Lockheed Martin Corp. (NYSE:LMT)

The analysis of the provided financial ratios over multiple quarters reveals several notable trends in operational efficiency and liquidity management.

Inventory Turnover

The inventory turnover ratio demonstrates a generally strong and improving trend from 16.01 to a peak of 20.21, indicating enhanced efficiency in managing inventory. Although minor fluctuations occur, the ratio remains robust, signaling effective inventory management over the periods.

Receivables Turnover

Receivables turnover shows significant variability, with initial values around 33.06 dropping to a low of 18.87 before recovering to values above 30. This fluctuation suggests varying efficiency in collecting accounts receivable, with periods of slower collection offset by improved performance in subsequent quarters.

Payables Turnover

Payables turnover exhibits wide fluctuations, sharply decreasing from 64.48 to values around 15.51–28.85 across several quarters. This variability indicates inconsistency in payment timing to suppliers, with some quarters showing extended payment periods and others faster payments.

Working Capital Turnover

The working capital turnover ratio fluctuates moderately within the range of approximately 10.48 to 44.49, with some notable spikes in certain quarters. This suggests fluctuating efficiency in utilizing working capital to generate revenue, with periods of both higher and lower turnover rates.

Average Inventory Processing Period

The average inventory processing period remains relatively stable between 18 and 23 days, demonstrating consistent inventory handling and turnover duration across the periods examined.

Average Receivable Collection Period

The average time to collect receivables tends to vary between 10 and 19 days, with occasional peaks indicating longer collection periods. These variations align with the fluctuations observed in receivables turnover, underscoring periods of slower receivables collection.

Operating Cycle

The operating cycle fluctuates between 30 and 42 days, reflecting variability in the combined inventory processing and receivables collection periods. A shorter operating cycle typically suggests more efficient operations, with periods showing improvement and others indicating slight lengthening.

Average Payables Payment Period

The average payables payment period ranges broadly from 5 to 24 days, indicating fluctuating creditor payment practices. Variability in this metric affects the cash conversion cycle and reflects strategic or operational decisions regarding payment timing.

Cash Conversion Cycle

The cash conversion cycle generally falls between 8 and 28 days, with notable fluctuations. The improvements in certain quarters to lower values point to more efficient management of receivables, inventory, and payables, thereby accelerating cash flow conversion.

Overall, the financial ratios portray a company actively managing inventory turnover efficiently, while receivables and payables metrics exhibit higher volatility, suggesting periodic shifts in credit and collection policies. Working capital utilization and the cash conversion cycle show responsiveness to operational changes, reflecting adaptive financial management practices throughout the periods observed.

The analysis of the quarterly financial data reveals several key trends and patterns in the company's operating costs, inventories, and inventory turnover ratios over the periods from March 2020 through June 2025.

Operating Costs and Expenses

The operating costs and expenses exhibit noticeable fluctuations over the analyzed quarters. Initially, from March 2020 to December 2020, there is a steady increase from $13,560 million to $14,818 million, reflecting rising expenditure. The first half of 2021 shows variation with a slight decrease in Q1 2021 ($14,072 million) followed by an increase in Q2 2021 ($14,878 million), but then the costs drop again in Q3 2021 to $13,726 million before rising significantly at the end of 2021 ($15,307 million). Starting in early 2022, a sharp increase is observed, peaking at $16,689 million in December 2022. This elevated level is maintained through 2023, with some oscillations, culminating in a peak of $17,932 million in Q4 2024. The data suggests an upward pressure on operating expenses over time, with intermittent volatility possibly influenced by operational scale, inflation, or other external factors.

Inventories

Inventory values show a generally stable trend with some variability. Between March 2020 and December 2020, inventories decline slightly from $3,539 million to $3,545 million, maintaining a relatively consistent level. Through 2021, there is a gradual decline, reaching a low of $2,903 million in September 2021, followed by a moderate increase toward the year's end. In 2022 and beyond, inventories demonstrate a cyclical pattern, fluctuating between approximately $3,088 million and $3,474 million. Notably, a progressive rise is visible towards 2025, reaching $3,699 million by June 2025. This incremental inventory build-up may indicate strategic stockpiling, changes in supply chain dynamics, or anticipated demand growth.

Inventory Turnover Ratio

The inventory turnover ratio, available from December 2020 onwards, presents a pattern of consistent improvement with fluctuations. Starting at 16.01 in December 2020, the ratio increases steadily to peak at 19.81 in December 2021, indicating more efficient inventory management or faster inventory cycles during this period. In 2022 and 2023, the ratio oscillates between approximately 16.2 and 18.68, with modest declines and recoveries reflecting variable turnover efficiency. From 2024, a generally elevated turnover is maintained, fluctuating near 18 to 20, suggesting sustained effectiveness in inventory utilization. The highest turnover ratio is observed in September 2024 at 20.21, which points towards improved operational efficiency or better sales performance relative to inventory holdings during that quarter.

In summary, operating costs have trended upwards with notable volatility, inventories have remained relatively stable with a slight upward trend near the end of the period, and inventory turnover ratios have improved overall, indicating enhanced inventory management practices. These patterns may reflect underlying changes in business operations, market conditions, or strategic decisions impacting cost structure and asset utilization.

The sales figures demonstrate a fluctuating yet generally upward trend over the observed quarterly periods. Notably, sales peaked at several points, such as in December 2020 and December 2022, followed by mild corrections in subsequent quarters. Starting from a base of 15,651 million US dollars in March 2020, the figures experienced multiple increases and decreases, reaching a high of 18,991 million US dollars in December 2022, and maintaining elevated levels into 2024 and 2025 with figures consistently above 17,000 million US dollars.

Net receivables exhibit significant variability over the same timeline. Beginning at 2,892 million US dollars in March 2020, receivables generally oscillate with no consistent upward or downward trajectory but instead with marked fluctuations. There are periods of increase such as in June 2022 (3,401 million US dollars) and June 2023 (3,427 million US dollars), contrasted by several quarters with notably lower balances, including December 2021 and December 2023. This volatility may indicate changes in credit terms, collection efficiency, or billing cycles impacting receivables levels.

The receivables turnover ratio, provided for part of the period, shows a range between approximately 18.87 and 35.48. Higher turnover ratios correspond with more efficient collection of receivables, and these ratios appear to fluctuate substantially quarter to quarter. For instance, a notable dip to 18.87 was observed in June 2022, followed by recovery to 26.06 in September 2022 and peaks above 30 in several quarters thereafter. These variations suggest inconsistencies in receivables management or differences in sales mix and credit terms across periods.

Collectively, the data indicates that while sales have generally trended upward with some seasonality, receivables and their turnover show more volatility, implying fluctuations in cash conversion cycles. The variability in receivables turnover ratios emphasizes the need to monitor credit policies and collection processes to optimize working capital efficiency.

Sales Trends

Exhibit overall growth with peaks in December quarters and temporary declines thereafter.

Receivables, net

Demonstrate inconsistent levels with periodic spikes and troughs, lacking a stable directional trend.

Receivables Turnover Ratio

Varies considerably, reflecting fluctuating efficiency in receivables collection over different quarters.

Operational Implications

Indicates potential opportunities to improve receivables management to support cash flow amid growing sales.

The analysis of the quarterly financial data reveals several patterns and fluctuations in operating costs, accounts payable, and payables turnover ratios over the observed periods.

Operating Costs and Expenses (US$ in millions)

Operating costs and expenses show a fluctuating trend with distinct periods of increase and decrease. Starting from approximately 13,560 million, the values generally rise, peaking at 17,932 million in the third quarter of 2024. Some quarters exhibit notable decreases, such as the decline between March 2020 and March 2021, where costs dipped slightly before rising again.

The data indicates a cyclical pattern, potentially impacted by seasonal factors or company-specific operational changes. Over the entire period, there is a general upward trend, reflecting increased expenditure likely associated with expanded activities or inflationary effects.

Accounts Payable (US$ in millions)

The accounts payable figures display considerable volatility from quarter to quarter. Initially, there is a sharp decrease from 3,166 million to 1,453 million early in the timeline, followed by fluctuating values throughout subsequent quarters.

Peaks occur irregularly, with values reaching about 3,821 million in mid-2025, indicating periods where the company likely deferred payments or increased procurement on credit terms. Conversely, some quarters show significant reductions, such as the steep decline to 780 million in late 2020, suggesting accelerated payments or reduced purchasing.

Payables Turnover (ratio)

The payables turnover ratio exhibits high variability and irregular patterns. Early data from late 2020 shows a high turnover ratio around 64.48, indicating rapid payment to suppliers relative to accounts payable. Subsequently, the ratio declines sharply and fluctuates between approximately 15 and 38.

This suggests periods of both quicker and slower payments relative to payables. Higher ratios indicate efficient management of payables, whereas lower ratios may point to extended payment terms or slower turnover of payables. The variability implies changing credit policies or varying supplier negotiation effectiveness across quarters.

Overall, the financial data suggests that while operating costs trend upwards over time, accounts payable and payables turnover exhibit more irregular patterns, reflecting dynamic working capital management strategies. The combination of fluctuations in these metrics points to a responsive approach to operational financing and supplier payment terms, likely adjusted to balance liquidity and operational needs.

The quarterly financial data reveals notable fluctuations and trends across working capital, sales, and working capital turnover ratios over the observed periods.

Working Capital

The working capital exhibited variability throughout the quarters, starting around 3,570 million USD and peaking multiple times near or above 6,300 million USD in 2021 and mid-2023. Significant declines are observed from the peak of 6,383 million USD in June 2023, decreasing dramatically to negative territory by June 2025 with a value of -366 million USD. This suggests a tightening of current assets relative to current liabilities towards the end of the period, implying potential liquidity constraints or shifts in the company's short-term financial position.

Sales

Sales figures generally demonstrate an upward trajectory with some seasonal or cyclical variations. The sales amount increased from approximately 15,651 million USD in March 2020 to peaks near 18,000-19,000 million USD in late 2022 and early 2024, showing overall growth. There is a dip after certain peaks, particularly noticeable in early 2023, but the trend resumes an upward movement into 2024 and beyond. The relatively steady increase in sales indicates sustained demand and revenue expansion over time.

Working Capital Turnover

The working capital turnover ratio displays remarkable volatility, with values ranging widely from around 10 to over 44 during the period. Earlier ratios in 2020 and 2021 hovered between approximately 10 to 15, suggesting a moderately efficient use of working capital in generating sales. Starting in late 2023 and moving into 2024 and 2025, the ratio spikes dramatically, reaching values as high as 44.49. This sharp increase can be interpreted as a result of diminishing working capital while maintaining sales levels, possibly indicating greater efficiency or stress on liquidity. The highest turnover ratios coincide with the downward trend in working capital, implying the company is generating sales with less working capital invested or facing pressure to manage cash flows carefully.

Overall, the data reveals a complex picture of improving sales accompanied by increasingly volatile and ultimately declining working capital levels, resulting in substantial fluctuations in efficiency metrics. This pattern may signal operational pressures related to liquidity management despite sales growth, highlighting areas for potential financial strategy review.

The data demonstrates a clear evolution in inventory management efficiency over multiple quarters, as reflected in the inventory turnover ratio and average inventory processing period.

Inventory Turnover Ratio

The inventory turnover ratio starts showing data from the quarter ending December 31, 2020, initially at 16.01. It then steadily increases over the following quarters, peaking at 19.81 in the December 31, 2021 quarter. After this peak, there is a slight decline and fluctuation, with values ranging mostly between 16.2 and 20.21 in subsequent periods. The highest observed value is 20.21 in the quarter ending June 30, 2024, indicating an improved rate of inventory turnover compared to earlier periods.

Average Inventory Processing Period (in days)

Starting at 23 days in the December 31, 2020 quarter, the average inventory processing period generally decreases, reaching as low as 18 days in certain quarters such as December 31, 2021, and September 29, 2024. The period then fluctuates mostly between 18 and 22 days across the evaluated timeframe, with a slight tendency towards shorter processing times over the later quarters. This trend aligns inversely with the inventory turnover ratio changes observed.

Overall, the trends suggest an improvement in inventory efficiency during the earlier periods, indicated by increasing turnover ratios and decreasing average processing days. More recently, although some fluctuations occur, the company maintains a relatively high turnover ratio and low inventory processing days, which suggests that inventory management remains effective but experiences some variability quarter to quarter.

The data reflects the quarterly trends in receivables turnover and average receivable collection period for the analyzed periods.

Receivables Turnover

The receivables turnover ratio exhibits notable variability across the quarters. Starting from a high level at 33.06, it declines steadily through subsequent periods to reach a low near 18.87, then demonstrates recovery and fluctuations around the mid to high 20s and low 30s range. Specifically, after bottoming out around Q3 2022, the ratio increased to approximately 31.69 in Q3 2023, followed by further variation ending near 21.73 in mid-2025. This pattern indicates fluctuating efficiency in collecting receivables, with periods of slower and faster turnover.

Average Receivable Collection Period

The average collection period in days inversely mirrors the turnover trend. Initially stable around 11-12 days, the period extends up to 19 days during quarters corresponding to the lowest turnover, indicating slower collection cycles. This extended period is followed by intermittent reductions back to about 10-12 days in later quarters, although it spikes again to 17 days by mid-2025. The variability indicates inconsistent collection speed, which could impact cash flow stability.

Insight on Relationship Between Metrics

As expected, the inverse relationship between the receivables turnover ratio and the average collection period is evident. When turnover decreases, indicating lower collection efficiency, the average collection period increases, and vice versa. Fluctuations in these metrics reflect changes in credit policy effectiveness, customer payment behavior, or economic conditions affecting receivables management.

The financial data reveals notable trends in the company's operational efficiency and working capital management over the reported periods. Three key metrics are considered: average inventory processing period, average receivable collection period, and operating cycle, each measured in days.

Average Inventory Processing Period

This metric demonstrates a gradual improvement in inventory management. Starting from 23 days in the earliest available quarter, it declined steadily to 18 days by December 31, 2021. Subsequently, the period fluctuated moderately, ranging between 19 and 23 days, but generally maintained a trend around 20 days toward the most recent quarters, indicating an overall stabilization in inventory turnover speed.

Average Receivable Collection Period

The receivable collection period exhibits more variability. Initially at 11 days, it rose gradually to reach a peak of 19 days in September 2022 and again in September 2023 before decreasing to a lower range of 10 to 12 days in the most recent quarters. This suggests periods of slower receivable turnover interspersed with improvements in collection efficiency. Despite fluctuations, there is no clear sustained upward or downward trend, reflecting varying credit collection dynamics.

Operating Cycle

The operating cycle mirrors the combined effect of the inventory processing and receivable collection periods. It remained relatively stable around 30 to 34 days early on, spiked to 42 days in September 2022, indicative of extended working capital duration during that period, and later oscillated between 30 and 37 days. Overall, the operating cycle reflects moderate volatility but indicates that the company maintained an approximate one-month cycle on average, with some transient expansions.

In summary, the company's inventory management appears consistently controlled with a slight improvement over time, while receivable collection periods and the overall operating cycle present greater variability. This pattern suggests that while inventory procedures have become more efficient or stable, credit management may be more sensitive to external or operational factors influencing collection speed. Monitoring these metrics closely will be important to sustaining operational liquidity and optimizing working capital.

The payables turnover ratio demonstrates considerable fluctuations over the analyzed periods. Initially, it is high at 64.48, then it sharply decreases to 30.31 and subsequently rises again through several quarters, reaching another peak of 74.34. Following this peak, the ratio declines consistently to values below 30, with occasional small upward movements. The recent quarters show a moderately fluctuating pattern ranging roughly between 16.89 and 28.85.

Correspondingly, the average payables payment period exhibits an inverse relationship to the payables turnover ratio, which is consistent with the expected interplay between these two metrics. Initially, the payment period is relatively low at 6 days, then increases with fluctuations, reaching values above 20 days in several recent quarters. This suggests that the company has extended the time taken to settle its payables in these periods. Towards the end of the observed timeline, the payment period oscillates mostly between 13 and 24 days, indicating variability but no clear directional trend.

Payables Turnover Ratio

Shows high volatility, with peaks around 64 and 74, and troughs below 20. The general pattern indicates the company's payables turnover efficiency experiences large changes quarter to quarter.

Average Payables Payment Period

Fluctuates between 5 and 24 days, reflecting variable payment behavior. Periods with longer payment days align with lower turnover ratios, consistent with slower payments to suppliers.

Overall, the data reveal that the company's management of payables has not stabilized and tends to vary significantly each quarter. Such volatility could suggest adjustments in payment policies, changes in supplier terms, or operational factors impacting accounts payable management. Continuous monitoring is recommended to understand the underlying reasons for these shifts and their impacts on cash flow management.

The data reflects multiple key metrics related to the company's working capital management over successive quarters. These metrics include average inventory processing period, average receivable collection period, average payables payment period, and cash conversion cycle, all measured in days.

Average Inventory Processing Period

This metric shows a gradual decline from 23 days in the first available quarter to generally around 20 days in the most recent quarters, with some minor variation between 18 and 23 days. This indicates a modest improvement in the speed of inventory turnover over time, suggesting enhanced efficiency in managing inventory levels.

Average Receivable Collection Period

The average collection period exhibits more fluctuation compared to inventory processing. Initially starting at 11 days, it reached a peak of 19 days around mid to late 2022 and again in September 2023 before trending slightly downward towards 10 days in the latest quarter. The variability suggests inconsistent patterns in customer payment behaviors or credit terms, with some quarters experiencing delayed receivables collection.

Average Payables Payment Period

The payables payment period displays notable volatility. It started at 6 days, increased sharply to 24 days by late 2023, and then showed fluctuations between 13 and 22 days thereafter. This trend may indicate varying supplier payment policies or strategic adjustments in managing cash outflows, potentially deferring payments to optimize cash flow in certain periods.

Cash Conversion Cycle

The cash conversion cycle (CCC) generally declined from 28 days to single-digit values, most notably reaching as low as 8 and 9 days in some recent quarters. This overall reduction in CCC reflects an improvement in the firm's ability to convert resource investments into cash more rapidly. The decreasing CCC, supported by shorter inventory processing and effective management of receivables and payables, suggests enhanced operational efficiency and liquidity management.

Overall, the trends denote efforts towards more efficient working capital management, highlighted by the steady reduction in inventory days and improved cash conversion cycles. Despite fluctuations in receivables and payables periods, the company's capacity to reduce its cash conversion cycle may contribute positively to its liquidity and operational agility.