Microsoft Excel LibreOffice Calc

United Parcel Service Inc. (UPS)

Short-term (Operating) Activity Analysis

Difficulty: Beginner

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, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Turnover Ratios
Inventory turnover 47.34 40.68 40.42 42.04 42.90
Receivables turnover 8.02 7.51 7.92 8.18 8.74
Payables turnover 3.84 4.24 4.54 5.00 5.36
Working capital turnover 33.85 23.19 28.74 23.23 18.38
Average No. of Days
Average inventory processing period 8 9 9 9 9
Add: Average receivable collection period 45 49 46 45 42
Operating cycle 53 58 55 54 51
Less: Average payables payment period 95 86 80 73 68
Cash conversion cycle -42 -28 -25 -19 -17

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-27).

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 improved from 2016 to 2017 and from 2017 to 2018.
Receivables turnover An activity ratio equal to revenue divided by receivables. United Parcel Service Inc.’s receivables turnover deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.
Payables turnover An activity ratio calculated as cost of goods sold divided by payables. United Parcel Service Inc.’s payables turnover declined from 2016 to 2017 and from 2017 to 2018.
Working capital turnover An activity ratio calculated as revenue divided by working capital. United Parcel Service Inc.’s working capital turnover deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.
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 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 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.
Operating cycle Equal to average inventory processing period plus average receivables collection period. United Parcel Service Inc.’s operating cycle deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.
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 2016 to 2017 and from 2017 to 2018.
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 2016 to 2017 and from 2017 to 2018.

Inventory Turnover

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

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Cost of revenue 19,930  16,434  13,822  12,947  14,758 
Inventories 421  404  342  308  344 
Ratio
Inventory turnover1 47.34 40.68 40.42 42.04 42.90
Benchmarks
Inventory Turnover, Competitors
CSX Corp. 11.46 8.00 6.89 9.47 15.02
FedEx Corp. 46.59 42.83 34.93 34.10 36.83
Union Pacific Corp. 6.70 5.68 5.23 6.02 8.56
Inventory Turnover, Sector
Industrial Transportation 26.85 22.40 19.22 19.91 23.44
Inventory Turnover, Industry
Industrials 4.19 4.43 4.49 4.28 4.56

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-27).

2018 Calculations

1 Inventory turnover = Cost of revenue ÷ Inventories
= 19,930 ÷ 421 = 47.34

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 improved from 2016 to 2017 and from 2017 to 2018.

Receivables Turnover

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

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Revenue 71,861  65,872  60,906  58,363  58,232 
Accounts receivable, net 8,958  8,773  7,695  7,134  6,661 
Ratio
Receivables turnover1 8.02 7.51 7.92 8.18 8.74
Benchmarks
Receivables Turnover, Competitors
CSX Corp. 12.13 11.76 11.80 12.03 11.22
FedEx Corp. 7.72 7.94 6.94 8.30 8.35
Union Pacific Corp. 13.01 14.23 15.85 16.09 14.89
Receivables Turnover, Sector
Industrial Transportation 8.53 8.43 8.30 9.18 9.45
Receivables Turnover, Industry
Industrials 7.92 6.39 6.59 6.57 7.01

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-27).

2018 Calculations

1 Receivables turnover = Revenue ÷ Accounts receivable, net
= 71,861 ÷ 8,958 = 8.02

Ratio Description The company
Receivables turnover An activity ratio equal to revenue divided by receivables. United Parcel Service Inc.’s receivables turnover deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.

Payables Turnover

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

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Cost of revenue 19,930  16,434  13,822  12,947  14,758 
Accounts payable 5,188  3,872  3,042  2,587  2,754 
Ratio
Payables turnover1 3.84 4.24 4.54 5.00 5.36
Benchmarks
Payables Turnover, Competitors
CSX Corp. 3.17 3.51 3.48 4.34 4.85
FedEx Corp. 8.22 8.00 5.89 8.22 8.65
Union Pacific Corp. 5.70 4.20 3.92 5.97 6.95
Payables Turnover, Sector
Industrial Transportation 5.24 5.38 4.87 6.12 6.52
Payables Turnover, Industry
Industrials 6.66 6.77 7.32 7.68 7.41

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-27).

2018 Calculations

1 Payables turnover = Cost of revenue ÷ Accounts payable
= 19,930 ÷ 5,188 = 3.84

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 2016 to 2017 and from 2017 to 2018.

Working Capital Turnover

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

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in millions)
Current assets 16,210  15,548  13,849  13,208  11,808 
Less: Current liabilities 14,087  12,708  11,730  10,696  8,639 
Working capital 2,123  2,840  2,119  2,512  3,169 
Revenue 71,861  65,872  60,906  58,363  58,232 
Ratio
Working capital turnover1 33.85 23.19 28.74 23.23 18.38
Benchmarks
Working Capital Turnover, Competitors
CSX Corp. 18.85 543.24 24.76 11.65 27.25
FedEx Corp. 17.62 12.81 12.65 9.52 10.42
Union Pacific Corp. – 317.01 – 23.61 26.25
Working Capital Turnover, Sector
Industrial Transportation 28.62 20.80 21.88 14.78 15.75
Working Capital Turnover, Industry
Industrials 7.46 5.08 5.16 5.68 2.66

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-27).

2018 Calculations

1 Working capital turnover = Revenue ÷ Working capital
= 71,861 ÷ 2,123 = 33.85

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 deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.

Average Inventory Processing Period

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

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data
Inventory turnover 47.34 40.68 40.42 42.04 42.90
Ratio (no. of days)
Average inventory processing period1 8 9 9 9 9
Benchmarks (no. of days)
Average Inventory Processing Period, Competitors
CSX Corp. 32 46 53 39 24
FedEx Corp. 8 9 10 11 10
Union Pacific Corp. 54 64 70 61 43
Average Inventory Processing Period, Sector
Industrial Transportation 14 16 19 18 16
Average Inventory Processing Period, Industry
Industrials 87 82 81 85 80

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-27).

2018 Calculations

1 Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 47.34 = 8

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, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data
Receivables turnover 8.02 7.51 7.92 8.18 8.74
Ratio (no. of days)
Average receivable collection period1 45 49 46 45 42
Benchmarks (no. of days)
Average Receivable Collection Period, Competitors
CSX Corp. 30 31 31 30 33
FedEx Corp. 47 46 53 44 44
Union Pacific Corp. 28 26 23 23 25
Average Receivable Collection Period, Sector
Industrial Transportation 43 43 44 40 39
Average Receivable Collection Period, Industry
Industrials 46 57 55 56 52

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-27).

2018 Calculations

1 Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 8.02 = 45

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 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.

Operating Cycle

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

No. of days

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data
Average inventory processing period 8 9 9 9 9
Average receivable collection period 45 49 46 45 42
Ratio
Operating cycle1 53 58 55 54 51
Benchmarks
Operating Cycle, Competitors
CSX Corp. 62 77 84 69 57
FedEx Corp. 55 55 63 55 54
Union Pacific Corp. 82 90 93 84 68
Operating Cycle, Sector
Industrial Transportation 57 59 63 58 55
Operating Cycle, Industry
Industrials 133 139 136 141 132

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-27).

2018 Calculations

1 Operating cycle = Average inventory processing period + Average receivable collection period
= 8 + 45 = 53

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 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.

Average Payables Payment Period

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

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data
Payables turnover 3.84 4.24 4.54 5.00 5.36
Ratio (no. of days)
Average payables payment period1 95 86 80 73 68
Benchmarks (no. of days)
Average Payables Payment Period, Competitors
CSX Corp. 115 104 105 84 75
FedEx Corp. 44 46 62 44 42
Union Pacific Corp. 64 87 93 61 53
Average Payables Payment Period, Sector
Industrial Transportation 70 68 75 60 56
Average Payables Payment Period, Industry
Industrials 55 54 50 48 49

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-27).

2018 Calculations

1 Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 3.84 = 95

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 2016 to 2017 and from 2017 to 2018.

Cash Conversion Cycle

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

No. of days

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data
Average inventory processing period 8 9 9 9 9
Average receivable collection period 45 49 46 45 42
Average payables payment period 95 86 80 73 68
Ratio
Cash conversion cycle1 -42 -28 -25 -19 -17
Benchmarks
Cash Conversion Cycle, Competitors
CSX Corp. -53 -27 -21 -15 -18
FedEx Corp. 11 9 1 11 12
Union Pacific Corp. 18 3 0 23 15
Cash Conversion Cycle, Sector
Industrial Transportation -13 -9 -12 -2 -1
Cash Conversion Cycle, Industry
Industrials 78 85 86 93 83

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-27).

2018 Calculations

1 Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 8 + 45 – 95 = -42

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 2016 to 2017 and from 2017 to 2018.