RTX Corp. (NYSE:RTX)

Inventory Turnover

The inventory turnover ratio demonstrated a gradual decline from 5.48 in March 2021 to 4.60 in September 2023, indicating a slowing rate of inventory movement. However, there was a slight recovery thereafter, reaching 4.97 by September 2025. This trend suggests a period of decreasing efficiency in inventory management, followed by modest improvement in recent quarters.

Receivables Turnover

Receivables turnover fluctuated over the observed periods, starting at 6.03 in March 2021, peaking near 7.83 in September 2024, and then slightly declining to 6.70 by September 2025. These variations indicate changing effectiveness in collecting receivables, with notable improvement particularly around 2024 before a slight moderation.

Payables Turnover

The payables turnover ratio showed a decreasing trend overall, falling from 5.67 in March 2021 to 4.72 in September 2025. The steady decline points toward a longer payment period to suppliers, which may impact supplier relationships or cash flow management.

Working Capital Turnover

Working capital turnover exhibited high volatility, with a significant jump from 11.41 in March 2022 to a peak of 44.25 in September 2023. After this peak, values declined sharply, fluctuating but remaining elevated, with an exceptional spike to 279.93 in March 2025 followed by a drop to 22.14 in September 2025. These fluctuations indicate erratic efficiency in using working capital to generate sales, possibly due to underlying operational or accounting variations.

Average Inventory Processing Period

The average inventory processing period steadily increased from 67 days in March 2021 to 79 days by June 2024, reflecting lengthening time to convert inventory into sales. Thereafter, a modest decrease is observed, ending at 73 days in September 2025, which suggests partial improvement in managing inventory turnover speeds.

Average Receivable Collection Period

This metric varied moderately, decreasing from 61 days in March 2021 to a low around 47 days in September 2024, yet rising again slightly to 54 days by September 2025. The initial improvement signifies more prompt collection of receivables, though the recent increase may indicate some loosening in collection efficiency.

Operating Cycle

The operating cycle remained relatively stable, hovering around 120 to 131 days throughout the timeline, showing no significant long-term improvement or deterioration in the overall cash-to-cash cycle time.

Average Payables Payment Period

Contrasting with other metrics, the average payables payment period increased from 64 days in March 2021 to 77 days in September 2025. This suggests the company is taking longer to settle payables, possibly to optimize cash outflows or due to constraints in payment capabilities.

Cash Conversion Cycle

The cash conversion cycle demonstrated a moderate decrease over time, reducing from 64 days in March 2021 to 50 days by September 2025. Despite some fluctuations, this reduction indicates improvement in the company’s ability to manage the time between cash disbursement and cash collection, which enhances liquidity.

Cost of Sales

The cost of sales demonstrated a generally increasing trend over the analyzed quarters. Starting from 12,537 million USD in March 2021, the figure rose steadily to reach 14,526 million USD by December 2021, indicating growth in production or input costs. A slight fluctuation appeared in 2023, with a dip to 12,750 million USD in the third quarter, but the overall pattern resumed upward thereafter. By September 2025, the cost of sales reached 17,898 million USD, reflecting a significant increase from the initial period.

Inventory, Net

Inventory levels showed a consistent upward trend throughout the periods. Beginning at 9,498 million USD in March 2021, net inventory increased steadily, peaking at 13,465 million USD in September 2024 before experiencing minor fluctuations toward the end of the period under review. The inventory reached 13,806 million USD by September 2025, indicating an expansion in inventory holdings over time.

Inventory Turnover Ratio

The inventory turnover ratio revealed a declining trend from 5.48 in March 2021 to a low of approximately 4.60 in the third quarter of 2023. This indicates that the company was turning over inventory less frequently during this interval, which may suggest slower sales or increased inventory accumulation relative to cost of sales. Some recovery appeared in 2024 and 2025, with the ratio rising closer to 4.97 by September 2025, although it remained below early 2021 levels.

Summary of Trends and Insights

The steady increase in cost of sales alongside growing inventory levels suggests expanding operational scale or input price inflation. However, the declining inventory turnover ratio implies that inventory management efficiency may have deteriorated, with inventory turning over at a slower rate. This could signal potential challenges in sales velocity or overstocking. The partial recovery in turnover ratio in recent quarters might reflect managerial efforts to improve inventory movement or adjust stock levels in response to market conditions.

The analysis of the quarterly financial data reveals several notable patterns and trends in key financial indicators over the observed periods.

Net Sales

Net sales demonstrate a generally upward trend across the quarters, with some fluctuations. Starting at approximately 15.3 billion USD in March 2021, sales progressively increased to around 18.1 billion USD by December 2022, despite a slight dip in early 2022. Notably, sales reached a peak of approximately 22.5 billion USD by September 2025. The data shows some volatility, such as a significant drop to about 13.5 billion USD in September 2023, followed by a rapid rebound to nearly 19.9 billion USD at year-end 2023. Overall, this signals robust growth with intermittent short-term variability.

Accounts Receivable, Net

The net accounts receivable figures exhibit moderate fluctuations but generally indicate an increasing trend over the full timeline. Initial figures start around 10 billion USD in early 2021, followed by some declines and recoveries. Post 2023, the accounts receivable appears to rise steadily, reaching approximately 12.8 billion USD by the third quarter of 2025. This pattern suggests increasing credit extended to customers in line with growing sales volumes, although the pace of increase is somewhat variable.

Receivables Turnover Ratio

The receivables turnover ratio fluctuates throughout the quarters, oscillating mainly between 6.3 and 7.8. This ratio measures the efficiency of collecting receivables and tends to move inversely to accounts receivable balances relative to sales. The ratio rose to peaks above 7.8 in some quarters such as September 2024, indicating faster collections during these periods. Conversely, lower points near 6.0 occur sporadically, suggesting slightly slower collection cycles. The variability suggests changing efficiency in collections, potentially affected by credit policies or customer payment behaviors over time.

In summary, sales exhibit strong growth with episodic volatility, accounts receivable balances generally increase in tandem with sales growth, and receivables turnover ratio shows moderate fluctuations indicative of varying collection efficiency. The overall financial pattern implies expanding business activity with attention needed on managing receivables to maintain collection effectiveness amid rising sales.

The analysis of the quarterly financial data reveals several key trends related to cost of sales, accounts payable, and payables turnover over the observed periods.

Cost of Sales

The cost of sales exhibited fluctuation with an overall upward trend across the quarters. Initial figures started around the 12,500 million USD mark and increased noticeably towards the end of the period, reaching highs close to 17,900 million USD. Intermittent decreases are observed, such as a dip in one mid-cycle quarter before climbing again sharply towards the final quarters. This indicates variability in cost pressures or sales volumes but with a generally increasing consumption or procurement cost over time.

Accounts Payable

Accounts payable figures show variability but a steady increase over the observed timeline. Starting from approximately 9,200 million USD, the values undergo some short-term declines and recoveries but trend upward consistently, reaching over 14,500 million USD by the last quarter. This pattern suggests growing short-term liabilities possibly related to increased purchasing activities or extended credit terms from suppliers.

Payables Turnover Ratio

Payables turnover ratios demonstrate a declining trend, moving from a high of about 6.5 towards the mid-period to values under 5 in the later periods. This inverse movement to accounts payable implies that the company is taking longer to settle its payables or that growth in payables is outpacing cost of sales increases. Lower turnover ratios typically indicate lengthening payment cycles.

Collectively, these trends point to increasing operational scale as evidenced by rising cost of sales and accounts payable balances. However, the declining payables turnover ratio suggests changes in payment behavior or credit terms that may impact liquidity management. These observations could warrant closer monitoring of working capital efficiency and supplier relationship management going forward.

The financial data reveals several noteworthy trends in key operational metrics over the examined quarters.

Working Capital

Working capital experienced notable fluctuations throughout the periods. Initially, it declined from $6,193 million in March 2021 to a low of $3,329 million at the end of 2022. This was followed by a partial recovery in early 2023, with amounts ranging from $5,376 million to $1,516 million during the first three quarters. However, there was a significant negative movement in mid-2024, with working capital turning negative around -$340 to -$483 million, indicating potential liquidity pressures. Towards the end of the observation period, a recovery trend is evident, culminating in a strong increase to $3,884 million by September 2025.

Net Sales

Net sales displayed an overall upward trajectory across the quarters, with some intermittent declines. From $15,251 million in March 2021, sales grew steadily to reach $18,093 million by December 2022. A brief dip occurred in the third quarter of 2023 to $13,464 million but was quickly followed by recovery and continued growth, peaking at $22,478 million by September 2025. This pattern suggests a generally strong demand trend with occasional short-term variations.

Working Capital Turnover

The working capital turnover ratio, which measures efficiency in generating sales from working capital, demonstrated considerable variability. Initially stable around 9.77 to 10.24 in early 2021, the ratio rose sharply to values above 20 during 2022, peaking at 44.25 in the third quarter of 2023. This indicates increasingly efficient use of working capital relative to sales during that timeframe. However, the most recent periods show an extreme spike, reaching values as high as 279.93 in March 2025, which may be influenced by the lower or negative working capital values at that time. Such high ratios merit further investigation to assess potential data anomalies or changes in operational strategy.

In summary, net sales have shown strong growth, while working capital has experienced volatility, including a period of negative values, possibly reflecting liquidity challenges. The working capital turnover’s high variability underscores changing efficiency in the use of working capital, with extraordinary ratios in late periods suggesting either operational changes or valuation effects. Continuing to monitor working capital levels alongside sales growth will be vital for maintaining financial stability and operational efficiency.

The analysis of the quarterly financial ratios for RTX Corp. reveals important trends in inventory management over the observed periods.

Inventory Turnover Ratio

The inventory turnover ratio generally exhibited a downward trend from early 2021 through the third quarter of 2023, decreasing from 5.48 to a low of 4.60. This indicates that the company was turning over its inventory less frequently during this period. Following this decline, from late 2023 into 2025, the ratio showed some recovery, rising to 5.12 by the fourth quarter of 2024 before slightly declining again to around 4.97 by the third quarter of 2025. This suggests a moderate improvement in inventory efficiency after the previous downward trend.

Average Inventory Processing Period

The average inventory processing period, measured by the number of days inventory is held before being sold, showed a complementary trend. Starting at 67 days in the first quarter of 2021, this metric increased steadily to a peak of 79 days in the third quarter of 2023, indicating a slower movement of inventory through the supply chain. After this peak, the period fluctuated but generally trended downwards, reaching 71 days by the first quarter of 2025, before rising somewhat towards 77 days in the third quarter of 2025. The initial increase corresponds with the decline in inventory turnover, confirming slower inventory cycles, while the later decrease signals attempts or developments towards more efficient inventory management.

Overall Interpretation

Over the examined time frame, the company experienced a period of reduced inventory turnover efficiency, likely reflecting challenges in inventory management or sales velocity. This is evidenced by the inverse movements between turnover ratio and processing period. Notably, from late 2023, there is a discernible improvement in turnover ratios accompanied by a reduction in processing days, suggesting corrective measures or market conditions positively influencing inventory flow. Despite these improvements, turnover and processing periods did not fully return to the early 2021 levels by the third quarter of 2025, implying room for further enhancement in inventory handling practices.

The analysis of the quarterly financial data reveals noteworthy trends in the receivables turnover ratio and the average receivable collection period over the observed time frame.

Receivables turnover ratio

The receivables turnover ratio exhibits a fluctuating pattern across the quarters. Starting from a ratio of 6.03, it generally improved reaching peaks above 7.0 several times, notably in March 2022, September 2022, June 2023, September 2024, and December 2024, indicating more efficient collections during those periods. There are periods where the ratio slightly declines, such as mid-2022 and early 2023, suggesting some variability in collection efficiency. Toward the end of the data series, the turnover ratio remains relatively stable, oscillating around 7.0 with minor decreases.

Average receivable collection period

The average collection period inversely correlates with the receivables turnover, as expected. It starts at 61 days and decreases to about 50 days by the end of 2021, indicating faster collection cycles. In 2022, the period fluctuates mostly between 50 and 58 days, showing some instability in collection speed. In 2023 and 2024, the average collection period continues fluctuating but shows an improving trend, with values dropping to the mid-40s around September 2024. However, towards the latter part of the dataset, the collection period increases slightly to around 54 days, suggesting a minor slowdown in collections.

Overall, the data reflects cyclical variations in both receivables turnover and the average collection period, with general improvements in collection efficiency interspersed with periods of minor regression. The fluctuations imply that while collection processes are largely effective, external or internal factors may intermittently impact the speed at which receivables are converted into cash.

The analysis of the financial activity ratios over multiple quarters reveals several noteworthy trends in operating efficiency and working capital management.

Average Inventory Processing Period

The average inventory processing period exhibits a general upward trend over the observed timeline. Starting at 67 days, it gradually increases with some fluctuations, reaching a peak near 79 days during several quarters. A slight reduction is seen toward the end of the period, dropping to 71 days at one point before rising again. This trend suggests a lengthening of the time inventory remains held before being processed, which might indicate challenges in inventory turnover or changes in inventory management strategies.

Average Receivable Collection Period

The average receivable collection period shows more variability but generally remains within a range from the low 50s to mid-50s in days. It initially declines slightly, then oscillates around the mid-50 day mark without a clear sustained upward or downward movement. The fluctuations suggest a relatively stable but moderately variable pace in collections, reflecting periodic changes in credit policies or customer payment behaviors.

Operating Cycle

The operating cycle, representing the combined duration of inventory processing and receivable collection, largely mirrors the trends observed in the prior two metrics. It starts around 128 days and fluctuates around this baseline with a gradual tendency toward an increase, climbing to approximately 130–134 days in more recent quarters before a modest decrease. This extended operating cycle could imply that cash conversion is taking longer, potentially impacting liquidity and working capital efficiency.

In summary, the company has faced a gradual lengthening in inventory processing times, while receivable collection periods remain relatively stable with some fluctuations. The overall operating cycle aligns broadly with these observations, reflecting an extended duration for converting inventory investments back into cash. These trends may warrant attention to inventory management practices and credit control policies to optimize cash flow and operational efficiency.

The analysis of the payables turnover ratio and the average payables payment period over the examined quarters reveals notable trends in the company's payment behavior and creditor management.

Payables Turnover Ratio

The payables turnover ratio demonstrates a fluctuating decreasing trend over the periods. Initially, the ratio increased from 5.67 in March 2021 to a peak of 6.52 in June 2021, followed by a gradual decline with minor fluctuations, eventually reaching 4.72 by September 2025. This downward movement indicates a slower rate of paying off suppliers over time, suggesting potentially extended credit terms or a slowdown in procurement activity relative to accounts payable.

Average Payables Payment Period

The average payables payment period, expressed in days, inversely reflects the trend observed in the turnover ratio. Starting at 64 days in March 2021, the period initially decreased to 56 days by June 2021, indicating quicker payments. Subsequently, the period progressively lengthened, reaching 77 days by September 2025. This increase in days payable outstanding suggests that the company is taking longer to settle its obligations with suppliers, consistent with the lowering payables turnover.

Relationship Between Metrics

The inverse relationship between the payables turnover ratio and the average payment period is typical, as a falling turnover ratio corresponds to a rising number of days to pay suppliers. Both metrics combined suggest a strategic or operational shift towards more extended payment terms or cash flow management tactics that prioritize increased payment delays.

Overall Insight

From the observed data, the company appears to be extending its payables cycle gradually over the examined timeframe, which could imply an intent to optimize cash flows or negotiate longer payment terms with suppliers. However, lengthening payment periods may also indicate potential liquidity concerns or changes in supplier relationships that warrant further monitoring to assess impacts on creditworthiness and supply chain stability.

The financial data reflects several notable trends in the company’s operational efficiency over the analyzed quarters, with particular focus on inventory management, receivables, payables, and overall cash conversion cycle.

Average Inventory Processing Period

The inventory processing period shows a general upward trend from 67 days at the start to a peak around 79 days in mid-2024, before declining towards 73 days by the end of the period. This indicates that the time taken to process inventory has gradually increased initially, possibly suggesting slowing inventory turnover or changes in supply chain dynamics, but there is some improvement towards the latest quarters.

Average Receivable Collection Period

The receivable collection period fluctuates within a range of approximately 47 to 61 days. There is no strong directional trend, but some oscillations are observed, with periods of improvement (reduction in days) followed by slight increases. The latest data suggests a relatively stable collection period around the mid-50s in number of days, reflecting consistent credit collection practices.

Average Payables Payment Period

The payables payment period has generally increased over time, starting near 64 days and rising to approximately 77 days by the end. This indicates that the company is taking longer to pay its suppliers on average, which could be a strategic move to optimize cash outflows or reflect changes in supplier agreements or cash management policies.

Cash Conversion Cycle (CCC)

The cash conversion cycle experiences moderate variability but exhibits a slight decline towards the latter quarters, falling from the high 60s to around 50 days. This reduction in the CCC implies an improvement in working capital efficiency, as the company is able to convert investments in inventory and receivables into cash more quickly despite the rising inventory days and payables period.

Overall, the company shows a mixed pattern of operational performance: inventory management duration has lengthened but begins to improve, receivables remain fairly stable, payables extend longer, likely aiding cash position, and cash conversion cycle trends downward indicating improved liquidity management. Such dynamics suggest calibrated adjustments in operational and financial strategies aimed at balancing efficiency and cash flow optimization.