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Short-term (Operating) Activity Analysis

Difficulty: Beginner


Ratios (Summary)

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

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Turnover Ratios
Inventory turnover
Receivables turnover
Payables turnover
Working capital turnover
Average No. of Days
Average inventory processing period
Add: Average receivable collection period
Operating cycle
Less: Average payables payment period
Cash conversion cycle

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.

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Inventory Turnover

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

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Cost of revenue
Inventories
Ratio
Inventory turnover1
Benchmarks
Inventory Turnover, Competitors
FedEx Corp.
Union Pacific Corp.
Inventory Turnover, Sector
Industrial Transportation
Inventory Turnover, Industry
Industrials

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

2017 Calculations

1 Inventory turnover = Cost of revenue ÷ Inventories
= ÷ =

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.

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Receivables Turnover

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

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Revenue
Accounts receivable, net
Ratio
Receivables turnover1
Benchmarks
Receivables Turnover, Competitors
FedEx Corp.
Union Pacific Corp.
Receivables Turnover, Sector
Industrial Transportation
Receivables Turnover, Industry
Industrials

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

2017 Calculations

1 Receivables turnover = Revenue ÷ Accounts receivable, net
= ÷ =

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.

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Payables Turnover

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

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Cost of revenue
Accounts payable
Ratio
Payables turnover1
Benchmarks
Payables Turnover, Competitors
FedEx Corp.
Union Pacific Corp.
Payables Turnover, Sector
Industrial Transportation
Payables Turnover, Industry
Industrials

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

2017 Calculations

1 Payables turnover = Cost of revenue ÷ Accounts payable
= ÷ =

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.

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Working Capital Turnover

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

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Current assets
Less: Current liabilities
Working capital
Revenue
Ratio
Working capital turnover1
Benchmarks
Working Capital Turnover, Competitors
FedEx Corp.
Union Pacific Corp.
Working Capital Turnover, Sector
Industrial Transportation
Working Capital Turnover, Industry
Industrials

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

2017 Calculations

1 Working capital turnover = Revenue ÷ Working capital
= ÷ =

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.

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Average Inventory Processing Period

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

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data
Inventory turnover
Ratio (no. of days)
Average inventory processing period1
Benchmarks (no. of days)
Average Inventory Processing Period, Competitors
FedEx Corp.
Union Pacific Corp.
Average Inventory Processing Period, Sector
Industrial Transportation
Average Inventory Processing Period, Industry
Industrials

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

2017 Calculations

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

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.

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Average Receivable Collection Period

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

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data
Receivables turnover
Ratio (no. of days)
Average receivable collection period1
Benchmarks (no. of days)
Average Receivable Collection Period, Competitors
FedEx Corp.
Union Pacific Corp.
Average Receivable Collection Period, Sector
Industrial Transportation
Average Receivable Collection Period, Industry
Industrials

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

2017 Calculations

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

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.

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Operating Cycle

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

No. of days

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data
Average inventory processing period
Average receivable collection period
Ratio
Operating cycle1
Benchmarks
Operating Cycle, Competitors
FedEx Corp.
Union Pacific Corp.
Operating Cycle, Sector
Industrial Transportation
Operating Cycle, Industry
Industrials

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

2017 Calculations

1 Operating cycle = Average inventory processing period + Average receivable collection period
= + =

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.

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Average Payables Payment Period

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

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data
Payables turnover
Ratio (no. of days)
Average payables payment period1
Benchmarks (no. of days)
Average Payables Payment Period, Competitors
FedEx Corp.
Union Pacific Corp.
Average Payables Payment Period, Sector
Industrial Transportation
Average Payables Payment Period, Industry
Industrials

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

2017 Calculations

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

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.

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Cash Conversion Cycle

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

No. of days

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data
Average inventory processing period
Average receivable collection period
Average payables payment period
Ratio
Cash conversion cycle1
Benchmarks
Cash Conversion Cycle, Competitors
FedEx Corp.
Union Pacific Corp.
Cash Conversion Cycle, Sector
Industrial Transportation
Cash Conversion Cycle, Industry
Industrials

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
= + =

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.

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