Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
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Short-term Activity Ratios (Summary)
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
The analysis of the financial ratios over the five-year period reveals several trends in operational efficiency and working capital management.
- Inventory Turnover
- Inventory turnover exhibits slight fluctuations, peaking at 5.12 in 2019, then declining to 4.6 in 2021 before a modest recovery to 4.69 in 2022. This suggests minor variability in inventory management efficiency, with a somewhat slower inventory movement in the latter years compared to the earlier periods.
- Receivables Turnover
- Receivables turnover improved from 6.18 in 2018 to 6.72 in 2019, dropped slightly in 2020 to 6.6, declined further in 2021 to 6.21, but rebounded to 6.67 in 2022. The pattern indicates overall stable and relatively efficient collection processes, with a brief dip in 2021.
- Payables Turnover
- There is notable volatility in payables turnover, which rose sharply from 8.08 in 2018 to 9.31 in 2019, then decreased considerably to 7.87 in 2020, and dropped further to its lowest point of 5.71 in 2021 before partial recovery to 6.56 in 2022. This decline may reflect extended payment terms or slower payment cycles during the later years, impacting supplier relationship dynamics.
- Working Capital Turnover
- Working capital turnover shows a generally declining trend following a peak of 6.55 in 2020. It decreased to 5.15 in 2021 and slightly improved to 5.3 in 2022, indicating a reduction in the efficiency of using working capital to generate sales over this period.
- Average Inventory Processing Period
- The number of days for inventory processing decreased from 75 in 2018 to 71 in 2019, then increased progressively to 79 days in 2021, slightly reducing to 78 days in 2022. This suggests that inventory remains on hand longer over recent years, correlating with the decreased inventory turnover.
- Average Receivable Collection Period
- The collection period shortened from 59 days in 2018 to 54 days in 2019, increased slightly to 55 days in 2020, peaked again at 59 days in 2021, and finally improved to 55 days in 2022. These fluctuations reveal varying effectiveness in credit and collection policies, with some increases in outstanding receivables duration in certain years.
- Operating Cycle
- The operating cycle shortened from 134 days in 2018 to 125 days in 2019, then rose to 138 days by 2021, slightly improving to 133 days in 2022. This reflects a general trend of longer cycles in recent years, influenced by the changes in inventory and receivable periods, potentially tying up capital for extended periods.
- Average Payables Payment Period
- The payment period to suppliers decreased from 45 days in 2018 to 39 days in 2019, then extended to 46 days in 2020 and significantly increased to 64 days in 2021 before reducing to 56 days in 2022. This pattern indicates a strategic extension of payables in 2021 and 2022, possibly as part of cash flow management efforts.
- Cash Conversion Cycle
- The cash conversion cycle improved steadily from 89 days in 2018 to 74 days in 2021, with a slight increase to 77 days in 2022. Overall, the company demonstrated enhanced cash efficiency by reducing the duration between cash outflows and inflows, despite a modest setback in the most recent year.
In summary, the data reflects a company that has generally maintained stable receivables management while experiencing some challenges with inventory turnover and payables management. The extension in payables payment periods and the reduction in cash conversion cycle through most years suggest an emphasis on managing liquidity. However, the longer operating cycle and inventory periods in recent years imply a need for continued focus on working capital optimization.
Turnover Ratios
Average No. Days
Inventory Turnover
Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in thousands) | ||||||
Cost of goods sold | ||||||
Inventories, net | ||||||
Short-term Activity Ratio | ||||||
Inventory turnover1 | ||||||
Benchmarks | ||||||
Inventory Turnover, Competitors2 | ||||||
Boeing Co. | ||||||
Caterpillar Inc. | ||||||
Eaton Corp. plc | ||||||
GE Aerospace | ||||||
Honeywell International Inc. | ||||||
Lockheed Martin Corp. | ||||||
RTX Corp. | ||||||
Inventory Turnover, Sector | ||||||
Capital Goods | ||||||
Inventory Turnover, Industry | ||||||
Industrials |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Inventory turnover = Cost of goods sold ÷ Inventories, net
= ÷ =
2 Click competitor name to see calculations.
The financial data over the five-year period ending in 2022 reveals several notable trends in the cost of goods sold, inventories, and inventory turnover ratio.
- Cost of Goods Sold (COGS)
- The cost of goods sold exhibits a fluctuating yet generally upward trend. Starting at 3,181,300 thousand USD in 2018, there was a slight increase in 2019 to 3,238,300 thousand USD, followed by a decline in 2020 to 2,976,700 thousand USD. However, from 2020 onwards, COGS increased steadily, reaching 3,476,300 thousand USD in 2022, which is the highest value in the period analyzed. This upward trajectory in recent years may suggest rising production costs or increased sales volume.
- Inventories, Net
- Inventories have shown a variable but overall increasing pattern. The inventory level started at 651,000 thousand USD in 2018 and slightly decreased in the subsequent two years to 607,300 thousand USD in 2020. From 2020 onward, inventories increased noticeably to 740,700 thousand USD in 2022. This rise could indicate stock accumulation possibly due to anticipated demand increases or slower inventory turnover.
- Inventory Turnover Ratio
- The inventory turnover ratio, measuring how efficiently inventory is managed relative to cost of goods sold, displayed modest fluctuations. It increased from 4.89 in 2018 to a peak of 5.12 in 2019, suggesting more efficient inventory management during that year. However, a decline followed, dipping to 4.6 in 2021 before a slight recovery to 4.69 in 2022. The general downward trend after 2019 indicates slightly less efficient inventory utilization despite rising inventory levels, which may raise concerns about inventory management or demand forecasting accuracy.
In summary, while the cost of goods sold and inventories have increased over the period, the inventory turnover ratio has experienced some decline after 2019, signaling potential concerns in inventory efficiency that may warrant management attention.
Receivables Turnover
Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in thousands) | ||||||
Net sales | ||||||
Accounts receivable, net of allowances | ||||||
Short-term Activity Ratio | ||||||
Receivables turnover1 | ||||||
Benchmarks | ||||||
Receivables Turnover, Competitors2 | ||||||
Boeing Co. | ||||||
Caterpillar Inc. | ||||||
Eaton Corp. plc | ||||||
GE Aerospace | ||||||
Honeywell International Inc. | ||||||
Lockheed Martin Corp. | ||||||
RTX Corp. | ||||||
Receivables Turnover, Sector | ||||||
Capital Goods | ||||||
Receivables Turnover, Industry | ||||||
Industrials |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Receivables turnover = Net sales ÷ Accounts receivable, net of allowances
= ÷ =
2 Click competitor name to see calculations.
- Net Sales
- Net sales exhibited a moderate fluctuation over the five-year period. Starting at 4,481,700 thousand US dollars in 2018, sales increased slightly to 4,591,000 thousand in 2019. There was a noticeable decline in 2020 to 4,186,000 thousand, followed by stabilization in 2021 around 4,194,100 thousand. In 2022, a significant recovery occurred with net sales rising to 4,947,900 thousand, representing a strong rebound and the highest value in the observed timeframe.
- Accounts Receivable, Net of Allowances
- The net accounts receivable showed a generally decreasing trend from 725,400 thousand US dollars in 2018 to 634,700 thousand in 2020, indicating possibly more efficient collection or lower sales-related receivables in that period. In 2021, there was an uptick to 675,300 thousand, followed by a further increase to 741,600 thousand in 2022, which aligns with the rise in net sales during the latest year.
- Receivables Turnover Ratio
- The receivables turnover ratio fluctuated modestly over the period, suggesting varying efficiency in collecting receivables. The ratio increased from 6.18 in 2018 to 6.72 in 2019, indicating improved collection efficiency despite slightly higher receivables in 2018. It dipped to 6.6 in 2020 and then decreased more significantly to 6.21 in 2021, potentially reflecting slower collection or longer credit terms during the pandemic impact. However, the ratio rebounded to 6.67 in 2022, consistent with improved collection performance alongside higher sales and receivables.
- Overall Analysis
- Across the five years, the company experienced a dip in net sales and accounts receivable during 2020, likely due to external factors impacting business conditions. The subsequent years show recovery in sales and a corresponding increase in receivables. The receivables turnover ratio trends suggest variability in the company's collection efficiency, with a decline during the challenging periods and improvement as conditions normalized. The data presents a picture of resilience with recovery efforts succeeding in 2022, though accounts receivable increased alongside sales, which may warrant attention to working capital management going forward.
Payables Turnover
Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in thousands) | ||||||
Cost of goods sold | ||||||
Accounts payable | ||||||
Short-term Activity Ratio | ||||||
Payables turnover1 | ||||||
Benchmarks | ||||||
Payables Turnover, Competitors2 | ||||||
Boeing Co. | ||||||
Caterpillar Inc. | ||||||
Eaton Corp. plc | ||||||
GE Aerospace | ||||||
Honeywell International Inc. | ||||||
Lockheed Martin Corp. | ||||||
RTX Corp. | ||||||
Payables Turnover, Sector | ||||||
Capital Goods | ||||||
Payables Turnover, Industry | ||||||
Industrials |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Payables turnover = Cost of goods sold ÷ Accounts payable
= ÷ =
2 Click competitor name to see calculations.
The financial data indicates several noteworthy trends in the cost of goods sold, accounts payable, and payables turnover ratio over the five-year period ending in 2022.
- Cost of goods sold
- The cost of goods sold showed a fluctuating trend, beginning at approximately $3.18 billion in 2018, slightly increasing in 2019, then declining in 2020 to below the 2018 level. It increased modestly in 2021 before rising significantly in 2022, reaching about $3.48 billion. This suggests variability likely influenced by operational or market factors with a notable cost increase in the latest year.
- Accounts payable
- Accounts payable decreased from $393.7 million in 2018 to $347.7 million in 2019, before experiencing an upward movement to $378 million in 2020. A substantial increase occurred in 2021 to $532.8 million, maintaining a similar high level in 2022 at approximately $529.9 million. The significant rise in payables in the later years may reflect changes in credit terms or supplier dynamics.
- Payables turnover ratio
- The payables turnover ratio, which measures how often the company pays off its suppliers, started at 8.08 in 2018, peaked at 9.31 in 2019, and then declined sharply to 7.87 in 2020. It further decreased markedly to 5.71 in 2021, recovering slightly to 6.56 in 2022. This decline in turnover ratio suggests a lengthening in the time taken to settle accounts payable, indicating potential shifts in working capital management or supplier payment practices.
Overall, the data depict a scenario of increased cost of goods sold accompanied by higher accounts payable balances in recent years, while the efficiency in paying suppliers has declined after 2019, reflecting possible strategic or operational adjustments in the company’s financial management.
Working Capital Turnover
Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in thousands) | ||||||
Current assets | ||||||
Less: Current liabilities | ||||||
Working capital | ||||||
Net sales | ||||||
Short-term Activity Ratio | ||||||
Working capital turnover1 | ||||||
Benchmarks | ||||||
Working Capital Turnover, Competitors2 | ||||||
Boeing Co. | ||||||
Caterpillar Inc. | ||||||
Eaton Corp. plc | ||||||
GE Aerospace | ||||||
Honeywell International Inc. | ||||||
Lockheed Martin Corp. | ||||||
RTX Corp. | ||||||
Working Capital Turnover, Sector | ||||||
Capital Goods | ||||||
Working Capital Turnover, Industry | ||||||
Industrials |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Working capital turnover = Net sales ÷ Working capital
= ÷ =
2 Click competitor name to see calculations.
- Working Capital
- The working capital exhibited a fluctuating trend over the five-year period. It decreased from $804,400 thousand in 2018 to $639,400 thousand in 2020, reflecting a contraction in short-term liquidity during this span. However, from 2020 onwards, there was a steady recovery, reaching $932,900 thousand by the end of 2022, surpassing the initial level observed in 2018.
- Net Sales
- Net sales showed a general upward movement despite a setback in 2020. Starting at $4,481,700 thousand in 2018, sales increased modestly to $4,591,000 thousand in 2019, then declined noticeably to $4,186,000 thousand in 2020, likely impacted by external economic conditions. Following this dip, sales stabilized in 2021 and experienced a significant rise in 2022, reaching $4,947,900 thousand, the highest in the period analyzed.
- Working Capital Turnover
- The working capital turnover ratio increased from 5.57 in 2018 to a peak of 6.55 in 2020, indicating higher efficiency in using working capital to generate sales during that time frame. Post-2020, the ratio declined to 5.15 in 2021 and slightly improved to 5.3 in 2022, suggesting a reduction in turnover efficiency relative to the peak but still remaining within a moderate efficiency range.
Average Inventory Processing Period
Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Inventory turnover | ||||||
Short-term Activity Ratio (no. days) | ||||||
Average inventory processing period1 | ||||||
Benchmarks (no. days) | ||||||
Average Inventory Processing Period, Competitors2 | ||||||
Boeing Co. | ||||||
Caterpillar Inc. | ||||||
Eaton Corp. plc | ||||||
GE Aerospace | ||||||
Honeywell International Inc. | ||||||
Lockheed Martin Corp. | ||||||
RTX Corp. | ||||||
Average Inventory Processing Period, Sector | ||||||
Capital Goods | ||||||
Average Inventory Processing Period, Industry | ||||||
Industrials |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ =
2 Click competitor name to see calculations.
- Inventory Turnover
- The inventory turnover ratio exhibits a slight fluctuation over the observed five-year period. It increased from 4.89 in 2018 to a peak of 5.12 in 2019, indicating more efficient inventory management during that year. However, following 2019, there was a gradual decline to 4.9 in 2020 and further to 4.6 in 2021, before a modest recovery to 4.69 in 2022. This trend suggests a mild decrease in inventory turnover efficiency after 2019, despite some improvement in the final year.
- Average Inventory Processing Period
- The average inventory processing period inversely correlates with inventory turnover, showing an initial improvement with a reduction from 75 days in 2018 to 71 days in 2019. Subsequent years show a lengthening of this period, increasing to 74 days in 2020 and reaching 79 days in 2021, which can be interpreted as slower inventory movement or longer holding periods. In 2022, there is a slight decrease to 78 days but the period remains notably higher than the levels observed in 2018 and 2019.
- Overall Insight
- The data indicate that the company maintained relatively stable inventory management in the earlier years, with optimal efficiency around 2019. Post-2019, there is a discernible decline in how quickly inventory is cycled through, as evidenced by both the lower turnover ratios and extended processing periods. This could reflect challenges in sales, supply chain issues, or strategic inventory policy adjustments. The slight improvements in 2022 suggest initial steps toward reversing these trends, though inventory efficiency has yet to return to prior peak levels.
Average Receivable Collection Period
Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Receivables turnover | ||||||
Short-term Activity Ratio (no. days) | ||||||
Average receivable collection period1 | ||||||
Benchmarks (no. days) | ||||||
Average Receivable Collection Period, Competitors2 | ||||||
Boeing Co. | ||||||
Caterpillar Inc. | ||||||
Eaton Corp. plc | ||||||
GE Aerospace | ||||||
Honeywell International Inc. | ||||||
Lockheed Martin Corp. | ||||||
RTX Corp. | ||||||
Average Receivable Collection Period, Sector | ||||||
Capital Goods | ||||||
Average Receivable Collection Period, Industry | ||||||
Industrials |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
- Receivables Turnover
- The receivables turnover ratio exhibits moderate fluctuations over the five-year span. Beginning at 6.18 in 2018, it increased to 6.72 in 2019, followed by a slight decrease to 6.6 in 2020. In 2021, the ratio declined further to 6.21, before rising again to 6.67 in 2022. Overall, the ratio demonstrates a pattern of cyclical movement, reflecting some variability in the frequency of receivables collection during the period.
- Average Receivable Collection Period
- The average receivable collection period, expressed in number of days, mirrors the inversely related trend to receivables turnover. Starting at 59 days in 2018, it decreased to 54 days in 2019, indicating a quicker collection of receivables. This was followed by a slight increase to 55 days in 2020 and a return to 59 days in 2021, before decreasing again to 55 days in 2022. This suggests fluctuations in the efficiency of receivables management, with shorter periods generally noted in 2019 and 2022.
- Overall Interpretation
- The trends indicate a general oscillation in the efficiency of receivables management, with no clear directional improvement or deterioration over the period. The inverse relation between the receivables turnover ratio and the average collection period is evident and aligns with expected financial behavior. The company experienced the most efficient receivables collection in 2019 and 2022, as indicated by higher turnover ratios and lower average collection days, whereas 2018 and 2021 showed comparatively less efficiency. These patterns suggest the company’s collection practices and customer payment behaviors experienced some variability but remained relatively stable overall.
Operating Cycle
Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Average inventory processing period | ||||||
Average receivable collection period | ||||||
Short-term Activity Ratio | ||||||
Operating cycle1 | ||||||
Benchmarks | ||||||
Operating Cycle, Competitors2 | ||||||
Boeing Co. | ||||||
Caterpillar Inc. | ||||||
Eaton Corp. plc | ||||||
GE Aerospace | ||||||
Honeywell International Inc. | ||||||
Lockheed Martin Corp. | ||||||
RTX Corp. | ||||||
Operating Cycle, Sector | ||||||
Capital Goods | ||||||
Operating Cycle, Industry | ||||||
Industrials |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= + =
2 Click competitor name to see calculations.
The financial data reveals specific trends related to inventory management, receivable collections, and the overall operating cycle over the five-year period ending December 31, 2022.
- Average Inventory Processing Period
- The average inventory processing period showed some fluctuations, starting at 75 days in 2018 and dipping to 71 days in 2019. It then increased to 74 days in 2020 and continued to rise, peaking at 79 days in 2021 before slightly decreasing to 78 days in 2022. This pattern indicates a generally upward trend in the time inventory remains in processing, suggesting a marginal slowdown in inventory turnover in recent years.
- Average Receivable Collection Period
- The average receivable collection period exhibited modest variation, initially decreasing from 59 days in 2018 to 54 days in 2019. It rose slightly to 55 days in 2020, returned to 59 days in 2021, and declined again to 55 days in 2022. These fluctuations imply relative stability with minor volatility in the speed of receivables collection, without a clear long-term trend either upward or downward.
- Operating Cycle
- The operating cycle reflects the combined effect of inventory processing and receivable collection periods. It decreased from 134 days in 2018 to 125 days in 2019, before increasing again to 129 days in 2020. It further increased to a peak of 138 days in 2021 and then reduced somewhat to 133 days in 2022. This pattern aligns with the observed trends in inventory and receivables, showing a generally stable but slightly lengthening operating cycle over the years, with some short-term fluctuations.
Overall, the data indicates that the company experienced a slight increase in the time taken to process inventory and a somewhat stable receivable collection period, resulting in a marginally longer operating cycle toward the most recent years analyzed. These trends could suggest areas for potential operational efficiency improvements to reduce inventory holding times and optimize cash flow timing.
Average Payables Payment Period
Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Payables turnover | ||||||
Short-term Activity Ratio (no. days) | ||||||
Average payables payment period1 | ||||||
Benchmarks (no. days) | ||||||
Average Payables Payment Period, Competitors2 | ||||||
Boeing Co. | ||||||
Caterpillar Inc. | ||||||
Eaton Corp. plc | ||||||
GE Aerospace | ||||||
Honeywell International Inc. | ||||||
Lockheed Martin Corp. | ||||||
RTX Corp. | ||||||
Average Payables Payment Period, Sector | ||||||
Capital Goods | ||||||
Average Payables Payment Period, Industry | ||||||
Industrials |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
- Payables Turnover
- The payables turnover ratio exhibits variability over the five-year period. It rose from 8.08 in 2018 to a peak of 9.31 in 2019, indicating a faster rate of paying suppliers during that year. However, the ratio declined sharply to 7.87 in 2020 and continued a downward trend to 5.71 by 2021 before a slight recovery to 6.56 in 2022. This pattern suggests a general slowing in the frequency of payment to creditors after 2019, potentially reflecting changes in payment policies or cash management strategies.
- Average Payables Payment Period
- The number of days taken on average to pay payables shows an inverse trend relative to the payables turnover ratio. The period decreased from 45 days in 2018 to 39 days in 2019, reflecting quicker payments consistent with the higher payables turnover ratio that year. Subsequently, the payment period lengthened substantially to 46 days in 2020 and further to 64 days in 2021, indicating slower payment processing. In 2022, the payment period shortened moderately to 56 days but remained elevated compared to the initial years.
- Summary of Trends
- Overall, the data reveal an initial improvement in payment efficiency up to 2019, followed by a period of decreased payment velocity characterized by lower payables turnover and longer payment durations through 2021. The partial rebound in 2022 suggests some recovery in payment practices but not to the prior levels. These trends might indicate a strategic shift towards longer payment schedules, possibly aimed at optimizing working capital, or could reflect external pressures affecting cash flow management.
Cash Conversion Cycle
Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Average inventory processing period | ||||||
Average receivable collection period | ||||||
Average payables payment period | ||||||
Short-term Activity Ratio | ||||||
Cash conversion cycle1 | ||||||
Benchmarks | ||||||
Cash Conversion Cycle, Competitors2 | ||||||
Boeing Co. | ||||||
Caterpillar Inc. | ||||||
Eaton Corp. plc | ||||||
GE Aerospace | ||||||
Honeywell International Inc. | ||||||
Lockheed Martin Corp. | ||||||
RTX Corp. | ||||||
Cash Conversion Cycle, Sector | ||||||
Capital Goods | ||||||
Cash Conversion Cycle, Industry | ||||||
Industrials |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= + – =
2 Click competitor name to see calculations.
- Inventory Processing Period
- The average inventory processing period fluctuated over the analyzed years. It decreased from 75 days in 2018 to 71 days in 2019, indicating improved inventory turnover. However, it increased again to 74 days in 2020, and further rose to 79 days in 2021 before slightly declining to 78 days in 2022. Overall, there is a tendency toward a longer inventory holding period in recent years compared to 2019.
- Receivable Collection Period
- The average receivable collection period generally remained stable, ranging between 54 and 59 days. It decreased from 59 days in 2018 to 54 days in 2019, then slightly increased to 55 days in 2020. In 2021, the period returned to 59 days before improving to 55 days in 2022. This indicates a relatively consistent speed of receivables collection, with minor year-to-year variations.
- Payables Payment Period
- The average payables payment period showed notable variability across the years. Starting at 45 days in 2018, it decreased to 39 days in 2019, suggesting quicker payments to suppliers. The period then increased significantly to 46 days in 2020, followed by a sharp rise to 64 days in 2021, before decreasing to 56 days in 2022. This pattern indicates changes in payment strategies or cash management policies, with an emphasis on extending payment terms notably in 2021.
- Cash Conversion Cycle
- The cash conversion cycle exhibited a downward trend from 89 days in 2018 to 74 days in 2021, implying improved operational efficiency in converting investments in inventory and other resources into cash flows. However, there was a slight increase to 77 days in 2022. Despite this small rise, the overall trend over the five-year period points to better working capital management, reducing the time to convert net working capital into cash.