United Parcel Service Inc. (NYSE:UPS)

An examination of long-term activity ratios reveals consistent trends across the observed period, spanning from March 31, 2022, to December 31, 2025. Generally, a decline in asset utilization efficiency is apparent, though with some fluctuations. The analysis below details observations for each ratio.

Net Fixed Asset Turnover

The net fixed asset turnover ratio demonstrates a clear downward trend over the analyzed timeframe. Starting at 2.94 in March 2022, the ratio gradually decreased to 2.35 by December 2025. While minor quarterly variations exist, the overall trajectory indicates diminishing efficiency in generating revenue from fixed assets. The rate of decline appears to be accelerating in the later periods.

Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)

Similar to the standard net fixed asset turnover, this ratio also exhibits a consistent decline. Beginning at 2.66 in March 2022, it decreased to 2.11 by December 2025. The inclusion of operating lease assets does not alter the overall downward trend, suggesting that the reduced efficiency is not solely attributable to changes in fixed asset base but rather a broader operational factor. The rate of decline mirrors that of the standard net fixed asset turnover.

Total Asset Turnover

The total asset turnover ratio follows a comparable pattern of decline. Starting at 1.41 in March 2022, the ratio decreased to 1.21 by December 2025. There is a slight recovery observed in March 2024, increasing to 1.33, but this is not sustained, and the ratio continues its downward trajectory. This suggests a decreasing ability to generate sales from the company’s total asset base.

Equity Turnover

The equity turnover ratio displays more variability than the other ratios, but still shows an overall decreasing trend. It begins at 6.41 in March 2022 and ends at 5.46 in December 2025. A peak is observed in December 2022 at 5.26, followed by an increase to 5.81 in March 2025, before declining again. This ratio suggests that the company is generating less revenue for each dollar of equity invested, although the fluctuations are more pronounced than those seen in the asset turnover ratios.

In summary, the observed trends indicate a consistent reduction in the efficiency with which assets and equity are utilized to generate revenue. This warrants further investigation into the underlying operational factors driving these declines.

The net fixed asset turnover ratio experienced a general declining trend over the observed period, spanning from March 31, 2022, to December 31, 2025. Initially, the ratio demonstrated relative stability, followed by a consistent decrease in subsequent quarters.

Initial Period (Mar 31, 2022 – Dec 31, 2022)

The ratio began at 2.94 and peaked at 3.01 in September 2022, indicating a slight improvement in the efficiency of asset utilization during this timeframe. However, it concluded the period at 2.89, suggesting a minor reduction in efficiency by year-end.

Declining Trend (Mar 31, 2023 – Dec 31, 2025)

A clear downward trajectory commenced in March 2023, with the ratio decreasing from 2.83 to 2.35 by December 2025. This represents a substantial decline over the three-year period. The rate of decline appeared to accelerate in the latter half of 2023 and continued through 2024 and 2025.

Revenue and Asset Relationship

While revenue fluctuated throughout the period, it did not demonstrate a consistent upward trend that would offset the increasing value of property, plant, and equipment. The consistent growth in net fixed assets, coupled with relatively stable or declining revenue, contributed to the observed decrease in the net fixed asset turnover ratio.

Recent Performance

The ratio stabilized somewhat between 2.37 and 2.45 from September 2024 through March 2025, before concluding at 2.35. This suggests the rate of decline may be slowing, but the overall trend remains negative.

The observed decline in the net fixed asset turnover ratio warrants further investigation to determine the underlying causes. Potential factors could include inefficiencies in asset utilization, overinvestment in fixed assets, or a slowdown in revenue growth relative to asset investment.

The net fixed asset turnover ratio, calculated including operating leases and right-of-use assets, demonstrates a generally declining trend over the observed period from March 31, 2022, to December 31, 2025. Initial values indicate a relatively efficient utilization of fixed assets, but this efficiency appears to diminish over time.

Overall Trend

The ratio begins at 2.66 in March 2022 and generally decreases to 2.11 by December 2025. This represents a roughly 21% decline over the period. The rate of decline appears to accelerate in the latter half of the observed timeframe.

Initial Period (March 2022 - December 2022)

From March 2022 to June 2022, the ratio experiences a slight increase, from 2.66 to 2.71. This is followed by a further increase to 2.73 in September 2022, representing the highest value in the observed period. A subsequent decrease to 2.61 is noted in December 2022, but the ratio remains above the initial value.

Transitional Period (March 2023 - December 2023)

The period from March 2023 to December 2023 shows a consistent downward trend. The ratio declines from 2.53 in March 2023 to 2.20 in December 2023. This suggests a weakening relationship between revenue generated and the investment in fixed assets.

Recent Period (March 2024 - December 2025)

The decline continues in the most recent period. The ratio fluctuates between 2.17 and 2.20 from March 2024 to September 2025, before concluding at 2.11 in December 2025. This indicates a sustained period of lower asset turnover.

Concurrently, the underlying fixed assets (including operating leases and right-of-use assets) have generally increased over the period, from US$37,076 million in March 2022 to US$41,994 million in December 2025. The combination of increasing fixed assets and decreasing net fixed asset turnover suggests that the company is generating less revenue per dollar of fixed asset investment.

Revenue also exhibits fluctuations, but does not consistently increase in line with the growth in fixed assets, contributing to the observed decline in the turnover ratio.

The total asset turnover ratio exhibits a fluctuating pattern over the observed period, spanning from March 31, 2022, to December 31, 2025. Initially, the ratio demonstrates a slight increase, followed by a gradual decline, and then a period of relative stability before concluding with a further downward trend.

Initial Period (Mar 31, 2022 – Jun 30, 2022)

The ratio begins at 1.41 and increases to 1.43, indicating a modestly improved efficiency in generating revenue from its asset base during this timeframe. This suggests a slight enhancement in asset utilization.

Peak and Subsequent Decline (Sep 30, 2022 – Dec 31, 2023)

The ratio reaches a peak of 1.45 in September 2022, before commencing a consistent decline to 1.28 by December 2023. This downward trend suggests a decreasing ability to generate sales for each dollar of assets held. The decline could be attributed to factors such as slower sales growth, increased asset holdings, or a combination of both.

Stabilization and Renewed Decline (Mar 31, 2024 – Dec 31, 2025)

From March 2024, the ratio experiences a brief period of stabilization, fluctuating between 1.27 and 1.33 for several quarters. However, it resumes its downward trajectory in the final quarters, concluding at 1.21 in December 2025. This final decline reinforces the earlier observed trend of diminishing asset efficiency.

Overall Trend

The overall trend indicates a weakening relationship between revenue generation and asset utilization. While initial quarters showed modest improvement, the latter portion of the period demonstrates a consistent decrease in the total asset turnover ratio. This warrants further investigation into the underlying causes, such as changes in operational efficiency, asset management strategies, or industry-specific factors.

The fluctuations observed throughout the period suggest potential cyclical influences or internal operational shifts impacting the company’s ability to efficiently utilize its assets to generate revenue. The consistent decline in the latter half of the observed period is a notable concern and merits further scrutiny.

The equity turnover ratio for the analyzed period demonstrates a generally declining trend, punctuated by periods of stabilization and modest increases. Initially, the ratio exhibited a decrease from 6.41 to 5.07 between March 31, 2022, and December 31, 2022. Subsequently, the ratio experienced a slight recovery, peaking at 5.45 by December 31, 2024, before concluding at 5.46 on December 31, 2025.

Initial Decline (Q1 2022 - Q4 2022)

A consistent decrease in the equity turnover ratio is observed throughout 2022. This suggests that, relative to equity, revenue generation was becoming less efficient. The most significant drop occurred between September 30, 2022 (5.96) and December 31, 2022 (5.07), indicating a potentially substantial shift in revenue generation or equity structure during that quarter.

Stabilization and Recovery (Q1 2023 - Q4 2024)

From March 31, 2023, through December 31, 2024, the equity turnover ratio largely stabilized, fluctuating between 4.80 and 5.45. This period indicates a relative consistency in the relationship between revenue and equity. A modest upward trend is visible during this timeframe, suggesting a gradual improvement in the efficiency of equity utilization.

Recent Performance (Q1 2025 - Q4 2025)

The ratio experienced a slight increase from 5.81 in March 31, 2025 to 5.46 in December 31, 2025. This suggests a minor improvement in revenue generation relative to equity in the latter half of 2025. However, the change is minimal and does not represent a significant departure from the preceding period’s stability.

Overall Trend

While fluctuations exist, the overall trend suggests a moderate decrease in equity turnover over the analyzed period. The ratio decreased from 6.41 at the beginning of the period to 5.46 at the end. This implies that more equity is required to generate each dollar of revenue compared to the start of the observation window. Further investigation into the drivers of revenue and equity changes would be necessary to fully understand this trend.