RTX Corp. (NYSE:RTX)

The analysis of the financial ratios and periods reveals several notable trends over the reported quarters.

Inventory Turnover

The inventory turnover ratio showed an increasing trend from March 2021, rising from 5.11 to a peak of 5.65 by March 2022. Thereafter, it generally declined, reaching a low of 4.6 in September 2023, before exhibiting some recovery to 5.12 by March 2025. This pattern suggests initial improvement in inventory management efficiency, followed by some slowdown, and a recent rebound in turnover.

Receivables Turnover

Receivables turnover fluctuated within a moderate range, starting near 6.11 in March 2021, peaking above 7 in several quarters, including 7.36 in December 2022 and again 7.83 in September 2024. The data indicate intermittent improvements in the collection of receivables, with turnover generally trending upward by the end of the period.

Payables Turnover

The payables turnover ratio increased from roughly 5.56 in March 2021 to a high of 6.52 in September 2021, indicating faster payment to suppliers during that period. Subsequent quarters showed a gradual decline to 4.89 by March 2025, suggesting a lengthening in payment terms or slower disbursements over time.

Working Capital Turnover

This ratio exhibited significant volatility. Starting near 7.52 in early 2021, it surged dramatically, peaking at an exceptionally high 44.25 in September 2023, followed by a drop and then an extreme spike to 279.93 by March 2025. Such fluctuations imply extraordinary changes in working capital utilization or reporting irregularities, warranting further investigation to understand underlying causes.

Average Inventory Processing Period

The average inventory days gradually increased from 65 days in late 2020 to a peak around 79 days from late 2022 through early 2024. This upward shift suggests slower inventory turnover and potentially reduced operational efficiency regarding inventory management during this timeframe.

Average Receivable Collection Period

The days sales outstanding ranged from about 47 to 61 days, showing slight improvement in receivables collection time, with some oscillation. Toward the end of the period, the collection period settled near 50-51 days, indicating slightly improved but stable receivables management.

Operating Cycle

The operating cycle remained relatively stable throughout the period, fluctuating between 118 and 134 days without a clear trending direction. This stability suggests steady overall management of working capital components combined.

Average Payables Payment Period

The payment period to suppliers initially decreased from 66 days to a low of 56 days in late 2020, then moved upward again, reaching 75 days by March 2025. This indicates a gradual extension in the time taken to pay suppliers, which may reflect strategic working capital management or liquidity constraints.

Cash Conversion Cycle

The cash conversion cycle shortened from 65 days in March 2021 to a low of 49 days by September 2024, indicating improved cash flow efficiency. There was a slight increase after this point but the cycle remained below initial levels, demonstrating generally enhanced cash flow management over the reported periods.

Cost of Sales

The cost of sales demonstrated notable fluctuations over the observed periods. Starting at 8,572 million USD in March 2020, it peaked sharply at 14,266 million USD by December 2020. Thereafter, it experienced a decline and some oscillation, stabilizing around the 12,500–13,000 million USD range through most of 2021. From early 2022 onward, a renewed upward trend is visible, with the cost of sales rising again, reaching an elevated level of approximately 17,388 million USD by December 2024 before slightly decreasing to 16,190 million USD at the last recorded date in March 2025. This pattern suggests increased production or sales activity with some seasonal or cyclical variations impacting costs.

Inventory, Net

Inventory levels displayed a decreasing trend from 11,506 million USD in March 2020 to a low of 9,178 million USD by December 2021. Following this period, inventory began a steady rise, climbing to 13,618 million USD by March 2025. This upward trend during the latter periods may reflect strategic stockpiling or preparation for increased sales, while the earlier decline might have been driven by efforts to optimize inventory or decreased demand.

Inventory Turnover Ratio

The inventory turnover ratio commenced at 5.11 in September 2020 and increased gradually to a peak of 5.65 by March 2021. This indicates a higher rate of inventory being sold and replenished during this time. Following the peak, the ratio generally declined to approximately 4.6 by December 2023, signifying slower inventory movement relative to cost of sales. However, the final data points show a rebound to around 5.12 by March 2025, implying an improvement in inventory efficiency toward the most recent period.

Overall Insights

The interplay between cost of sales, inventory levels, and inventory turnover ratio depicts a company experiencing dynamic operational shifts. The increasing cost of sales alongside rising inventory in the latter periods suggests ramped-up business activity with a corresponding buildup in stock. The fluctuation in inventory turnover ratio indicates varying efficiency in managing inventory, with peaks representing rapid stock movement and troughs pointing to slower turnover.

Net Sales

Net sales exhibited an overall upward trajectory from March 31, 2020 to March 31, 2025, despite some fluctuations. Starting at 11,360 million US dollars in the first quarter of 2020, net sales peaked periodically, reaching notably high values such as 18,315 million US dollars in June 2023 and culminating around 21,623 million US dollars in March 2025.

A significant dip occurred in the third quarter of 2023 when net sales decreased to 13,464 million US dollars, but this was followed by a strong recovery with consecutive increases through to early 2025. The data indicate seasonality or potentially variable demand conditions impacting sales.

Accounts Receivable, Net

The net accounts receivable displayed a variable pattern, generally fluctuating between approximately 9,000 and 11,500 million US dollars over the observed periods. Higher values were noted at the start of the period, with a peak near 13,104 million US dollars in March 2020, followed by decreases and partial recoveries.

From 2021 onward, accounts receivable remained relatively stable with mild oscillations, mostly staying within the 9,000 to 11,000 million US dollars range. The highest levels towards the end of the timeline, reaching around 11,426 million US dollars in March 2025, suggest a moderate increase in outstanding receivables relative to earlier years.

Receivables Turnover Ratio

The receivables turnover ratio, available from the third quarter of 2020 onwards, indicated consistent performance with ratios generally ranging between 6.0 and 7.8 times.

This ratio peaked at 7.83 times in March 2025, implying improved efficiency in collections when compared to earlier periods. Fluctuations were observed throughout the quarters, but there was no evident long-term decline, which signifies stable management of accounts receivable relative to sales.

Notably, periodic variations in turnover ratio seemed to correspond with changes in both net sales and accounts receivable, reflecting dynamic credit and collection activities over time.

Cost of Sales

The cost of sales exhibited considerable fluctuation over the periods presented. Initially, there was a marked increase from 8,572 million USD in March 2020 to a peak of 14,266 million USD by December 2020. Following this peak, the cost of sales showed a tendency to oscillate, with some quarters experiencing declines and others increases. From 2021 onward, the amounts remained generally within the range of approximately 12,500 to 16,000 million USD, with the highest values observed at the end of 2024 and beginning of 2025. Despite these variations, there is no clear upward or downward trend over the long term, indicating a pattern of volatility rather than steady growth or decline.

Accounts Payable

Accounts payable displayed a more volatile pattern in the early periods but showed a tendency toward increase over the longer term. Starting at 10,976 million USD in March 2020, there was a notable decline in the subsequent quarters down to 7,182 million USD by June 2020. After this decline, accounts payable gradually increased, surpassing the initial values and reaching 13,444 million USD by March 2025. This upward movement in accounts payable suggests an increasing reliance on supplier credit or delayed payments over time, particularly from 2022 onward, where a steady rise is evident quarter to quarter.

Payables Turnover

The payables turnover ratio, available from September 2020 onward, reflects how rapidly the company is paying off its accounts payable. This ratio initially increased from 5.56 to a peak of 6.52 by September 2021, indicating faster payment to suppliers during that period. Subsequently, there was a general decline in turnover to 4.89 by December 2024, reflecting slower payment cycles or longer credit terms being negotiated with suppliers. Although minor fluctuations occurred, the overall trend from mid-2021 to the end of 2024 is a moderate but consistent decrease in payables turnover, which could signal changes in the company's working capital management strategy or supplier payment policies.

Working Capital

The working capital exhibited a generally declining trend from March 2020 through September 2022, falling from 7,373 million to 3,448 million US dollars, indicating potential tightening in liquidity or increased current liabilities relative to current assets. After this period, fluctuations occurred, with modest recoveries observed in March 2023 and June 2023, though these were followed by a sharp decline into negative values from June 2024 through September 2024, reaching a low in June 2024 at -483 million US dollars. The value partially rebounded by March 2025 to a positive 292 million US dollars, suggesting a volatile liquidity position over the latter quarters.

Net Sales

Net sales demonstrated an overall upward trajectory throughout the entire period. Starting at 11,360 million US dollars in March 2020, the figure increased with some variability, peaking at 21,623 million US dollars in December 2024. A notable surge occurred between September 2023 and December 2024, where sales rose from 13,464 to 21,623 million US dollars, indicating strong revenue growth. Despite occasional quarter-to-quarter dips, the general pattern reflects sustained sales expansion over the examined horizon.

Working Capital Turnover

The working capital turnover ratio, available from December 2020 onwards, shows an increasing trend for much of the period, rising from 7.52 to an extraordinary level of 44.25 by September 2023. This upward movement, peaking at 44.25, reflects an improved efficiency in utilizing working capital to generate sales. However, following this peak, the ratio declined to 23.64 by December 2023, before a very sharp increase to 279.93 reported in March 2025. The latter extreme value likely correlates with the transition of working capital into negative territory during earlier quarters, potentially indicating very low or negative working capital being leveraged to produce sales, which can imply higher operational risk or aggressive management of current assets and liabilities.

Summary

Overall, the data reveals increasing net sales suggesting growing demand or expanded operations. Conversely, working capital trends suggest mounting challenges in maintaining liquidity, particularly as working capital slipped into negative values intermittently in 2024. The volatility and dramatic fluctuations in working capital turnover underline changing operational dynamics and potentially stressed short-term financial management. These patterns warrant close attention to liquidity risk and to the sustainability of revenue growth given the fluctuating efficiency ratios.

The analysis of the given financial data reveals important trends in inventory management ratios over multiple quarters from March 2020 to March 2025.

Inventory Turnover Ratio

The inventory turnover ratio shows a gradual fluctuation throughout the observed period. Starting at 5.11 in March 2020, it increased slightly to a peak of 5.65 in March 2021, indicating enhanced efficiency in inventory usage. Subsequently, the ratio experienced a steady decline, reaching its lowest values around 4.6 to 4.68 between June and September 2023. This reduction suggests a slower inventory rotation and a potential build-up of stock. In the later quarters, some recovery is evident, with the ratio climbing back to 5.12 in March 2025, which could imply improvements in inventory management or sales velocity.

Average Inventory Processing Period (Number of Days)

This metric inversely corresponds with inventory turnover, reflecting the average duration inventory remains before sale. From an initial 71 days in March 2020, the period shortened to a low of 65 days by December 2020 and March 2021, indicating a quicker turnover. Afterward, the period gradually extended, reaching a maximum of 79 days between September and December 2023. This trend suggests increasingly slower inventory turnover during these quarters, which might point to reduced sales or rising stock levels. There is a slight improvement in the later quarters, with the period reducing to 71 days by March 2025, suggesting a return towards more efficient inventory processing.

Overall, the data portrays a period of initial efficiency in inventory handling succeeded by a slowdown during mid-2022 to late 2023. The recovery trend in early 2024 and onwards reflects potential strategic adjustments or market conditions favoring improved inventory management. Monitoring these ratios over time is critical to maintaining operational efficiency and controlling inventory-related costs.

The analysis of the receivables turnover ratio over the observed periods indicates relative stability with some fluctuations. Starting from a turnover ratio of 6.11, the ratio slightly decreased to 6.03 in mid-2021, then increased to reach as high as 7.15 in several quarters, including early and late 2022. The ratio generally oscillates around the range of approximately 6.3 to 7.8, showing periods of improved efficiency in receivables collection as well as some temporary declines. The highest observed turnover ratio is 7.83, occurring in the third quarter of 2024, suggesting a peak in the company's efficiency at converting receivables into cash during that time. Towards the latest periods, the ratio slightly decreased again to 7.15 by the first quarter of 2025.

Regarding the average receivable collection period, the data reflect an inverse relationship with the receivables turnover ratio, consistent with financial theory. The number of days decreased from values as high as 61 to lows in the low 50s and even 47 days in the third quarter of 2024. This short period indicates quicker collection of receivables, therefore better cash flow management at that time. However, slight increases in days appear intermittently, indicating occasional slower collections, though these remain mostly within a controlled range of about 50 to 60 days.

Overall, the trends suggest an effective management of accounts receivable, with the company generally maintaining a favorable turnover ratio and collection period. Peaks in receivables turnover coincidence with lower average collection days, pointing toward optimized credit and collection policies in certain quarters. While there are natural fluctuations, no significant deterioration or alarming trends in receivables management are evident from this dataset.

Average Inventory Processing Period

The average inventory processing period shows a general upward trend over the observed quarters. Starting at 71 days in March 2021, it declines slightly to 65 days by December 2021, indicating improved inventory turnover efficiency during that interval. However, from early 2022 onwards, the period gradually increases again, reaching a peak of 79 days in September 2023. Thereafter, a modest decline follows, reducing the period to 71 days by March 2025. This pattern suggests some fluctuations in inventory management performance, with a notable lengthening of the processing period during 2022 and 2023, followed by improvement towards the end of the timeframe.

Average Receivable Collection Period

The average receivable collection period exhibits variability but remains relatively stable within a range of approximately 47 to 61 days throughout the quarters presented. After an initial value of 60 days in March 2021, the period decreases to a low of 47 days in September 2024, indicating improved collection efficiency. Notably, some quarter-to-quarter fluctuations occur, such as a rise to 61 days in June 2021 and interim oscillations around low 50s in the subsequent periods. The general slight downward trend towards the later quarters may reflect improved credit management or more effective collection processes.

Operating Cycle

The operating cycle, which combines the effects of inventory processing and receivables collection periods, remains fairly consistent with minor fluctuations. Initially recorded at 131 days in March 2021, it declines to a low of 118 days by September 2021, signaling enhanced operational efficiency during this time. Subsequently, the operating cycle fluctuates within the range of 120 to 134 days, with peaks around early 2023 and a trough close to 121 days in September 2024. Overall, the operating cycle does not demonstrate a strong directional trend but reflects the interplay of the two underlying components, mirroring their respective tendencies and occasional variances over the examined timelines.

Payables Turnover Ratio

The payables turnover ratio exhibits a fluctuating yet generally declining trend over the observed periods. Initially, in early 2021, the ratio increased from 5.56 to a peak of 6.52 by September 2021, indicating a faster rate of payables settlement. Following this peak, the ratio decreased and stabilized around 5.3 to 5.6 through 2022 and 2023, with minor oscillations. From March 2024 onwards, a gradual decline is evident, falling from 5.6 down to 4.89 by March 2025. This downward trend suggests a slowing pace in the settlement of payables in the most recent quarters.

Average Payables Payment Period (Number of Days)

The average payables payment period inversely mirrors the payables turnover ratio, starting at 66 days in March 2021, dropping to a low of 56 days in September 2021, implying quicker payments during that period. Subsequently, this metric increases and shows greater variability, ranging mostly between 62 and 69 days across 2022 and 2023. In the latest data from March 2024 to March 2025, the payment period lengthens distinctly from 65 days to 75 days, indicating a slower clearance of payables, consistent with the observed decline in the payables turnover ratio.

Overall Insights

Over the analyzed timeframe, the data suggests a shift from relatively fast payables processing to gradually slower payment cycles. The initial improvement in payables turnover and reduction in payment days indicates enhanced efficiency in payables management during 2021. However, this trend reverses starting in late 2021 and continues through 2024 and early 2025, reflecting increasing payment periods. This change could imply evolving credit terms, liquidity considerations, or strategic decisions related to working capital management. Monitoring these trends is important for assessing supplier relationships and cash flow impact.

Average Inventory Processing Period

The average inventory processing period shows an initial decreasing trend from 71 days in March 2021 to 65 days in December 2021. Subsequently, the period increases gradually, peaking at 79 days in September 2023 before experiencing slight fluctuations around the upper seventies. The period tends to hover in the mid to upper seventies toward the later periods, with a value of 76 days recorded in March 2025, indicating a lengthening of inventory processing time over the analyzed timeframe.

Average Receivable Collection Period

The average receivable collection period exhibits moderate volatility over the observed periods. It starts at 60 days in March 2021, declines to a low of 50 days in December 2022, and then fluctuates between the low fifties and high forties through to March 2025. This pattern suggests ongoing efforts to manage receivable collections with some degree of variability but an overall stable trend without significant prolonged increases or decreases.

Average Payables Payment Period

The average payables payment period demonstrates a generally cyclical pattern with values ranging from a low of 56 days in September 2021 to a high of 75 days in March 2025. Initial decreases are followed by intermittent increases, indicating variability in payment timing to suppliers. In the final periods, the payment period lengthens, suggesting possible strategic extensions of payable terms or delays in disbursements, culminating in the highest recorded value within the timeframe.

Cash Conversion Cycle

The cash conversion cycle shows a downward trend from 65 days in March 2021 to 55 days in September 2022, reflecting improved efficiency in the operational cycle. However, it rises again afterward, stabilizing around the mid-sixties through 2023, before declining sharply to 49 days in March 2025. Overall, this indicates fluctuations in the time taken to convert investments in inventory and receivables back into cash, with a notable improvement in the most recent period assessed.