Raytheon Co. (NYSE:RTN)

Inventory Turnover

The inventory turnover ratio fluctuated over the period, starting at 27.68 in 2015, slightly decreasing to 27.23 in 2016, then rising to a peak of 32.11 in 2017. It declined to 25.82 in 2018 before increasing again to 31.91 in 2019. Overall, this indicates varying efficiency in inventory management with notable improvement in 2017 and 2019.

Receivables Turnover

The receivables turnover ratio saw a gradual decline from 19.89 in 2015 to 19.15 in 2017, followed by a more pronounced drop to 16.42 in 2018. The ratio rebounded sharply to 21.39 in 2019, suggesting a temporary slowdown in collections in 2018, but a significant recovery thereafter.

Payables Turnover

The payables turnover ratio decreased from 12.53 in 2015 to a low of 9.97 in 2018 before rising to 11.92 in 2019. This trend indicates a lengthening of the payment period up to 2018, followed by a moderate improvement in payment speed.

Working Capital Turnover

The working capital turnover ratio generally increased over the five years, moving from 6.31 in 2015 to 8.87 in 2019. There was a dip in 2016, but the trend from 2017 onwards points to improving efficiency in using working capital to generate sales.

Average Inventory Processing Period

This period was stable at 13 days in 2015 and 2016, shortened to 11 days in 2017, rose to 14 days in 2018, and dropped back to 11 days in 2019. The fluctuations reflect changes in inventory turnover, indicating variable speed in processing inventory.

Average Receivable Collection Period

The collection period remained steady at 18 days in 2015 and 2016, increased slightly to 19 days in 2017 and further to 22 days in 2018, then improved significantly to 17 days in 2019. These changes align with the receivables turnover ratio trends, showing slower collections before 2019 and a recovery afterwards.

Operating Cycle

The operating cycle was consistently around 30-31 days from 2015 to 2017, increased to 36 days in 2018, and then reduced markedly to 28 days in 2019. The increase in 2018 reflects the longer inventory processing and collection periods that year, while the reduction in 2019 indicates improved operational efficiency.

Average Payables Payment Period

This period increased from 29 days in 2015 to 37 days in 2018 before decreasing to 31 days in 2019. The longer payment period in 2018 suggests delayed payments to suppliers, which slightly reversed in 2019.

Cash Conversion Cycle

The cash conversion cycle shows a small positive value of 2 days in 2015, a missing value for 2016, then a slight improvement to 1 day in 2017. It turned negative to -1 day in 2018 and further improved to -3 days in 2019. A negative cash conversion cycle indicates that the company was able to collect cash from customers before paying its suppliers, an advantageous liquidity position.

Cost of Sales, Products and Services

The cost of sales exhibited a generally increasing trend from 2015 to 2019, rising from 17,574 million US dollars in 2015 to 21,413 million US dollars in 2019. There was a consistent year-over-year increase except for a slight slowdown in growth during 2017 and 2018. Overall, the increase suggests either an expansion in production or rising input costs over the period.

Inventories

Inventories showed fluctuating values during the analyzed period. After a modest increase from 635 million US dollars in 2015 to 659 million US dollars in 2016, inventories declined to 594 million US dollars in 2017. They then rose sharply to 758 million US dollars in 2018 before falling again to 671 million US dollars in 2019. This pattern indicates variability in inventory management or possible shifts in supply chain strategies.

Inventory Turnover

The inventory turnover ratio also varied during the five years. It began at a high of 27.68 times in 2015, decreased slightly in 2016, then peaked at 32.11 times in 2017. This was followed by a notable decline to 25.82 times in 2018 and a recovery to 31.91 times in 2019. These fluctuations reflect changes in inventory efficiency and possibly the velocity of inventory turnover aligning with inventory level changes over time.

The financial data indicates a consistent increase in net sales over the five-year period from 2015 to 2019. Net sales rose progressively each year, starting at 23,247 million US dollars in 2015 and reaching 29,176 million US dollars by 2019. This trend reflects steady growth in the company's revenue generation.

Receivables, net, also showed an overall upward trend, increasing from 1,169 million US dollars in 2015 to a peak of 1,648 million US dollars in 2018 before declining to 1,364 million US dollars in 2019. This pattern suggests that while the amount of credit extended to customers generally increased, there was a notable reduction in receivables in the final year observed.

Receivables turnover, a ratio indicating how efficiently the company collects its receivables, showed some variability. It started at 19.89 in 2015, remained relatively stable in 2016 and 2017, and then declined to 16.42 in 2018, indicating slower collection during that year. However, it markedly improved to 21.39 in 2019, surpassing the initial values and suggesting enhanced efficiency in receivables collection by the end of the period.

In summary, the data presents a picture of consistent sales growth accompanied by fluctuating receivables balances and varying efficiency in collections. The peak in receivables in 2018 and the corresponding dip in turnover indicate a temporary slow-down in receivables management, which was corrected by 2019, as evidenced by the improved turnover ratio.

The analysis of the provided financial data reveals several trends in the company's operational and payment activities over the five-year period ending in 2019.

Cost of Sales, Products and Services

The cost of sales demonstrates a consistent upward trajectory throughout the period. Starting at $17,574 million in 2015, the value increased each year, reaching $21,413 million by the end of 2019. This steady increase suggests either rising production costs, increased sales volume, or a combination of both factors.

Accounts Payable

Accounts payable figures fluctuate somewhat but generally show an increase from 2015 to 2018, rising from $1,402 million to $1,964 million. However, by the end of 2019, there is a decline to $1,796 million. This indicates changing credit terms with suppliers or variations in purchasing volume, with a peak in payables in 2018 followed by a reduction in 2019.

Payables Turnover Ratio

The payables turnover ratio exhibits variability over the years. It starts at 12.53 in 2015, dips slightly in 2016, recovers in 2017, drops significantly in 2018 to 9.97, and improves again to 11.92 in 2019. This ratio suggests fluctuations in the company's efficiency in paying its suppliers, with a notable decrease in payment speed during 2018, followed by a faster payment rate in 2019.

Overall, while the cost of sales consistently rises, indicating growing operational activity or costs, the accounts payable and payables turnover ratio point to some variability in managing supplier payments, particularly a slower payment cycle in 2018 that partially reverses in 2019.

Working Capital

Working capital exhibited a fluctuating trend over the observed period. It increased from 3686 million US dollars in 2015 to a peak of 4251 million in 2016, followed by a gradual decline to 3291 million by the end of 2019. This represents an overall decrease in working capital of approximately 11% from 2015 to 2019.

Net Sales

Net sales showed a consistent upward trend throughout the five-year span. Starting at 23247 million US dollars in 2015, net sales steadily increased each year, reaching 29176 million by 2019. This corresponds to a total growth of around 25% over the period, indicating strong sales performance and possible market expansion.

Working Capital Turnover

Working capital turnover experienced variability but demonstrated an overall increasing pattern. After a dip from 6.31 in 2015 to 5.66 in 2016, the ratio rose substantially to 8.87 in 2019. This suggests an improvement in the efficiency with which working capital is used to generate sales, particularly noteworthy given the decline in absolute working capital figures.

The data indicates fluctuations in inventory management efficiency over the five-year period. The inventory turnover ratio, which measures the number of times inventory is sold and replaced over a period, shows variability. It started at 27.68 in 2015, slightly declined to 27.23 in 2016, then increased notably to 32.11 in 2017, dropped again to 25.82 in 2018, and rose to 31.91 in 2019. This pattern suggests intermittent improvements and setbacks in how quickly inventory is being moved.

Correspondingly, the average inventory processing period, expressed in number of days, presents an inverse trend as expected. The processing period remained stable at 13 days in 2015 and 2016, decreased to 11 days in 2017 which aligns with the peak turnover ratio that year, then increased to 14 days in 2018 when turnover ratio declined, and finally returned to 11 days in 2019 with the turnover ratio rising again. This fluctuation in processing period confirms changes in operational efficiency concerning inventory handling and turnover speed.

Overall, the data reveals that inventory turnover and average processing period are closely related, with higher turnover rates corresponding to shorter processing periods and vice versa. The variations over the years suggest that the company’s inventory management effectiveness experienced periodic shifts, which could be due to changes in demand, supply chain operations, or internal policies affecting inventory handling.

The analysis of the annual financial data reveals notable trends in the receivables management over the observed period.

Receivables Turnover Ratio

The receivables turnover ratio exhibited fluctuations within the five-year span. Starting at 19.89 in 2015, it slightly declined over the next three years, reaching a low of 16.42 in 2018. This decline indicates a slowdown in the frequency of collecting receivables during that time. However, in 2019, there was a significant increase to 21.39, suggesting an improvement in the efficiency of receivables collection by year's end.

Average Receivable Collection Period

The average receivable collection period aligns inversely with the receivables turnover. It remained steady at 18 days from 2015 to 2016, then rose marginally to 19 days in 2017, before increasing more noticeably to 22 days in 2018. This rise indicates a lengthening in the time taken to collect receivables, which is consistent with the lower turnover ratio that year. In 2019, however, the collection period decreased sharply to 17 days, reflecting a faster collection cycle and improved liquidity management.

Overall, the data reflect a period of decreasing efficiency in receivables collection from 2015 through 2018, followed by a strong recovery in 2019. The improvements observed in the final year may suggest enhanced credit control measures or changes in customer payment behavior leading to quicker cash inflows.

The data reveals the trends in inventory management, receivables collection, and the overall operating cycle over the five-year period.

Average Inventory Processing Period

The inventory processing period remained fairly stable between 11 and 14 days, with a slight dip to 11 days in 2017 and 2019 after peaking at 14 days in 2018. This suggests the company maintained a relatively consistent pace in processing inventory, with minor fluctuations.

Average Receivable Collection Period

The receivable collection period showed more variation, rising gradually from 18 days in 2015 and 2016 to a high of 22 days in 2018, before improving significantly to 17 days in 2019. The increase in 2018 indicates a temporary slowdown in collecting payments, but the subsequent reduction reflects an improvement in receivables management.

Operating Cycle

The operating cycle followed a pattern linked to the aforementioned metrics. It was consistent at around 30 to 31 days from 2015 to 2017, then increased to 36 days in 2018 due to longer collection and processing periods. In 2019, the operating cycle decreased sharply to 28 days, the shortest period in the observed timeframe, driven by reductions in both inventory processing and receivable collection periods.

The analysis reveals fluctuations in the payables turnover ratio and the average payables payment period over the five-year span.

Payables Turnover

The payables turnover ratio exhibits variability, beginning at 12.53 in 2015 and experiencing a slight decrease to 11.81 in 2016. It recovered to 12.56 in 2017 before decreasing significantly to 9.97 in 2018, indicating a slower rate of paying off payables. In 2019, the ratio increased again to 11.92, suggesting an improvement in the rate at which payables were managed and paid.

Average Payables Payment Period

The average payment period shows an inverse trend compared to the payables turnover. Starting at 29 days in 2015, it increased to 31 days in 2016, reverted to 29 days in 2017, then peaked at 37 days in 2018, implying extended payment times during that year. In 2019, it decreased to 31 days, indicating a partial return to quicker payments.

Overall, the data indicates a general pattern where increases in the average payment period correspond to decreases in payables turnover, particularly notable in 2018. The subsequent year shows signs of improved payment efficiency, though not fully returning to the initial levels observed in 2015 and 2017.

The financial data reveals trends in the company's working capital management over a five-year period. The focus is on inventory, receivables, payables, and the resulting cash conversion cycle.

Average Inventory Processing Period

The inventory processing period fluctuated slightly, starting at 13 days in 2015 and remaining consistent through 2016. It then decreased to 11 days in 2017, increased to 14 days in 2018, and returned to 11 days by the end of 2019. This pattern indicates some variability but generally a relatively short inventory turnover duration.

Average Receivable Collection Period

The receivable collection period was stable at 18 days in both 2015 and 2016. It increased to 19 days in 2017 and peaked at 22 days in 2018 before declining to 17 days in 2019. This suggests some challenges in collections during 2017-2018, followed by improved efficiency in 2019.

Average Payables Payment Period

The payable payment period shows an overall increasing trend from 29 days in 2015 to 31 days in 2016, briefly dipping to 29 days in 2017, then rising notably to 37 days in 2018, before decreasing back to 31 days in 2019. This indicates a tendency to extend payment terms, especially in 2018.

Cash Conversion Cycle

The cash conversion cycle data is incomplete, but available figures show small positive or negative values close to zero, moving from 2 days in 2015 to 1 day in 2017, followed by negative values of -1 day in 2018 and -3 days in 2019. This decline into negative territory suggests an improvement in working capital management, where the company effectively generates cash before needing to pay suppliers.

Overall, the company exhibits moderate variability in inventory and receivables processing periods, with an increasing tendency to extend payables, thereby optimizing the cash conversion cycle toward a negative balance in recent years. This trend may reflect improved efficiency in liquidity management and operational cash flows.