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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- Statement of Comprehensive Income
- Balance Sheet: Assets
- Common-Size Income Statement
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Price to FCFE (P/FCFE)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Price to Book Value (P/BV) since 2005
- Aggregate Accruals
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Short-term Activity Ratios (Summary)
Based on: 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), 10-K (reporting date: 2017-12-31).
Analysis of the financial ratios over the five-year period reveals several notable trends related to inventory management, receivables, payables, and cash conversion efficiency.
- Inventory Turnover
- Inventory turnover exhibited variability, starting at 10.15 in 2017, peaking at 13.61 in 2018, followed by a decline to 10.05 in 2020, and a moderate recovery to 11.58 in 2021. This suggests fluctuating efficiency in managing inventory, with the highest turnover rate indicating faster inventory movement in 2018.
- Receivables Turnover
- The receivables turnover ratio demonstrated a steady increase from 11.05 in 2017 to 12.28 in 2019, indicating improved collection efficiency. However, a slight decline occurred in subsequent years, with values of 11.54 and 11.42 in 2020 and 2021 respectively, implying a marginally slower collection pace more recently.
- Payables Turnover
- Payables turnover showed an upward trend from 1.61 in 2017 to a peak of 2.19 in 2020 before dropping back to 1.87 in 2021. This pattern suggests a tendency to accelerate payments during the middle of the period before slowing slightly by the end of 2021.
- Working Capital Turnover
- Data is largely missing except for a high ratio of 61.96 in 2020, which indicates an exceptional utilization of working capital during that year. However, without comparative figures from other years, trend analysis is constrained.
- Average Inventory Processing Period
- The average inventory processing period shortened significantly from 36 days in 2017 to 27 days in 2018, then increased to 36 days in 2020 before declining again to 32 days in 2021. This reflects fluctuating inventory holding times, with a general tendency toward quicker inventory movement relative to the starting point.
- Average Receivable Collection Period
- Receivable collection period decreased from 33 days in 2017 to 30 days in 2019, indicating enhanced efficiency in collecting from customers. This was slightly reversed thereafter, with the period increasing back to 32 days in 2020 and 2021, signaling a slight easing in collection speed.
- Operating Cycle
- The operating cycle declined from 69 days in 2017 to 59 days in 2018, rose to 68 days in 2020, and then decreased again to 64 days in 2021. These fluctuations mirror changes in inventory and receivables turnover periods, showing variable efficiency in the overall operational process.
- Average Payables Payment Period
- The average payables payment period shortened from 227 days in 2017 to a low of 167 days in 2020, followed by a return to 195 days in 2021. This indicates a strategic adjustment in payment timing, with quicker payments during 2020 and a tendency to extend payments somewhat afterward.
- Cash Conversion Cycle
- The cash conversion cycle remained negative across all years, moving from -158 days in 2017 to a peak of -99 days in 2020, then falling back to -131 days in 2021. The negative values suggest the company consistently received payments from customers before paying suppliers, with the shortest gap occurring in 2020, implying enhanced liquidity management during that year.
Turnover Ratios
Average No. Days
Inventory Turnover
Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Cost of railway operating revenues | ||||||
Materials and supplies | ||||||
Short-term Activity Ratio | ||||||
Inventory turnover1 | ||||||
Benchmarks | ||||||
Inventory Turnover, Competitors2 | ||||||
FedEx Corp. | ||||||
Union Pacific Corp. | ||||||
United Airlines Holdings Inc. | ||||||
United Parcel Service Inc. | ||||||
Inventory Turnover, Sector | ||||||
Transportation | ||||||
Inventory Turnover, Industry | ||||||
Industrials |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Inventory turnover = Cost of railway operating revenues ÷ Materials and supplies
= ÷ =
2 Click competitor name to see calculations.
- Cost of Railway Operating Revenues
- The cost of railway operating revenues exhibited a fluctuating trend over the analyzed period. It increased from 2,254 million USD in 2017 to a peak of 2,817 million USD in 2018, indicating a significant rise in operating costs. This was followed by a decrease to 2,678 million USD in 2019 and a more pronounced drop to 2,222 million USD in 2020. In 2021, costs rose again to 2,525 million USD, suggesting some recovery but remaining below the 2018 peak.
- Materials and Supplies
- Spending on materials and supplies showed relative stability, with minor fluctuations. The value was 222 million USD in 2017, slightly decreasing to 207 million USD in 2018, then rising to 244 million USD in 2019. It dipped again to 221 million USD in 2020 and marginally reduced to 218 million USD in 2021. Overall, this category remained fairly consistent, without significant upward or downward trends.
- Inventory Turnover
- The inventory turnover ratio demonstrated variability across the years. Starting at 10.15 in 2017, it peaked at 13.61 in 2018, indicating improved efficiency in managing inventory during that period. However, it declined to 10.98 in 2019 and further to 10.05 in 2020, reflecting a reduction in inventory management effectiveness. The ratio increased again in 2021 to 11.58, suggesting an improvement compared to the previous year but not reaching the 2018 level.
- Overall Observations
- The data reveals that operating costs and inventory management experienced notable fluctuations rather than steady trends. The peak in operating costs and inventory turnover in 2018 may point to a period of intensified activities or changes in operational strategy that year. The declines in 2020 correspond to the period heavily affected by global disruptions, with partial recovery observed in 2021. Materials and supplies spending remained relatively stable throughout the timeframe, indicating consistent procurement or inventory needs.
Receivables Turnover
Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Railway operating revenues | ||||||
Accounts receivable, net | ||||||
Short-term Activity Ratio | ||||||
Receivables turnover1 | ||||||
Benchmarks | ||||||
Receivables Turnover, Competitors2 | ||||||
FedEx Corp. | ||||||
Uber Technologies Inc. | ||||||
Union Pacific Corp. | ||||||
United Airlines Holdings Inc. | ||||||
United Parcel Service Inc. | ||||||
Receivables Turnover, Sector | ||||||
Transportation | ||||||
Receivables Turnover, Industry | ||||||
Industrials |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Receivables turnover = Railway operating revenues ÷ Accounts receivable, net
= ÷ =
2 Click competitor name to see calculations.
- Railway Operating Revenues
- The railway operating revenues exhibited growth from 2017 to 2018, increasing from 10,551 million US dollars to 11,458 million US dollars. However, in 2019, there was a slight decline to 11,296 million US dollars, followed by a more pronounced decrease in 2020 to 9,789 million US dollars. By 2021, revenues rebounded to 11,142 million US dollars, approaching pre-pandemic levels. This pattern indicates a recovery in business activity after the impact observed in 2020, likely related to external economic factors.
- Accounts Receivable, Net
- The net accounts receivable showed an initial increase from 955 million US dollars in 2017 to 1,009 million US dollars in 2018. This was succeeded by a decline to 920 million US dollars in 2019 and a further decrease to 848 million US dollars in 2020. In 2021, accounts receivable rose again to 976 million US dollars. The fluctuations mirror the changes in operating revenues, with a dip during the pandemic year followed by recovery, suggesting some correlation between sales volumes and credit extended.
- Receivables Turnover Ratio
- The receivables turnover ratio improved over the period from 2017 (11.05) through 2019 (12.28), indicating slightly faster collection of receivables relative to sales. In 2020, the ratio decreased to 11.54 and modestly declined further to 11.42 in 2021. These reductions in turnover during and following the pandemic year may reflect longer collection periods or changes in credit management policies amid economic stress.
Payables Turnover
Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Cost of railway operating revenues | ||||||
Accounts payable | ||||||
Short-term Activity Ratio | ||||||
Payables turnover1 | ||||||
Benchmarks | ||||||
Payables Turnover, Competitors2 | ||||||
FedEx Corp. | ||||||
Uber Technologies Inc. | ||||||
Union Pacific Corp. | ||||||
United Airlines Holdings Inc. | ||||||
United Parcel Service Inc. | ||||||
Payables Turnover, Sector | ||||||
Transportation | ||||||
Payables Turnover, Industry | ||||||
Industrials |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Payables turnover = Cost of railway operating revenues ÷ Accounts payable
= ÷ =
2 Click competitor name to see calculations.
The analysis of the financial data reveals several notable trends over the five-year period.
- Cost of Railway Operating Revenues
- The cost of railway operating revenues showed an overall upward trend from 2017 to 2021, with some fluctuations. It rose from $2,254 million in 2017 to peak at $2,817 million in 2018, followed by a slight decline to $2,678 million in 2019. In 2020, the cost decreased significantly to $2,222 million, likely reflecting the impact of external factors during that year. However, in 2021, the cost rebounded to $2,525 million, indicating recovery but not reaching the 2018 peak levels.
- Accounts Payable
- Accounts payable mirrored a somewhat similar pattern. It increased from $1,401 million in 2017 to $1,505 million in 2018, then declined in 2019 to $1,428 million. A more pronounced decrease occurred in 2020, when accounts payable fell to $1,016 million. This was followed by a rebound in 2021 to $1,351 million. The reduction observed in 2020 could be related to tightened cash management or reduced operational activity during that year.
- Payables Turnover Ratio
- The payables turnover ratio exhibited a general increasing trend with some fluctuations. Starting at 1.61 in 2017, the ratio rose to 1.87 in 2018 and slightly increased further to 1.88 in 2019. An increase to 2.19 was seen in 2020, suggesting faster payment cycles that year. In 2021, the ratio reverted to 1.87, indicating a return towards the earlier pace of payables turnover. The spike in 2020 may reflect a strategic emphasis on quicker payments or changes in supplier terms amidst the exceptional conditions of that year.
In summary, the data indicates a cost and payable structure affected by external disruptions in 2020, followed by partial recovery in 2021. The payables turnover ratio’s increase in 2020 suggests changes in payment policies or operational dynamics during that period. Overall, the trends show that while costs and payables fluctuated, there was an effort to manage liabilities effectively throughout the timeline.
Working Capital Turnover
Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Current assets | ||||||
Less: Current liabilities | ||||||
Working capital | ||||||
Railway operating revenues | ||||||
Short-term Activity Ratio | ||||||
Working capital turnover1 | ||||||
Benchmarks | ||||||
Working Capital Turnover, Competitors2 | ||||||
FedEx Corp. | ||||||
Uber Technologies Inc. | ||||||
Union Pacific Corp. | ||||||
United Airlines Holdings Inc. | ||||||
United Parcel Service Inc. | ||||||
Working Capital Turnover, Sector | ||||||
Transportation | ||||||
Working Capital Turnover, Industry | ||||||
Industrials |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Working capital turnover = Railway operating revenues ÷ Working capital
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals several notable trends over the five-year period ending December 31, 2021. Working capital fluctuates significantly, showing negative values in most years except for 2020. Specifically, working capital is negative at -396 million USD in 2017, declining further to -729 million USD in 2018. It improves notably in 2019 to -219 million USD and turns positive at 158 million USD in 2020, only to revert to a negative position of -354 million USD in 2021. This volatility indicates varying liquidity conditions, with a particularly positive working capital situation in 2020 amid otherwise negative balances.
Railway operating revenues show relative stability with some fluctuations. Revenues increase from 10,551 million USD in 2017 to 11,458 million USD in 2018, representing growth. The figure slightly decreases in 2019 to 11,296 million USD and drops more substantially in 2020 to 9,789 million USD, which may be suggestive of operational challenges or external impacts during that year. Recovery is apparent in 2021, with revenues rising back to 11,142 million USD, approaching pre-2020 levels. This pattern suggests resilience in operations after a significant dip.
The working capital turnover ratio is only reported for one period, 2019, at 61.96. Given the absence of comparative data for other years, no trend analysis is possible for this ratio. However, such a high turnover value in 2019, coinciding with a negative but improving working capital balance, might indicate efficient utilization of working capital in revenue generation for that year.
Overall, the data reflects mixed liquidity conditions with working capital moving between negative and positive values, accompanied by relatively steady revenue streams with a notable contraction and recovery around 2020. This suggests the company experienced financial and operational pressures during 2020, potentially linked to external disruptions, but displayed a recovery trajectory the following year.
Average Inventory Processing Period
Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Inventory turnover | ||||||
Short-term Activity Ratio (no. days) | ||||||
Average inventory processing period1 | ||||||
Benchmarks (no. days) | ||||||
Average Inventory Processing Period, Competitors2 | ||||||
FedEx Corp. | ||||||
Union Pacific Corp. | ||||||
United Airlines Holdings Inc. | ||||||
United Parcel Service Inc. | ||||||
Average Inventory Processing Period, Sector | ||||||
Transportation | ||||||
Average Inventory Processing Period, Industry | ||||||
Industrials |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ =
2 Click competitor name to see calculations.
The data reveals trends in inventory management efficiency over a five-year period. The inventory turnover ratio fluctuates, showing the highest value in 2018 at 13.61, followed by a decline in 2019 to 10.98 and further to 10.05 in 2020, before increasing again to 11.58 in 2021. This suggests variability in how quickly the company sells and replaces its inventory during this period.
The average inventory processing period, measured in days, exhibits an inverse pattern relative to inventory turnover, reflecting the typical relationship between these metrics. The period decreases significantly from 36 days in 2017 to 27 days in 2018, which corresponds to the peak in the turnover ratio, indicating improved inventory efficiency. Subsequently, the processing period increases to 33 days in 2019 and returns to 36 days in 2020, coinciding with the lower turnover values. In 2021, the processing period shortens again to 32 days as the turnover ratio improves.
Overall, the data indicates a cyclical pattern in inventory management, with peak efficiency in 2018 followed by a period of less efficient inventory turnover in 2019 and 2020, and a partial recovery in 2021. The fluctuations might suggest changes in operational strategies or external factors affecting inventory levels and sales during these years.
- Inventory Turnover Ratio
- Increased sharply in 2018, declined in 2019 and 2020, and improved again in 2021.
- Average Inventory Processing Period
- Shortest in 2018, lengthened in 2019 and 2020, then decreased in 2021, inversely related to turnover ratio.
- Insights
- The firm experienced variable inventory management efficiency, with indications of operational adjustments or market influences affecting inventory handling.
Average Receivable Collection Period
Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Receivables turnover | ||||||
Short-term Activity Ratio (no. days) | ||||||
Average receivable collection period1 | ||||||
Benchmarks (no. days) | ||||||
Average Receivable Collection Period, Competitors2 | ||||||
FedEx Corp. | ||||||
Uber Technologies Inc. | ||||||
Union Pacific Corp. | ||||||
United Airlines Holdings Inc. | ||||||
United Parcel Service Inc. | ||||||
Average Receivable Collection Period, Sector | ||||||
Transportation | ||||||
Average Receivable Collection Period, Industry | ||||||
Industrials |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
- Receivables Turnover
- The receivables turnover ratio exhibited a general upward trend from 2017 to 2019, increasing from 11.05 to 12.28. This suggests an improvement in the efficiency of collecting receivables during this period. However, in 2020, the ratio declined to 11.54 and slightly decreased again to 11.42 in 2021, indicating a modest reduction in collection efficiency compared to the peak in 2019.
- Average Receivable Collection Period
- The average receivable collection period decreased from 33 days in 2017 to 30 days in 2019, reflecting a faster collection cycle. Subsequently, the period lengthened slightly to 32 days in both 2020 and 2021. This aligns with the observed decrease in receivables turnover during the same timeframe, suggesting a slight slowdown in the speed at which receivables are collected after 2019.
- Summary of Trends
- Overall, the data indicates an improvement in receivables management from 2017 through 2019, with higher turnover and shorter collection periods signifying enhanced efficiency. From 2020 onward, there is a mild reversal in this trend, with slightly lower turnover ratios and longer collection periods, which could be attributable to changes in operational conditions or external factors affecting the collection process.
Operating Cycle
Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Average inventory processing period | ||||||
Average receivable collection period | ||||||
Short-term Activity Ratio | ||||||
Operating cycle1 | ||||||
Benchmarks | ||||||
Operating Cycle, Competitors2 | ||||||
FedEx Corp. | ||||||
Union Pacific Corp. | ||||||
United Airlines Holdings Inc. | ||||||
United Parcel Service Inc. | ||||||
Operating Cycle, Sector | ||||||
Transportation | ||||||
Operating Cycle, Industry | ||||||
Industrials |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= + =
2 Click competitor name to see calculations.
- Average Inventory Processing Period
- The average inventory processing period exhibits some variability over the five-year span. It decreased notably from 36 days in 2017 to 27 days in 2018, indicating improved inventory turnover efficiency during that period. Following this, the period increased to 33 days in 2019 and returned to 36 days in 2020, suggesting some fluctuations in inventory management. In 2021, it slightly improved again to 32 days. Overall, despite fluctuations, the inventory processing period remains relatively stable around the mid-30 day mark in the majority of years.
- Average Receivable Collection Period
- The average receivable collection period shows a mild downward trend initially, moving from 33 days in 2017 to 30 days in 2019, which may reflect enhanced effectiveness in collecting receivables. However, in 2020 and 2021, the collection period lengthened slightly to 32 days, indicating a modest decline in collection efficiency or changes in credit policies. The overall variation is limited, suggesting a generally consistent collections process.
- Operating Cycle
- The operating cycle mirrors the trends seen in inventory and receivable periods. It decreased from 69 days in 2017 to 59 days in 2018, reflecting an overall improvement in working capital efficiency during that period. Thereafter, it increased to 63 days in 2019 and 68 days in 2020, indicating some operational delays or changes impacting the cycle. In 2021, the operating cycle reduced slightly to 64 days. These fluctuations imply periodic shifts in the turnover and collection processes affecting the cash conversion cycle.
- Summary
- The data reflects a working capital management profile characterized by some variability but overall relative stability. The inventory processing period shows some inconsistency but mostly centers around a low to mid-30 day range. Receivable collection has remained steady with minor improvements and regressions but consistent near 30-32 days. The operating cycle correspondingly fluctuates but demonstrates no extreme variations beyond a range of approximately 59 to 69 days. These trends suggest a business maintaining generally stable operational efficiency over the reviewed years with occasional short-term changes in inventory and receivables management impacting overall working capital turnover.
Average Payables Payment Period
Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Payables turnover | ||||||
Short-term Activity Ratio (no. days) | ||||||
Average payables payment period1 | ||||||
Benchmarks (no. days) | ||||||
Average Payables Payment Period, Competitors2 | ||||||
FedEx Corp. | ||||||
Uber Technologies Inc. | ||||||
Union Pacific Corp. | ||||||
United Airlines Holdings Inc. | ||||||
United Parcel Service Inc. | ||||||
Average Payables Payment Period, Sector | ||||||
Transportation | ||||||
Average Payables Payment Period, Industry | ||||||
Industrials |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
The financial data indicates variations in the company's payables management over the five-year period ending December 31, 2021. The payables turnover ratio displays an overall increasing trend from 1.61 in 2017 to a peak of 2.19 in 2020, followed by a decrease to 1.87 in 2021. This suggests that the company generally increased the frequency with which it paid off its suppliers until 2020, but then the turnover rate slowed down in 2021.
Correspondingly, the average payables payment period shows a decreasing trend from 227 days in 2017 to 167 days in 2020, indicating that the company was reducing the time it took to settle its payables throughout this period. However, in 2021, the payment period increased back to 195 days, aligning with the reduction observed in the payables turnover ratio for the same year.
The inverse relationship between the payables turnover ratio and the average payables payment period is consistent, as a higher turnover ratio generally corresponds to a shorter payment period and vice versa. The improvements seen until 2020 may reflect efforts to optimize working capital management, possibly by accelerating payments to suppliers.
However, the reversal in 2021, where the payment period lengthened and the turnover ratio decreased, could imply a strategic shift toward extending payment terms or a response to liquidity considerations in that year. Overall, the patterns suggest active management of payables with some fluctuations likely influenced by operational or market factors during the period analyzed.
Cash Conversion Cycle
Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
---|---|---|---|---|---|---|
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 | ||||||
FedEx Corp. | ||||||
Union Pacific Corp. | ||||||
United Airlines Holdings Inc. | ||||||
United Parcel Service Inc. | ||||||
Cash Conversion Cycle, Sector | ||||||
Transportation | ||||||
Cash Conversion Cycle, Industry | ||||||
Industrials |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= + – =
2 Click competitor name to see calculations.
- Average Inventory Processing Period
- The average inventory processing period exhibits some fluctuations over the five-year span. It started at 36 days in 2017, dropped to a low of 27 days in 2018, then increased to 33 days in 2019, returned to 36 days in 2020, and slightly declined to 32 days in 2021. This indicates variability in inventory turnover efficiency with a tendency to stabilize around the mid-30-day range in recent years.
- Average Receivable Collection Period
- This metric demonstrates relative stability across the analyzed years. Beginning at 33 days in 2017, it slightly decreased to 32 days in 2018, fell to 30 days in 2019, then reverted back to 32 days in both 2020 and 2021. The pattern suggests consistent credit and collection policies, maintaining a stable period for cash collection from customers.
- Average Payables Payment Period
- The average payables payment period shows a downward trend from 227 days in 2017 to 167 days by 2020, with a rebound to 195 days in 2021. This pattern reflects a shortening of the payment cycle over time, implying a more prompt approach to settling payables until 2020, followed by a slight extension in 2021. The overall decrease in payment period indicates efforts to optimize supplier relationships or cash outflow timing.
- Cash Conversion Cycle
- The cash conversion cycle, which represents the net time duration between cash outlay and cash recovery, is consistently negative throughout the period, though it becomes less negative over time. It starts at -158 days in 2017, improves to -136 days in 2018, remains relatively stable at -132 days in 2019, rises to -99 days in 2020, and then decreases again to -131 days in 2021. The generally negative values indicate that the company collects cash from customers well before it needs to pay its suppliers, which is a favorable liquidity characteristic. The fluctuation suggests slight variations in working capital management effectiveness over the years.
- Overall Insights
- Throughout the five years, the company exhibits a pattern of relatively efficient working capital management. Inventory turnover cycles and receivable collection periods remain fairly constant, while payables payment periods have shortened, indicating improved liquidity management. The consistently negative cash conversion cycle underscores a strong position in terms of cash flow timing, enabling the company to operate with considerable liquidity advantages. Minor variability in these metrics suggests ongoing adjustments in operational processes rather than substantial shifts in strategy.