Microsoft Excel LibreOffice Calc

United Parcel Service Inc. (UPS)

Short-term (Operating) Activity Analysis

Difficulty: Beginner

  • Annual Data
  • Quarterly Data

    • Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.

    Ratios (Summary)

    United Parcel Service Inc., short-term (operating) activity ratios

    Microsoft Excel LibreOffice Calc
    Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
    Turnover Ratios
    Inventory turnover 40.68 40.42 42.04 42.90 34.00
    Receivables turnover 7.51 7.92 8.18 8.74 8.53
    Payables turnover 4.24 4.54 5.00 5.36 5.53
    Working capital turnover 23.19 28.74 23.23 18.38 8.86
    Average No. of Days
    Average inventory processing period 9 9 9 9 11
    Add: Average receivable collection period 49 46 45 42 43
    Operating cycle 58 55 54 51 54
    Less: Average payables payment period 86 80 73 68 66
    Cash conversion cycle -28 -25 -19 -17 -12

    Source: Based on data from United Parcel Service Inc. Annual Reports

    Ratio Description The company
    Inventory turnover An activity ratio calculated as cost of goods sold divided by inventory. United Parcel Service Inc.'s inventory turnover deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017.
    Receivables turnover An activity ratio equal to revenue divided by receivables. United Parcel Service Inc.'s receivables turnover deteriorated from 2015 to 2016 and from 2016 to 2017.
    Payables turnover An activity ratio calculated as cost of goods sold divided by payables. United Parcel Service Inc.'s payables turnover declined from 2015 to 2016 and from 2016 to 2017.
    Working capital turnover An activity ratio calculated as revenue divided by working capital. United Parcel Service Inc.'s working capital turnover improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017.
    Average inventory processing period An activity ratio equal to the number of days in the period divided by inventory turnover over the period.
    Average receivable collection period An activity ratio equal to the number of days in the period divided by receivables turnover. United Parcel Service Inc.'s average receivable collection period deteriorated from 2015 to 2016 and from 2016 to 2017.
    Operating cycle Equal to average inventory processing period plus average receivables collection period. United Parcel Service Inc.'s operating cycle deteriorated from 2015 to 2016 and from 2016 to 2017.
    Average payables payment period An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. United Parcel Service Inc.'s average payables payment period increased from 2015 to 2016 and from 2016 to 2017.
    Cash conversion cycle A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. United Parcel Service Inc.'s cash conversion cycle improved from 2015 to 2016 and from 2016 to 2017.

    Inventory Turnover

    United Parcel Service Inc., inventory turnover calculation, comparison to benchmarks

    Microsoft Excel LibreOffice Calc
    Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
    Selected Financial Data (USD $ in millions)
    Cost of revenue 16,434  13,822  12,947  14,758  13,703 
    Inventories 404  342  308  344  403 
    Ratio
    Inventory turnover1 40.68 40.42 42.04 42.90 34.00
    Benchmarks
    Inventory Turnover, Competitors
    CSX Corp. 8.00 6.89 9.47 15.02 15.60
    FedEx Corp. 42.83 34.93 34.10 36.83 35.99
    Union Pacific Corp. 5.68 5.23 6.02 8.56 8.96
    Inventory Turnover, Sector
    Industrial Transportation 22.40 19.22 19.91 23.44 22.62
    Inventory Turnover, Industry
    Industrials 4.41 4.47 4.27 4.54 4.60

    Source: Based on data from United Parcel Service Inc. Annual Reports

    2017 Calculations

    1 Inventory turnover = Cost of revenue ÷ Inventories
    = 16,434 ÷ 404 = 40.68

    Ratio Description The company
    Inventory turnover An activity ratio calculated as cost of goods sold divided by inventory. United Parcel Service Inc.'s inventory turnover deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017.

    Receivables Turnover

    United Parcel Service Inc., receivables turnover calculation, comparison to benchmarks

    Microsoft Excel LibreOffice Calc
    Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
    Selected Financial Data (USD $ in millions)
    Revenue 65,872  60,906  58,363  58,232  55,438 
    Accounts receivable, net 8,773  7,695  7,134  6,661  6,502 
    Ratio
    Receivables turnover1 7.51 7.92 8.18 8.74 8.53
    Benchmarks
    Receivables Turnover, Competitors
    CSX Corp. 11.76 11.80 12.03 11.22 11.43
    FedEx Corp. 7.94 6.94 8.30 8.35 8.78
    Union Pacific Corp. 14.23 15.85 16.09 14.89 15.53
    Receivables Turnover, Sector
    Industrial Transportation 8.43 8.30 9.18 9.45 9.54
    Receivables Turnover, Industry
    Industrials 6.37 6.58 6.55 7.00 7.03

    Source: Based on data from United Parcel Service Inc. Annual Reports

    2017 Calculations

    1 Receivables turnover = Revenue ÷ Accounts receivable, net
    = 65,872 ÷ 8,773 = 7.51

    Ratio Description The company
    Receivables turnover An activity ratio equal to revenue divided by receivables. United Parcel Service Inc.'s receivables turnover deteriorated from 2015 to 2016 and from 2016 to 2017.

    Payables Turnover

    United Parcel Service Inc., payables turnover calculation, comparison to benchmarks

    Microsoft Excel LibreOffice Calc
    Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
    Selected Financial Data (USD $ in millions)
    Cost of revenue 16,434  13,822  12,947  14,758  13,703 
    Accounts payable 3,872  3,042  2,587  2,754  2,478 
    Ratio
    Payables turnover1 4.24 4.54 5.00 5.36 5.53
    Benchmarks
    Payables Turnover, Competitors
    CSX Corp. 3.51 3.48 4.34 4.85 4.11
    FedEx Corp. 8.00 5.89 8.22 8.65 8.75
    Union Pacific Corp. 4.20 3.92 5.97 6.95 7.28
    Payables Turnover, Sector
    Industrial Transportation 5.38 4.87 6.12 6.52 6.53
    Payables Turnover, Industry
    Industrials 6.74 7.29 7.65 7.38 7.45

    Source: Based on data from United Parcel Service Inc. Annual Reports

    2017 Calculations

    1 Payables turnover = Cost of revenue ÷ Accounts payable
    = 16,434 ÷ 3,872 = 4.24

    Ratio Description The company
    Payables turnover An activity ratio calculated as cost of goods sold divided by payables. United Parcel Service Inc.'s payables turnover declined from 2015 to 2016 and from 2016 to 2017.

    Working Capital Turnover

    United Parcel Service Inc., working capital turnover calculation, comparison to benchmarks

    Microsoft Excel LibreOffice Calc
    Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
    Selected Financial Data (USD $ in millions)
    Current assets 15,548  13,849  13,208  11,808  13,387 
    Less: Current liabilities 12,708  11,730  10,696  8,639  7,131 
    Working capital 2,840  2,119  2,512  3,169  6,256 
    Revenue 65,872  60,906  58,363  58,232  55,438 
    Ratio
    Working capital turnover1 23.19 28.74 23.23 18.38 8.86
    Benchmarks
    Working Capital Turnover, Competitors
    CSX Corp. 543.24 24.76 11.65 27.25 67.56
    FedEx Corp. 12.81 12.65 9.52 10.42 8.02
    Union Pacific Corp. 317.01 – 23.61 26.25 110.37
    Working Capital Turnover, Sector
    Industrial Transportation 20.80 21.88 14.78 15.75 11.00
    Working Capital Turnover, Industry
    Industrials 5.07 5.15 5.66 2.65 2.40

    Source: Based on data from United Parcel Service Inc. Annual Reports

    2017 Calculations

    1 Working capital turnover = Revenue ÷ Working capital
    = 65,872 ÷ 2,840 = 23.19

    Ratio Description The company
    Working capital turnover An activity ratio calculated as revenue divided by working capital. United Parcel Service Inc.'s working capital turnover improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017.

    Average Inventory Processing Period

    United Parcel Service Inc., average inventory processing period calculation, comparison to benchmarks

    Microsoft Excel LibreOffice Calc
    Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
    Selected Financial Data
    Inventory turnover 40.68 40.42 42.04 42.90 34.00
    Ratio (no. of days)
    Average inventory processing period1 9 9 9 9 11
    Benchmarks (no. of days)
    Average Inventory Processing Period, Competitors
    CSX Corp. 46 53 39 24 23
    FedEx Corp. 9 10 11 10 10
    Union Pacific Corp. 64 70 61 43 41
    Average Inventory Processing Period, Sector
    Industrial Transportation 16 19 18 16 16
    Average Inventory Processing Period, Industry
    Industrials 83 82 86 80 79

    Source: Based on data from United Parcel Service Inc. Annual Reports

    2017 Calculations

    1 Average inventory processing period = 365 ÷ Inventory turnover
    = 365 ÷ 40.68 = 9

    Ratio Description The company
    Average inventory processing period An activity ratio equal to the number of days in the period divided by inventory turnover over the period.

    Average Receivable Collection Period

    United Parcel Service Inc., average receivable collection period calculation, comparison to benchmarks

    Microsoft Excel LibreOffice Calc
    Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
    Selected Financial Data
    Receivables turnover 7.51 7.92 8.18 8.74 8.53
    Ratio (no. of days)
    Average receivable collection period1 49 46 45 42 43
    Benchmarks (no. of days)
    Average Receivable Collection Period, Competitors
    CSX Corp. 31 31 30 33 32
    FedEx Corp. 46 53 44 44 42
    Union Pacific Corp. 26 23 23 25 23
    Average Receivable Collection Period, Sector
    Industrial Transportation 43 44 40 39 38
    Average Receivable Collection Period, Industry
    Industrials 57 56 56 52 52

    Source: Based on data from United Parcel Service Inc. Annual Reports

    2017 Calculations

    1 Average receivable collection period = 365 ÷ Receivables turnover
    = 365 ÷ 7.51 = 49

    Ratio Description The company
    Average receivable collection period An activity ratio equal to the number of days in the period divided by receivables turnover. United Parcel Service Inc.'s average receivable collection period deteriorated from 2015 to 2016 and from 2016 to 2017.

    Operating Cycle

    United Parcel Service Inc., operating cycle calculation, comparison to benchmarks

    No. of days

    Microsoft Excel LibreOffice Calc
    Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
    Selected Financial Data
    Average inventory processing period 9 9 9 9 11
    Average receivable collection period 49 46 45 42 43
    Ratio
    Operating cycle1 58 55 54 51 54
    Benchmarks
    Operating Cycle, Competitors
    CSX Corp. 77 84 69 57 55
    FedEx Corp. 55 63 55 54 52
    Union Pacific Corp. 90 93 84 68 64
    Operating Cycle, Sector
    Industrial Transportation 59 63 58 55 54
    Operating Cycle, Industry
    Industrials 140 138 142 132 131

    Source: Based on data from United Parcel Service Inc. Annual Reports

    2017 Calculations

    1 Operating cycle = Average inventory processing period + Average receivable collection period
    = 9 + 49 = 58

    Ratio Description The company
    Operating cycle Equal to average inventory processing period plus average receivables collection period. United Parcel Service Inc.'s operating cycle deteriorated from 2015 to 2016 and from 2016 to 2017.

    Average Payables Payment Period

    United Parcel Service Inc., average payables payment period calculation, comparison to benchmarks

    Microsoft Excel LibreOffice Calc
    Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
    Selected Financial Data
    Payables turnover 4.24 4.54 5.00 5.36 5.53
    Ratio (no. of days)
    Average payables payment period1 86 80 73 68 66
    Benchmarks (no. of days)
    Average Payables Payment Period, Competitors
    CSX Corp. 104 105 84 75 89
    FedEx Corp. 46 62 44 42 42
    Union Pacific Corp. 87 93 61 53 50
    Average Payables Payment Period, Sector
    Industrial Transportation 68 75 60 56 56
    Average Payables Payment Period, Industry
    Industrials 54 50 48 49 49

    Source: Based on data from United Parcel Service Inc. Annual Reports

    2017 Calculations

    1 Average payables payment period = 365 ÷ Payables turnover
    = 365 ÷ 4.24 = 86

    Ratio Description The company
    Average payables payment period An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. United Parcel Service Inc.'s average payables payment period increased from 2015 to 2016 and from 2016 to 2017.

    Cash Conversion Cycle

    United Parcel Service Inc., cash conversion cycle calculation, comparison to benchmarks

    No. of days

    Microsoft Excel LibreOffice Calc
    Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
    Selected Financial Data
    Average inventory processing period 9 9 9 9 11
    Average receivable collection period 49 46 45 42 43
    Average payables payment period 86 80 73 68 66
    Ratio
    Cash conversion cycle1 -28 -25 -19 -17 -12
    Benchmarks
    Cash Conversion Cycle, Competitors
    CSX Corp. -27 -21 -15 -18 -34
    FedEx Corp. 9 1 11 12 10
    Union Pacific Corp. 3 – 23 15 14
    Cash Conversion Cycle, Sector
    Industrial Transportation -9 -12 -2 -1 -2
    Cash Conversion Cycle, Industry
    Industrials 86 88 94 83 82

    Source: Based on data from United Parcel Service Inc. Annual Reports

    2017 Calculations

    1 Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
    = 9 + 49 – 86 = -28

    Ratio Description The company
    Cash conversion cycle A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. United Parcel Service Inc.'s cash conversion cycle improved from 2015 to 2016 and from 2016 to 2017.