Honeywell International Inc. (NASDAQ:HON)

Inventory Turnover

The inventory turnover ratio shows a consistent declining trend over the periods, starting from 4.94 in March 2020 and gradually decreasing to 3.67 by March 2025. This suggests a slower rate of inventory turnover and potentially less efficient inventory management over time.

Receivables Turnover

The receivables turnover ratio exhibits relative stability with minor fluctuations. It increased slightly from 4.78 in March 2020 to peak around 5.04 in March 2022, then levelled off with small oscillations, ending at 4.75 in March 2025. This indicates consistent efficiency in collecting receivables throughout the timeframe.

Payables Turnover

Payables turnover remained relatively stable but with a moderate downward trend, starting at 3.86 in March 2020 and fluctuating near 3.6 towards the end of the period, with minor variations. This suggests a slight extension in the payment period to suppliers in more recent quarters.

Working Capital Turnover

The working capital turnover ratio displayed notable volatility, initially increasing from 3.64 in March 2020 to a high of 8.84 in September 2021. Following this peak, the ratio showed periods of decline and recovery, ending at 7.04 in March 2025. Overall, this suggests fluctuating efficiency in generating revenue from working capital during the period.

Average Inventory Processing Period

The average inventory processing period (in days) gradually increased from 74 days in March 2020 to 99 days by March 2025. This lengthening duration is consistent with the declining inventory turnover ratio and indicates slower inventory movement over time.

Average Receivable Collection Period

The average receivable collection period hovered around the mid-70 days range across the periods. It varied modestly between 72 and 82 days but did not show a clear trend upward or downward, reflecting stable receivables management.

Operating Cycle

The operating cycle remained relatively steady around 150 to 176 days with a slight increase over time. This aligns with slower inventory and receivables activities, contributing to a longer duration to convert inventory and receivables into cash.

Average Payables Payment Period

The average payables payment period gradually increased from approximately 95 days early in the period to over 100 days from 2021 onwards. This indicates a lengthening in the time taken to pay suppliers, possibly as a means to improve cash flow.

Cash Conversion Cycle

The cash conversion cycle values fluctuated moderately throughout the timeframe, mostly ranging between 51 and 75 days. There was no consistent trend, though occasional increases coincide with prolonged inventory and receivable periods, and a somewhat extended payables payment period.

The analysis of the quarterly financial data reveals distinct trends in the cost of products and services sold, inventories, and inventory turnover ratios over the period examined.

Cost of Products and Services Sold

The cost values exhibit some fluctuations, initially decreasing slightly from 5534 million USD in Q1 2020 to 5276 million USD in Q2 2020, then experiencing a general increase peaking at 6201 million USD in Q4 2023. Following this peak, there is a moderate decline, but costs remain relatively elevated, with values above 5900 million USD from late 2023 onward. This trend indicates a rising cost base over the longer term, with some short-term variability potentially reflective of market or operational factors influencing costs.

Inventories

Inventories show a consistent upward trajectory throughout the analyzed periods. Beginning at 4584 million USD in Q1 2020, the inventory level gradually increases each quarter, reaching 6611 million USD by Q1 2025. The steady growth in inventory stock suggests buildup either in anticipation of demand or as a result of supply chain dynamics, possibly indicating increased production or stockpiling strategies.

Inventory Turnover Ratio

The inventory turnover ratio data, available starting from Q4 2020, exhibits a declining trend over time. Initially at 4.94, this ratio falls steadily to 3.67 by Q1 2025. A declining inventory turnover ratio implies that inventory is being sold and replaced less frequently, which may reflect slower sales, increased stock levels, or changes in inventory management practices.

Overall, the data suggests a scenario where costs associated with products and services are generally increasing, inventories are being accumulated, and the speed at which inventory is cycled is decreasing. This combination could warrant further investigation into operational efficiencies, demand forecasts, and supply chain management to optimize inventory levels and cost management.

Net Sales

Net sales exhibited fluctuations across the observed periods, with a notable dip in the second quarter of 2020, likely reflecting external challenges during that time. Following this decline, sales gradually increased, peaking in the fourth quarter of 2024 at 10,088 million USD. While some quarters showed dips or stagnation, the overall trend from 2020 through early 2025 indicates recovery and gradual growth.

Accounts Receivable, Less Allowances

The accounts receivable balance demonstrated some variability, with lower values around mid-2020 and a generally increasing trajectory through 2023. There was a slight decline in the last quarters of 2023 and early 2024, followed by renewed increases toward the end of the dataset, reaching 8,251 million USD by the first quarter of 2025. This pattern suggests fluctuating credit sales and collection efficiency over time.

Receivables Turnover Ratio

The receivables turnover ratio, available from March 2020 onwards, ranged between approximately 4.45 and 5.04. The ratio slightly declined from a peak around 5.04 in December 2020, reaching a low near 4.45 in September 2022, suggesting a moderation in collection efficiency or extended credit terms. Subsequently, the ratio showed modest recovery, stabilizing around 4.75 to 4.94 by early 2025, indicating a consistent ability to collect receivables relative to sales.

Overall Insights

The company’s sales recovered steadily after the initial 2020 downturn, reaching higher sales levels by 2024. Accounts receivable balances moved upward with some variability, which, combined with the relatively stable receivables turnover ratio, implies consistent credit management despite market fluctuations. The data reflects resilience in sales and effective collection practices over the period analyzed.

The analysis of the quarterly financial data reveals several notable trends in cost management and accounts payable activities over the examined periods.

Cost of products and services sold

The cost fluctuates throughout the quarters, starting at 5,534 million US dollars in the first quarter of 2020 and showing variability around the 5,500 to 6,000 million range in most periods. There is an observable rise in the last four quarters, peaking at 6,418 million US dollars in December 2024, followed by a slight decline to 6,037 million US dollars in March 2025. This indicates an overall upward trend in the cost of products and services sold, suggesting increased production costs or volume over time.

Accounts payable

The accounts payable figures demonstrate an increasing trend, starting from 5,676 million US dollars in March 2020, generally rising over time with some fluctuations. Notably, the values surpass 6,000 million US dollars from 2021 onwards and reach up to 6,880 million in December 2024, before a modest decrease to 6,734 million in March 2025. This growth reflects an expanding volume of obligations owed to suppliers or potentially longer payment terms.

Payables turnover ratio

The payables turnover ratio, available from December 2020 onward, shows a gradual decline from around 3.86 to a low of approximately 3.36 in December 2023. Following this dip, the ratio fluctuates moderately between 3.46 and 3.61 in the subsequent quarters. The declining trend suggests that the company is taking longer to pay its suppliers, which could be indicative of strategic cash flow management or changes in payment policies.

Overall, the cost of products and services sold has increased steadily in recent periods, accompanied by higher accounts payable balances. The decreasing payables turnover ratio supports the observation of extended payment durations. These patterns combined may imply a strategic adjustment in working capital management or reflect market conditions affecting cost and supplier terms.

Working Capital

Working capital demonstrated considerable fluctuations throughout the analyzed periods. Starting at 5,236 million US dollars in the first quarter of 2020, it increased significantly to a peak of 11,016 million US dollars in the third quarter of 2020. After this high point, working capital declined over the next few quarters, reaching a low near 3,900 million US dollars in mid-2022. Subsequent quarters showed moderate recovery and oscillations, including a notable increase to 10,946 million US dollars in the first quarter of 2024, followed by another decline leading to 5,574 million US dollars by the first quarter of 2025. Overall, the trend reflects volatility with periods of expansion and contraction.

Net Sales

Net sales exhibited a generally upward trend with some volatility. Beginning at 8,463 million US dollars in early 2020, sales dipped to 7,477 million in the second quarter of the same year but soon rebounded. From late 2020 to 2023, net sales showed a pattern of steady increases, peaking at 10,088 million US dollars in the fourth quarter of 2024. Although there was a minor decrease to 9,822 million in the first quarter of 2025, overall sales performance indicates growth across the period with temporary fluctuations.

Working Capital Turnover

Working capital turnover ratios, reflecting the efficiency of utilizing working capital to generate sales, started from around 3.64 times in late 2020 and increased markedly over time. The ratio moved upward, hitting a peak of 8.84 times in the third quarter of 2022, indicating improved efficiency. Following this peak, the ratio varied, showing declines and recoveries, with a low of 3.37 times in the first quarter of 2024 and rising again to 7.04 times by the first quarter of 2025. This pattern suggests shifts in working capital management and sales generation, with periods of high efficiency interspersed with less optimal usage.

Overall Insights

The data reveals cyclical and somewhat volatile patterns in working capital and efficiency metrics, contrasted with a more consistent growth in net sales. Peaks and troughs in working capital levels may be influenced by operational or seasonal factors, which also affect the turnover ratio. Net sales growth suggests increasing market demand or pricing power, while variability in working capital turnover points to changing capital management effectiveness and possibly changes in inventory, receivables, or payables management.

The inventory turnover ratio demonstrates a clear declining trend over the observed periods, starting at 4.94 in the first recorded quarter and decreasing steadily to 3.67 by the end of the timeline. This gradual reduction indicates that the company is selling and replacing its inventory less frequently over time.

Conversely, the average inventory processing period, measured in the number of days, shows an increasing trend. It begins at 74 days and rises gradually to 99 days toward the end of the data range. This indicates that inventory remains on hand for a longer duration before being sold or used, which aligns inversely with the decreasing turnover ratio.

Inventory Turnover Ratio

Initially measured at 4.94, the ratio declined steadily through successive quarters, reaching 3.67 by the last quarter. The decline suggests reduced efficiency in inventory management or slower sales relative to inventory levels.

Average Inventory Processing Period

This metric increased from 74 days up to 99 days over the examined quarters, implying an elongation in the time inventory is held. A longer processing period typically reflects slower inventory movement and potentially higher holding costs.

Overall, the inverse relationship observed between these two metrics suggests a slowdown in inventory turnover cycles, potentially impacting liquidity and operational efficiency. The company may benefit from investigating underlying causes such as demand changes, supply chain issues, or inventory management practices to improve these key performance indicators.

Receivables Turnover

The receivables turnover ratio shows a moderate level of fluctuation over the periods analyzed. Starting at 4.78 in the first available quarter, the ratio increased slightly, peaking at 5.04 in the first quarter of 2022. Subsequently, it declined, reaching around 4.45 in the third quarter of 2022 before stabilizing near 4.7 to 4.9 through 2023 and into early 2024. The ratio indicates that the company generally maintains consistent efficiency in collecting receivables, though a dip in late 2022 suggests a temporary slowdown in collections.

Average Receivable Collection Period

The average receivable collection period inversely reflects the movements seen in the receivables turnover. Starting around 76-77 days in early 2020, the number of days decreased to a low of 72 days in the first quarter of 2022, corresponding to the peak in turnover ratio. Thereafter, the collection period lengthened, peaking at 82 days in the third quarter of 2022, indicating a slower collection cycle. From late 2022 onward, the period shows some improvement, reducing to the mid-70 days range by 2024. This suggests the company has been able to improve its collection efficiency after experiencing a temporary extension in receivable days.

Summary

Overall, the data indicates a generally stable and effective receivable management process with minor cyclical variations. A noticeable dip in turnover and extension in collection days during 2022 reflects some operational challenges or changes in customer payment behavior during that period. However, the subsequent recovery to near prior levels suggests successful remedial actions or normalization of conditions. The trend towards maintaining receivable turnovers around 4.8-4.9 and collection periods near 75 days in recent quarters highlights steady and consistent control over accounts receivable.

The analysis of the quarterly financial data reveals trends in the company's inventory, receivables, and overall operating cycle over the observed period.

Average Inventory Processing Period

The inventory processing period shows a general upward trajectory. Starting around 74 days in early 2021, the metric increased steadily, reaching a peak of 100 days by the end of 2023. Subsequently, a slight decline is observed, stabilizing around 98 to 99 days through 2024 and into early 2025. This suggests a lengthening in the time inventory remains held before being processed, indicating potential shifts in inventory management or supply chain performance.

Average Receivable Collection Period

The receivable collection period fluctuates moderately throughout the period. Initially near 75 to 76 days in early 2021, it peaked at 82 days in Q3 2022. Afterward, the duration exhibited a slight downward trend to around 74 days by early 2024, followed by minor variances close to this level through 2025. The volatility points to changing customer payment behaviors or credit policy adjustments but remains relatively stable overall, without significant prolonged increases.

Operating Cycle

The operating cycle, which combines inventory and receivables periods, mirrors the increasing trend seen in inventory processing time. Beginning near 150 days in early 2021, it escalated to a high of approximately 177 days in Q1 2023. Following this peak, the operating cycle experienced a modest reduction with values oscillating in the mid-170 day range up to early 2025. The lengthening cycle length suggests a slower overall turnaround from inventory acquisition to cash collection, which may impact working capital requirements.

In summary, the data indicates a tendency toward longer inventory holding periods and an overall extended operating cycle during the period. The receivables collection period showed less pronounced but somewhat irregular movements. The observed patterns may reflect changes in operational efficiency, supply chain factors, or credit management policies affecting the company's cash flow dynamics.

Payables Turnover

The payables turnover ratio, available from the period ending March 31, 2020, to March 31, 2025, shows a relatively stable trend with minor fluctuations. Starting at 3.86 in the early quarters of 2020 and 2021, the ratio dipped slightly to a low of 3.36 by the end of 2023. Following this, a gradual recovery is observed, with the ratio reaching up to 3.61 by the first quarter of 2025. This indicates a consistent efficiency in the company's management of payables, with occasional variations suggesting adjustments in payment strategies or supplier terms.

Average Payables Payment Period

The average payables payment period in days demonstrates a gradual increase from 95 days in early 2020 to a peak of 109 days in the fourth quarter of 2023. This increase reflects a lengthening of the time taken to settle payables. After reaching this peak, the payment period declines somewhat but remains elevated compared to the initial periods, fluctuating around 101 to 105 days. This pattern may imply a strategic extension of payment terms or a shift in cash flow management, possibly to optimize working capital.

Overall Analysis

The opposing trends observed between the payables turnover ratio and the average payment period are consistent with each other, as a lower turnover ratio corresponds with a longer average payment period. The gradual lengthening of the payment period suggests a deliberate approach to managing payables, potentially to improve liquidity. However, the relative stability of both metrics over the analyzed time frame indicates controlled management without significant volatility in payment practices. The slight recovery in payables turnover ratio towards the end of the period may indicate a normalization or tightening of payment terms in response to market conditions or internal policy changes.

Average Inventory Processing Period

The average inventory processing period demonstrates a consistent upward trend over the examined quarters. Starting at 74 days in March 2021, it generally increases each period, reaching a peak of 100 days in December 2023. In the following quarters, it stabilizes slightly around 98 to 99 days through March 2025. This indicates that the company is taking progressively longer to process inventory, potentially reflecting changes in inventory management, supply chain factors, or product mix.

Average Receivable Collection Period

The average receivable collection period shows a relatively stable pattern with minor fluctuations. Beginning at 76 days in March 2021, it fluctuates in the mid-70s to low 80s range throughout the period. There is no clear long-term trend toward increase or decrease; the collection period hovers mostly between 72 and 81 days. This suggests consistent credit and collection policies with minor variations potentially linked to customer payment behavior or credit terms.

Average Payables Payment Period

The average payables payment period exhibits minor variability but remains broadly stable with a moderate upward tendency. From 95 days in March 2021, it fluctuates around the 95 to 105-day range, hitting 109 days in December 2023, the highest point observed. There is no abrupt volatility, indicating relatively steady payment practices, though a slight lengthening of payment terms can be inferred toward the later periods.

Cash Conversion Cycle

The cash conversion cycle initially decreases slightly, maintaining around 53 to 55 days in the earlier quarters noted, but then demonstrates an upward trend, rising to 75 days by March 2025. The cycle shows peaks around 71 to 74 days in multiple quarters, signaling a lengthening timeframe in converting resources into cash flow. This increase is consistent with the longer average inventory and payables periods, suggesting that working capital management may have become less efficient over time.