 2025. This suggests that inventory management strategies implemented may be gaining effectiveness over time.

Relationship to Inventory Turnover

The observed decrease in the average inventory processing period aligns with the increasing inventory turnover ratio. As inventory turnover increases, the average time inventory spends in processing naturally decreases, confirming a consistent relationship between these two metrics. The increasing turnover ratio supports the conclusion of improved inventory efficiency.

In conclusion, the company demonstrates improving efficiency in its inventory management processes, as evidenced by the declining average inventory processing period and corresponding increase in inventory turnover. The acceleration of this improvement in recent quarters suggests successful implementation of inventory optimization strategies.

The average receivable collection period demonstrates a generally decreasing trend over the observed period, with some fluctuations. Initially, the period remained stable before exhibiting improvement and then some reversion towards earlier levels.

Overall Trend

From March 31, 2022, through December 31, 2023, the average collection period decreased from 37 days to 29 days. This indicates an improvement in the efficiency of collecting receivables. However, the period then increased to 32 days by March 31, 2025, before decreasing again to 28 days by December 31, 2025.

Initial Stability (Q1 2022 - Q3 2022)

The average collection period remained consistent at 37 or 38 days for the first three quarters of 2022, suggesting a stable receivables collection process during that time.

Improvement (Q4 2022 - Q4 2023)

A noticeable improvement in collection efficiency occurred between the fourth quarter of 2022 and the fourth quarter of 2023. The period decreased from 34 days to 29 days, representing a 14.3% reduction. This could be attributed to changes in credit policies, more aggressive collection efforts, or a shift in customer payment behavior.

Fluctuation and Recent Trend (Q1 2024 - Q2 2025)

The period experienced an increase to 32 days in the first quarter of 2024, followed by a further increase to 36 days in the second quarter of 2025. This suggests a temporary slowdown in collections. However, the period then decreased to 28 days in the final quarter of 2025, indicating a recovery in collection efficiency.

Long-Term Perspective

Despite the fluctuations, the average collection period at the end of the observed period (28 days) is lower than the period at the beginning (37 days). This suggests that, overall, the company has become more efficient at collecting its receivables over the analyzed timeframe.

The operating cycle exhibited fluctuations over the observed period, generally demonstrating a decreasing trend, particularly in the latter half of the analyzed timeframe. Initial values indicated a cycle of approximately 89 to 96 days, followed by a period of relative stability before a more pronounced decline.

Average Inventory Processing Period

The average inventory processing period remained relatively stable between 43 and 58 days throughout the period. A slight upward trend was observed from March 2022 to June 2022, peaking at 58 days, before decreasing to 44 days by December 2022. This level of processing time was largely maintained through the first half of 2023, with minor fluctuations. A consistent downward trend became apparent from September 2023, reaching a low of 33 days by December 2025. This suggests increasing efficiency in inventory management.

Average Receivable Collection Period

The average receivable collection period showed a similar pattern of initial stability followed by a decline. Values ranged from 37 to 38 days in the first half of 2022, decreasing to 29 days by December 2022. This trend continued into 2023, with a low of 28 days recorded in December 2025. There were minor increases in the collection period during the first quarters of 2024 and 2025, but these were not substantial enough to reverse the overall downward trend. This indicates improved efficiency in collecting receivables.

Operating Cycle

The operating cycle, calculated as the sum of the average inventory processing period and the average receivable collection period, began at approximately 89 to 96 days. A consistent decline was observed, particularly after December 2022, with the cycle decreasing to a low of 61 days by December 2025. This reduction suggests an overall improvement in the company’s efficiency in converting its investments in inventory and receivables into cash. The most significant decrease occurred between September 2024 and December 2025, indicating accelerated improvements in both inventory management and receivable collection during that period.

Overall, the observed trends suggest a strengthening of short-term operating efficiency. The decreasing operating cycle indicates that the company is becoming more adept at managing its working capital and converting resources into cash in a shorter timeframe.

The average payables payment period demonstrates a clear decreasing trend over the observed period. Initially, the period fluctuated around 88-89 days in the first two quarters of 2022, before beginning a consistent decline.

Overall Trend

From March 31, 2022, through December 31, 2025, the average payables payment period decreased from 88 days to 55 days. This represents a substantial reduction in the time taken to settle outstanding obligations to suppliers.

2022-2023 Performance

The period experienced a moderate decrease from 88 days in March 2022 to 73 days by December 2023. This suggests a gradual improvement in the company’s ability to manage and reduce its payment obligations during this timeframe. The decline wasn't linear, with some quarterly fluctuations.

2024-2025 Acceleration

The rate of decrease accelerated in 2024 and 2025. The period fell to 62 days by the end of 2024 and further decreased to 55 days by December 2025. This indicates a more aggressive approach to payables management or potentially a shift in supplier terms.

Consistency

While the period generally decreased, there were instances of stability. For example, the period remained at 65 days for two consecutive quarters in 2025, suggesting a temporary plateau before continuing the downward trend.

The consistent decline in the average payables payment period suggests improved efficiency in accounts payable processing, potentially stronger relationships with suppliers allowing for extended payment terms, or a deliberate strategy to optimize cash flow. Further investigation would be required to determine the underlying drivers of this trend.

The short-term operating activity of the company, as measured by its cash conversion cycle and component ratios, demonstrates notable fluctuations over the observed period. Generally, the company has improved its efficiency in converting its investments in inventory and receivables into cash, while also extending payment terms with its suppliers. This has resulted in a generally decreasing, and at times negative, cash conversion cycle.

Average Inventory Processing Period

The average time to process inventory exhibited some variability, beginning at 52 days and peaking at 58 days in June 2022. A general downward trend is then observed, reaching a low of 33 days by December 2025. There were minor fluctuations within this trend, with values ranging between 36 and 48 days from March 2023 to September 2025. This suggests increasing efficiency in inventory management over the period.

Average Receivable Collection Period

The average number of days to collect receivables remained relatively stable between 37 and 38 days through the first three quarters of 2022, before decreasing to 34 days by March 2023. A continued decline was observed, reaching a low of 27 days in December 2024. A slight increase to 37 days occurred in September 2025, followed by a decrease to 28 days in December 2025. This indicates improved efficiency in collecting payments from customers.

Average Payables Payment Period

The average time taken to pay suppliers began at 88 days in March 2022 and decreased to 73 days by December 2023. A more substantial decrease occurred from December 2023 to December 2025, falling to 55 days. This suggests the company has been able to negotiate longer payment terms with its suppliers, improving its short-term cash flow.

Cash Conversion Cycle

The cash conversion cycle began at 1 day in March 2022, increased to 7 days in June 2022, and then turned negative, reaching -2 days in September 2023. It fluctuated around zero for the remainder of 2023 and the first half of 2024. The cycle then increased to 9 days in September 2025 before decreasing to 6 days in December 2025. The overall trend indicates a shortening of the cash conversion cycle, with the company increasingly able to convert its investments in operating assets into cash more quickly. The negative values suggest that, at times, the company received cash from customers before it needed to pay its suppliers.

In summary, the company demonstrates improving efficiency in managing its working capital, as evidenced by the decreasing inventory processing and receivable collection periods, coupled with an extended payables payment period. This has resulted in a generally shorter cash conversion cycle, indicating improved liquidity and operational efficiency.