Microsoft Excel LibreOffice Calc

Short-term (Operating) Activity Analysis

Difficulty: Beginner


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 + 4986 = -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.