Analysis of Short-term (Operating) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Short-term Activity Ratios (Summary)
Illinois Tool Works Inc., short-term (operating) activity ratios
Based on: 10-K (filing date: 2021-02-12), 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10).
| Short-term activity ratio | Description | The company |
|---|---|---|
| Inventory turnover | An activity ratio calculated as cost of goods sold divided by inventory. | Illinois Tool Works Inc.’s inventory turnover ratio improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020. |
| Receivables turnover | An activity ratio equal to revenue divided by receivables. | Illinois Tool Works Inc.’s receivables turnover ratio improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020. |
| Payables turnover | An activity ratio calculated as cost of goods sold divided by payables. | Illinois Tool Works Inc.’s payables turnover ratio increased from 2018 to 2019 but then decreased significantly from 2019 to 2020. |
| Working capital turnover | An activity ratio calculated as revenue divided by working capital. | Illinois Tool Works Inc.’s working capital turnover ratio deteriorated from 2018 to 2019 and from 2019 to 2020. |
| Short-term activity ratio | Description | The company |
|---|---|---|
| Average inventory processing period | An activity ratio equal to the number of days in the period divided by inventory turnover over the period. | Illinois Tool Works Inc.’s number of days of inventory outstanding improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020. |
| Average receivable collection period | An activity ratio equal to the number of days in the period divided by receivables turnover. | Illinois Tool Works Inc.’s number of days of receivables outstanding improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020. |
| Operating cycle | Equal to average inventory processing period plus average receivables collection period. | Illinois Tool Works Inc.’s operating cycle improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020. |
| Average payables payment period | An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. | Illinois Tool Works Inc.’s number of days of payables outstanding decreased from 2018 to 2019 but then increased from 2019 to 2020 exceeding 2018 level. |
| Cash conversion cycle | A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. | Illinois Tool Works Inc.’s cash conversion cycle improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020. |
Inventory Turnover
Illinois Tool Works Inc., inventory turnover calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cost of revenue | 7,375 | 8,187 | 8,604 | 8,309 | 7,896 | |
| Inventories | 1,189 | 1,164 | 1,318 | 1,220 | 1,076 | |
| Short-term Activity Ratio | ||||||
| Inventory turnover1 | 6.20 | 7.03 | 6.53 | 6.81 | 7.34 | |
| Benchmarks | ||||||
| Inventory Turnover, Competitors2 | ||||||
| 3M Co. | 3.92 | 4.15 | 3.82 | 3.97 | 4.44 | |
| Boeing Co. | 0.78 | 0.94 | 1.30 | 1.71 | 1.87 | |
| Caterpillar Inc. | 2.55 | 3.25 | 3.21 | 3.10 | 3.29 | |
| General Electric Co. | 3.80 | 4.74 | 4.81 | 4.19 | 3.91 | |
| Honeywell International Inc. | 4.94 | 5.51 | 6.71 | 5.98 | 6.22 | |
| Lockheed Martin Corp. | 16.01 | 14.22 | 15.51 | 10.14 | 9.03 | |
| Raytheon Technologies Corp. | 5.11 | 5.21 | 4.96 | 4.45 | 4.76 | |
| Inventory Turnover, Sector | ||||||
| Capital Goods | 2.31 | 2.64 | 3.11 | 3.39 | 3.43 | |
| Inventory Turnover, Industry | ||||||
| Industrials | 2.76 | 3.10 | 3.59 | 3.86 | 3.84 | |
Based on: 10-K (filing date: 2021-02-12), 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10).
1 2020 Calculation
Inventory turnover = Cost of revenue ÷ Inventories
= 7,375 ÷ 1,189 = 6.20
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Inventory turnover | An activity ratio calculated as cost of goods sold divided by inventory. | Illinois Tool Works Inc.’s inventory turnover ratio improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020. |
Receivables Turnover
Illinois Tool Works Inc., receivables turnover calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating revenue | 12,574 | 14,109 | 14,768 | 14,314 | 13,599 | |
| Trade receivables | 2,506 | 2,461 | 2,622 | 2,628 | 2,357 | |
| Short-term Activity Ratio | ||||||
| Receivables turnover1 | 5.02 | 5.73 | 5.63 | 5.45 | 5.77 | |
| Benchmarks | ||||||
| Receivables Turnover, Competitors2 | ||||||
| 3M Co. | 6.84 | 6.71 | 6.53 | 6.45 | 6.86 | |
| Boeing Co. | 29.75 | 23.44 | 26.07 | 8.88 | 10.71 | |
| Caterpillar Inc. | 5.33 | 5.92 | 5.89 | 5.74 | 5.98 | |
| General Electric Co. | 4.37 | 5.22 | 5.71 | 4.63 | 4.59 | |
| Honeywell International Inc. | 4.78 | 4.90 | 5.57 | 4.57 | 4.81 | |
| Lockheed Martin Corp. | 33.06 | 25.59 | 22.00 | 5.93 | 5.76 | |
| Raytheon Technologies Corp. | 6.11 | 5.70 | 4.66 | 4.75 | 4.99 | |
| Receivables Turnover, Sector | ||||||
| Capital Goods | 7.21 | 7.34 | 7.39 | 5.58 | 5.83 | |
| Receivables Turnover, Industry | ||||||
| Industrials | 7.47 | 7.67 | 7.71 | 6.21 | 6.37 | |
Based on: 10-K (filing date: 2021-02-12), 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10).
1 2020 Calculation
Receivables turnover = Operating revenue ÷ Trade receivables
= 12,574 ÷ 2,506 = 5.02
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Receivables turnover | An activity ratio equal to revenue divided by receivables. | Illinois Tool Works Inc.’s receivables turnover ratio improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020. |
Payables Turnover
Illinois Tool Works Inc., payables turnover calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cost of revenue | 7,375 | 8,187 | 8,604 | 8,309 | 7,896 | |
| Accounts payable | 534 | 472 | 524 | 590 | 511 | |
| Short-term Activity Ratio | ||||||
| Payables turnover1 | 13.81 | 17.35 | 16.42 | 14.08 | 15.45 | |
| Benchmarks | ||||||
| Payables Turnover, Competitors2 | ||||||
| 3M Co. | 6.48 | 7.69 | 7.36 | 8.23 | 8.36 | |
| Boeing Co. | 4.94 | 4.63 | 6.30 | 6.23 | 7.21 | |
| Caterpillar Inc. | 4.75 | 6.15 | 5.25 | 4.79 | 6.14 | |
| General Electric Co. | 3.67 | 4.20 | 5.40 | 6.07 | 6.06 | |
| Honeywell International Inc. | 3.86 | 4.25 | 5.18 | 4.19 | 4.77 | |
| Lockheed Martin Corp. | 64.48 | 40.16 | 19.35 | 31.02 | 25.52 | |
| Raytheon Technologies Corp. | 5.56 | 5.28 | 4.51 | 4.59 | 5.54 | |
| Payables Turnover, Sector | ||||||
| Capital Goods | 5.65 | 5.76 | 6.13 | 6.30 | 6.97 | |
| Payables Turnover, Industry | ||||||
| Industrials | 5.52 | 5.63 | 5.96 | 6.12 | 6.63 | |
Based on: 10-K (filing date: 2021-02-12), 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10).
1 2020 Calculation
Payables turnover = Cost of revenue ÷ Accounts payable
= 7,375 ÷ 534 = 13.81
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Payables turnover | An activity ratio calculated as cost of goods sold divided by payables. | Illinois Tool Works Inc.’s payables turnover ratio increased from 2018 to 2019 but then decreased significantly from 2019 to 2020. |
Working Capital Turnover
Illinois Tool Works Inc., working capital turnover calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current assets | 6,523 | 6,253 | 5,778 | 7,278 | 6,123 | |
| Less: Current liabilities | 2,589 | 2,154 | 3,542 | 3,053 | 2,760 | |
| Working capital | 3,934 | 4,099 | 2,236 | 4,225 | 3,363 | |
| Operating revenue | 12,574 | 14,109 | 14,768 | 14,314 | 13,599 | |
| Short-term Activity Ratio | ||||||
| Working capital turnover1 | 3.20 | 3.44 | 6.60 | 3.39 | 4.04 | |
| Benchmarks | ||||||
| Working Capital Turnover, Competitors2 | ||||||
| 3M Co. | 4.58 | 8.57 | 5.07 | 4.80 | 5.47 | |
| Boeing Co. | 1.69 | 15.57 | 16.21 | 10.50 | 7.66 | |
| Caterpillar Inc. | 2.84 | 4.04 | 4.99 | 4.58 | 6.13 | |
| General Electric Co. | 2.26 | 7.03 | 19.33 | 8.59 | 8.09 | |
| Honeywell International Inc. | 3.64 | 5.92 | 7.69 | 5.68 | 5.84 | |
| Lockheed Martin Corp. | 12.01 | 19.15 | 31.53 | 10.58 | 18.41 | |
| Raytheon Technologies Corp. | 7.52 | 26.47 | 16.08 | 7.07 | 8.62 | |
| Working Capital Turnover, Sector | ||||||
| Capital Goods | 3.26 | 8.69 | 11.21 | 7.13 | 7.56 | |
| Working Capital Turnover, Industry | ||||||
| Industrials | 4.62 | 10.85 | 14.26 | 9.11 | 9.48 | |
Based on: 10-K (filing date: 2021-02-12), 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10).
1 2020 Calculation
Working capital turnover = Operating revenue ÷ Working capital
= 12,574 ÷ 3,934 = 3.20
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Working capital turnover | An activity ratio calculated as revenue divided by working capital. | Illinois Tool Works Inc.’s working capital turnover ratio deteriorated from 2018 to 2019 and from 2019 to 2020. |
Average Inventory Processing Period
Illinois Tool Works Inc., average inventory processing period calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Inventory turnover | 6.20 | 7.03 | 6.53 | 6.81 | 7.34 | |
| Short-term Activity Ratio (no. days) | ||||||
| Average inventory processing period1 | 59 | 52 | 56 | 54 | 50 | |
| Benchmarks (no. days) | ||||||
| Average Inventory Processing Period, Competitors2 | ||||||
| 3M Co. | 93 | 88 | 96 | 92 | 82 | |
| Boeing Co. | 467 | 388 | 280 | 213 | 195 | |
| Caterpillar Inc. | 143 | 112 | 114 | 118 | 111 | |
| General Electric Co. | 96 | 77 | 76 | 87 | 93 | |
| Honeywell International Inc. | 74 | 66 | 54 | 61 | 59 | |
| Lockheed Martin Corp. | 23 | 26 | 24 | 36 | 40 | |
| Raytheon Technologies Corp. | 71 | 70 | 74 | 82 | 77 | |
| Average Inventory Processing Period, Sector | ||||||
| Capital Goods | 158 | 138 | 117 | 108 | 107 | |
| Average Inventory Processing Period, Industry | ||||||
| Industrials | 132 | 118 | 102 | 95 | 95 | |
Based on: 10-K (filing date: 2021-02-12), 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10).
1 2020 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 6.20 = 59
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Average inventory processing period | An activity ratio equal to the number of days in the period divided by inventory turnover over the period. | Illinois Tool Works Inc.’s number of days of inventory outstanding improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020. |
Average Receivable Collection Period
Illinois Tool Works Inc., average receivable collection period calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Receivables turnover | 5.02 | 5.73 | 5.63 | 5.45 | 5.77 | |
| Short-term Activity Ratio (no. days) | ||||||
| Average receivable collection period1 | 73 | 64 | 65 | 67 | 63 | |
| Benchmarks (no. days) | ||||||
| Average Receivable Collection Period, Competitors2 | ||||||
| 3M Co. | 53 | 54 | 56 | 57 | 53 | |
| Boeing Co. | 12 | 16 | 14 | 41 | 34 | |
| Caterpillar Inc. | 68 | 62 | 62 | 64 | 61 | |
| General Electric Co. | 83 | 70 | 64 | 79 | 80 | |
| Honeywell International Inc. | 76 | 75 | 66 | 80 | 76 | |
| Lockheed Martin Corp. | 11 | 14 | 17 | 62 | 63 | |
| Raytheon Technologies Corp. | 60 | 64 | 78 | 77 | 73 | |
| Average Receivable Collection Period, Sector | ||||||
| Capital Goods | 51 | 50 | 49 | 65 | 63 | |
| Average Receivable Collection Period, Industry | ||||||
| Industrials | 49 | 48 | 47 | 59 | 57 | |
Based on: 10-K (filing date: 2021-02-12), 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10).
1 2020 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 5.02 = 73
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Average receivable collection period | An activity ratio equal to the number of days in the period divided by receivables turnover. | Illinois Tool Works Inc.’s number of days of receivables outstanding improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020. |
Operating Cycle
Illinois Tool Works Inc., operating cycle calculation, comparison to benchmarks
No. days
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Average inventory processing period | 59 | 52 | 56 | 54 | 50 | |
| Average receivable collection period | 73 | 64 | 65 | 67 | 63 | |
| Short-term Activity Ratio | ||||||
| Operating cycle1 | 132 | 116 | 121 | 121 | 113 | |
| Benchmarks | ||||||
| Operating Cycle, Competitors2 | ||||||
| 3M Co. | 146 | 142 | 152 | 149 | 135 | |
| Boeing Co. | 479 | 404 | 294 | 254 | 229 | |
| Caterpillar Inc. | 211 | 174 | 176 | 182 | 172 | |
| General Electric Co. | 179 | 147 | 140 | 166 | 173 | |
| Honeywell International Inc. | 150 | 141 | 120 | 141 | 135 | |
| Lockheed Martin Corp. | 34 | 40 | 41 | 98 | 103 | |
| Raytheon Technologies Corp. | 131 | 134 | 152 | 159 | 150 | |
| Operating Cycle, Sector | ||||||
| Capital Goods | 209 | 188 | 166 | 173 | 170 | |
| Operating Cycle, Industry | ||||||
| Industrials | 181 | 166 | 149 | 154 | 152 | |
Based on: 10-K (filing date: 2021-02-12), 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10).
1 2020 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= 59 + 73 = 132
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Operating cycle | Equal to average inventory processing period plus average receivables collection period. | Illinois Tool Works Inc.’s operating cycle improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020. |
Average Payables Payment Period
Illinois Tool Works Inc., average payables payment period calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Payables turnover | 13.81 | 17.35 | 16.42 | 14.08 | 15.45 | |
| Short-term Activity Ratio (no. days) | ||||||
| Average payables payment period1 | 26 | 21 | 22 | 26 | 24 | |
| Benchmarks (no. days) | ||||||
| Average Payables Payment Period, Competitors2 | ||||||
| 3M Co. | 56 | 47 | 50 | 44 | 44 | |
| Boeing Co. | 74 | 79 | 58 | 59 | 51 | |
| Caterpillar Inc. | 77 | 59 | 70 | 76 | 59 | |
| General Electric Co. | 100 | 87 | 68 | 60 | 60 | |
| Honeywell International Inc. | 95 | 86 | 70 | 87 | 76 | |
| Lockheed Martin Corp. | 6 | 9 | 19 | 12 | 14 | |
| Raytheon Technologies Corp. | 66 | 69 | 81 | 80 | 66 | |
| Average Payables Payment Period, Sector | ||||||
| Capital Goods | 65 | 63 | 60 | 58 | 52 | |
| Average Payables Payment Period, Industry | ||||||
| Industrials | 66 | 65 | 61 | 60 | 55 | |
Based on: 10-K (filing date: 2021-02-12), 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10).
1 2020 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 13.81 = 26
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Average payables payment period | An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. | Illinois Tool Works Inc.’s number of days of payables outstanding decreased from 2018 to 2019 but then increased from 2019 to 2020 exceeding 2018 level. |
Cash Conversion Cycle
Illinois Tool Works Inc., cash conversion cycle calculation, comparison to benchmarks
No. days
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Average inventory processing period | 59 | 52 | 56 | 54 | 50 | |
| Average receivable collection period | 73 | 64 | 65 | 67 | 63 | |
| Average payables payment period | 26 | 21 | 22 | 26 | 24 | |
| Short-term Activity Ratio | ||||||
| Cash conversion cycle1 | 106 | 95 | 99 | 95 | 89 | |
| Benchmarks | ||||||
| Cash Conversion Cycle, Competitors2 | ||||||
| 3M Co. | 90 | 95 | 102 | 105 | 91 | |
| Boeing Co. | 405 | 325 | 236 | 195 | 178 | |
| Caterpillar Inc. | 134 | 115 | 106 | 106 | 113 | |
| General Electric Co. | 79 | 60 | 72 | 106 | 113 | |
| Honeywell International Inc. | 55 | 55 | 50 | 54 | 59 | |
| Lockheed Martin Corp. | 28 | 31 | 22 | 86 | 89 | |
| Raytheon Technologies Corp. | 65 | 65 | 71 | 79 | 84 | |
| Cash Conversion Cycle, Sector | ||||||
| Capital Goods | 144 | 125 | 106 | 115 | 118 | |
| Cash Conversion Cycle, Industry | ||||||
| Industrials | 115 | 101 | 88 | 94 | 97 | |
Based on: 10-K (filing date: 2021-02-12), 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10).
1 2020 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 59 + 73 – 26 = 106
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Cash conversion cycle | A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. | Illinois Tool Works Inc.’s cash conversion cycle improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020. |