United Parcel Service Inc. (NYSE:UPS)

The analysis of the financial ratios over the reported periods reveals several noteworthy trends and fluctuations.

Receivables turnover

The receivables turnover ratio generally exhibits an upward trend from the beginning to the end of the period. Starting at 7.87, it increases to a peak near 10.03 before slightly moderating towards the latest periods, ending around 8.66. This suggests an overall improvement in the efficiency of collecting receivables, with some variability in the most recent quarters.

Payables turnover

The payables turnover ratio also shows an increasing trajectory across the periods. From an initial value of 13.11, it rises steadily reaching highs above 16. This indicates an acceleration in the rate at which the company settles its payables, reflecting potentially improved payment practices or supplier terms. The last few quarters maintain relatively high turnover values above 14.

Working capital turnover

Working capital turnover displays considerable volatility throughout the timeline. Early on, it declines from 26.45 to as low as 11.27, then experiences notable spikes up to 60.59, followed by substantial decreases again. Such fluctuations may indicate varying operational efficiency or shifts in working capital management strategies. The volatility suggests that the company’s use of working capital to generate revenue is inconsistent across quarters.

Average receivable collection period

The average receivable collection period shows a general range between 36 and 47 days, with moderate oscillations. Periods of shorter collection days (mid 30s) alternate with slight lengthening up to 47 days, demonstrating some fluctuation in the time taken to collect receivables. The company appears to maintain collection periods within a relatively stable band, suggesting consistency in credit management policies.

Average payables payment period

The average payables payment period ranges from 22 to 28 days, showing a slight downward trend over time. This indicates that the company is paying suppliers somewhat faster, which could reflect strengthened supplier relationships or changes in payment terms. The variability is less pronounced compared to other metrics, indicating stability in payables management.

Overall, the data suggest improvements in receivables and payables turnover ratios, reflecting enhanced efficiency in managing cash flows related to collections and payments. However, working capital turnover’s high variability points to less consistency in broader operational efficiency. The average collection and payment periods remain relatively stable with modest improvements in payment speed.

Revenue Trends

Over the observed quarterly periods, revenue demonstrated a pattern of considerable fluctuations. After a steady increase from the first quarter of 2020 (US$18,035 million) through the end of that year (US$24,896 million), revenue showed a cyclical behavior with alternating decreases and increases in subsequent quarters. Peaks are notably seen in December quarters, specifically December 2020 (US$24,896 million), December 2021 (US$27,771 million), and December 2023 (US$24,917 million), indicating possible seasonality effects. However, there is an observable downward trend in the revenue figures for several mid-year periods post-2021, and the latest quarter, June 2025, recorded a value of US$21,221 million, which is lower than some previous peak periods.

Accounts Receivable, Net

The net accounts receivable amounts varied along with revenue but did not follow an identical pattern. The balances increased notably from March 2020 (US$8,126 million) through December 2020 (US$10,750 million), then continued to rise through December 2021 (US$12,541 million). After this peak, the amounts generally fluctuated, with intermittent decreases such as in mid-2023, followed by increases toward the later quarters, ending at US$10,430 million in June 2025. This suggests a degree of volatility in the collection or credit terms which may impact liquidity.

Receivables Turnover Ratio

The receivables turnover ratio, available from March 2021 onwards, indicates the efficiency with which the company collects its receivables. It showed a relatively stable range with some quarterly variation, oscillating between approximately 7.76 and 10.03. Higher values in this range suggest improved collection efficiency or shorter receivables periods. The highest turnover ratios occurred in the third quarters of 2022 (10.03) and 2021 (9.6), while the lowest ratio was seen around the first quarter of 2022 (7.76). These fluctuations imply varying effectiveness in credit management, which could be influenced by changes in customer payment behaviors or internal credit policies.

Overall Insights

The data reveals pronounced seasonality in revenue, with higher sales typically recorded in the fourth quarters each year. Accounts receivable show a somewhat correlated pattern but with greater volatility, possibly reflecting changes in payment terms or collection effectiveness. The receivables turnover ratio, while fluctuating, mostly remains within a moderate range conducive to maintaining healthy cash flows. Periods of lower turnover coincide with some revenue dips, suggesting a potential relationship between sales volume and collection efficiency. Management may need to focus on stabilizing both revenue streams and receivables collection to improve financial stability and operational cash flow.

The revenue demonstrates noticeable fluctuations over the analyzed quarters. Initially, revenue increased steadily from 18,035 million USD in March 2020 to a peak of 27,771 million USD in December 2021. Subsequently, the figures show a pattern of decline followed by partial recoveries, ending at 21,221 million USD in June 2025. This suggests cyclical or seasonal variations as well as potential impacts from external or internal operational factors influencing sales volumes or pricing.

Accounts payable exhibit a generally similar trend with occasional deviations. Starting at 4,779 million USD in March 2020, it rises to a high of 7,512 million USD in December 2022, followed by a decrease and then some variability around the 5,400 to 6,300 million USD range towards the end of the period. The pattern implies closely tied vendor obligations with business activity and possibly changes in credit terms or supplier payment strategies.

Payables turnover ratio values, available from June 2020 onward, exhibit relative stability with minor fluctuations. Ratios range approximately between 12.93 and 16.89, indicating the company’s consistency in managing the frequency of settling accounts payable. Higher values in the latter quarters reflect somewhat faster payment cycles, suggesting an improved liquidity position or altered payment policies.

Revenue Analysis

Revenue growth through mid-2021 and late 2021 indicates periods of strong operational performance or market demand. Declines afterward may point to competitive pressures, market saturation, or macroeconomic impacts. The partial recoveries show resilience but also underline volatility.

Accounts Payable Analysis

The rise in payables until the end of 2022 coincides with increased revenue, implying expanding operational scale. Subsequent contraction might reflect tightened cash flow management or renegotiation of credit terms with suppliers.

Payables Turnover Ratio Analysis

The turnover ratio's moderate range suggests effective management of payables without excessive delays. Fluctuations to higher turnover rates later in the timeline could be indicative of strategic shifts to accelerate supplier payments, potentially to strengthen supplier relationships or leverage early payment discounts.

Overall, the data reveals operational cycles affecting revenue and payables, with liquidity management reflected in payables turnover behavior. The patterns suggest a company balancing growth with control over short-term liabilities amid variable market conditions.

The financial data over the assessed periods reveals notable fluctuations in working capital, revenue, and working capital turnover ratios, reflecting dynamic operational and financial conditions.

Working Capital

Working capital exhibits considerable variability across the quarters. Starting at a moderate level, it increased steadily through early 2021, peaking around September 2021, before experiencing a general decline through 2022. This downward trend reached its lowest point at the end of 2023, followed by a partial recovery into 2024, though this recovery is irregular with drops in certain quarters. The variability indicates ongoing changes in short-term liquidity management and asset-liability coordination.

Revenue

Revenue demonstrates a somewhat cyclical pattern with distinct peaks in the fourth quarter of each year, consistent with seasonal business trends likely related to holiday periods. Overall, revenue peaked significantly in the fourth quarters of 2020 and 2021, with a slight reduction in the latter periods, notably declining in the first three quarters of 2023 before rebounding late in 2023 and into 2024. Despite fluctuations, revenue maintains a relatively steady average range without extreme volatility.

Working Capital Turnover

The working capital turnover ratio, calculated sparsely in the earlier periods, shows a pronounced oscillation with exceptionally high values in several quarters, particularly from late 2023 into early 2025. This ratio inversely correlates with the working capital figures; when working capital dips to lower levels, turnover spikes, suggesting higher efficiency in utilizing working capital to generate sales, or possibly tighter working capital management. The very high turnover ratios observed in some recent periods imply accelerated asset utilization or a possible reduction in working capital cushion.

Interrelations and Insights

The interplay between working capital and its turnover indicates a strategic balancing act. Declining working capital combined with rising turnover ratios in later quarters hints at enhanced operational efficiency or more aggressive liquidity management. However, abrupt declines in working capital could also pose risks if not managed prudently. Revenue stability alongside these changes suggests the company maintains sales performance amidst fluctuating liquidity metrics. Seasonal revenue spikes are consistent, underpinning cyclical demand patterns that likely influence working capital needs and turnover.

The receivables turnover ratio exhibits a generally fluctuating upward trend with some periodic decreases. Starting at a value of 7.87 in March 2020, it increases steadily to a high of 10.03 by September 2023, indicating an improvement in the efficiency of collecting accounts receivable over this period. After reaching this peak, the ratio experiences a slight decline but remains relatively high, ending at 8.66 in June 2025. This suggests that overall, the company has enhanced its ability to convert receivables to cash more frequently within the analyzed timeframe.

The average receivable collection period, measured in days, moves inversely to the turnover ratio as expected. Initial values around 46 days in March 2020 decrease to a low point of 36 days by September 2023, reflecting a shortened duration for collecting receivables. Following this trough, the collection period slightly increases but maintains a level near the pre-improvement period at about 42 days by June 2025. This pattern underscores the general enhancement in receivables management, achieving quicker collections over much of the period analyzed.

Receivables Turnover Ratio

Shows an overall increase from 7.87 to a peak of 10.03 between 2020 and 2023, indicating faster conversion of receivables.

Post-peak values show minor declines but generally remain above 8.5, reflecting sustained operational efficiency.

Average Receivable Collection Period

Decreases from 46 days to a low of 36 days, signifying an improvement in receivable collection speed.

Slight increases after the low point suggest some stabilization, with collection times returning to around 42 days.

The reciprocal relationship between the receivables turnover ratio and the average collection period is consistent throughout the timeline, validating the data's internal consistency. The improvements in these metrics indicate effective receivables management practices, likely contributing to better cash flow and working capital management during the period under review.

Payables Turnover Ratio

The payables turnover ratio demonstrates a generally upward trend over the observed periods, starting at 13.11 and rising to a peak around 16.89 before slightly decreasing to 14.95. This indicates an improvement in the frequency at which payables are being settled, suggesting enhanced efficiency in managing short-term liabilities. There are minor fluctuations, but the overall pattern reflects increased turnover activity over time.

Average Payables Payment Period

The average payables payment period in days shows a decreasing trend, moving from 28 days initially to as low as 22 days during several quarters in the later periods. This reduction in payment days corresponds with the increase in payables turnover, implying quicker settlement of payables. Occasional slight increases occur but are not sustained, indicating persistently more prompt payment behavior.

Summary of Trends

The combined analysis of these two metrics suggests that the company has progressively improved its payables management by increasing turnover and decreasing payment periods. This likely enhances supplier relationships and cash flow efficiency by reducing the duration liabilities are outstanding. The variability in some quarters could reflect operational or strategic adjustments, but the overall direction is towards faster payables processing.