United Parcel Service Inc. (NYSE:UPS)

The analysis of the quarterly financial metrics reveals several noteworthy trends and fluctuations over the observed period.

Receivables Turnover

The receivables turnover ratio exhibits moderate variability, with values generally ranging between 7.7 and 10.0. There is no clear upward or downward long-term trend; rather, the ratio fluctuates cyclically. Peaks are observed around the third quarters of each year, followed by dips in the fourth quarters, indicating seasonal patterns in the efficiency of receivables collection.

Payables Turnover

The payables turnover ratio maintains a slightly increasing trend over time, progressing from approximately 14.1 to peaks above 16.6. The ratio shows some periodic dips but generally suggests an improvement in the rate at which payables are settled. This could indicate enhanced management of supplier payments or changes in payment terms.

Working Capital Turnover

Working capital turnover displays significant volatility, with values oscillating widely, including sharp increases notably in the fourth quarters of 2022 and 2023 (reaching above 50 and even 60) compared to earlier periods where values mostly ranged from about 11 to 27. The variability suggests fluctuations in the efficiency of using working capital to generate sales. The very high ratios in certain quarters point to periods of strengthened operational efficiency or potentially lower working capital balances relative to sales.

Average Receivable Collection Period

This metric remains relatively stable throughout the periods analyzed, ranging mostly between 36 and 47 days. There is a mild tendency toward shorter collection periods in recent quarters, particularly in the first and second quarters of 2023 through 2024, indicating enhanced effectiveness in collecting receivables timely.

Average Payables Payment Period

The average payables payment period consistently falls between 22 and 28 days, showing minor fluctuations with a slight reduction trend over the years. The payment period shortens modestly to around 22 days in several recent quarters, reflecting a possible strategy to pay suppliers more promptly or improved liquidity management.

Overall, the data suggests that while receivables and payables turnover ratios experience moderate cyclical variations, there is a subtle improvement in payment practices and receivables management over time. The working capital turnover shows the most pronounced variability, which may warrant deeper investigation to understand the underlying operational changes or seasonality effects influencing working capital utilization efficiency.

The financial data reveals several notable trends over the observed quarters. Revenue demonstrates a pattern of seasonal fluctuation with peaks typically observed in the fourth quarters of each year, reflecting higher business activity during these periods. For example, notable revenue surges are visible in December 2021, December 2022, and December 2024, indicating consistent year-end growth spikes. However, there is a general mild decline in revenue levels in the first three quarters of 2023 and 2025 compared to prior years, which may suggest some volatility or market challenges during these periods.

The accounts receivable balance follows a somewhat similar seasonal trend as revenue, with higher balances typically recorded at year-end quarters. The increase towards the fourth quarter indicates an accumulation of receivables with the rise in revenue. However, the data also shows fluctuations in the accounts receivable levels that do not always precisely track revenue, suggesting potential changes in credit terms or collection efficiency at certain points in time.

Regarding the receivables turnover ratio, which measures the effectiveness of credit and collection policies, the trend indicates variability within a range generally between 7.7 and 10.1. Higher turnover ratios in some quarters, such as mid-2023, imply quicker collection of receivables, enhancing cash flow efficiency. Conversely, the dips in turnover ratio during final quarters of certain years (such as December 2021 and December 2022) correspond with peaks in accounts receivable, potentially reflecting slower collections during high-sales periods.

Revenue Trends

Shows consistent seasonal peaks in the fourth quarter each year.

Moderate declines observed in first three quarters of 2023 and 2025.

Overall revenue levels fluctuate but exhibit resilience with year-end recoveries.

Accounts Receivable Patterns

Balances increase toward the end of each year, aligning with revenue peaks.

Some variability suggests shifts in credit management or collection timing.

Receivable levels in some quarters do not move in direct proportion to revenue changes.

Receivables Turnover Ratio

Ranges mostly between 7.7 and 10.1, indicating moderate collection efficiency.

Higher ratios suggest improved collections efficiency in mid-year quarters.

Lower ratios coincide with peak sales quarters, implying temporary collection slowdowns.

In summary, the company exhibits predictable seasonal revenue fluctuations with corresponding impacts on accounts receivable and collection efficiency. While the company maintains relatively stable receivables turnover rates, periods of lower turnover during peak sales seasons suggest attention to collection processes may be warranted to optimize cash flow. The moderate revenue declines during certain quarters call for further investigation to understand underlying market dynamics influencing these shifts.

Revenue Trends

The revenue figures exhibit a recurring seasonal pattern, with peaks typically observed in the fourth quarter of each fiscal year, indicating a possible surge in business activities during this period. Starting from a base of approximately 22.9 billion USD in the first quarter of 2021, revenue generally increases towards year-end, reaching highs near 27-28 billion USD in the last quarters of 2021 and 2022. However, in the most recent periods from 2023 onwards, the revenue peaks appear to be lower, with the December quarters ranging around 24-25 billion USD, suggesting some moderation in growth or external factors influencing demand. The first quarters of 2023 to 2025 reveal a decline in revenue compared to previous years’ first quarters, highlighting weaker early-year performance.

Accounts Payable Analysis

Accounts payable swings in a somewhat consistent manner paralleling revenue, with elevated levels towards year-end quarters. The amounts generally range between 5.3 billion and 7.5 billion USD, with higher payables noted at the end of 2021 and 2022. Notably, accounts payable reduced during the early quarters of 2024 and 2025 compared to prior corresponding quarters, which might indicate improved payment cycles or lesser credit reliance during those periods. The variability suggests management is actively balancing supplier credit and cash flow demands across cycles.

Payables Turnover Ratio Insights

The payables turnover ratio fluctuates between roughly 12.9 and 16.9 times annually. The general trend shows a decline in this ratio towards the final quarters of each year, correlating with higher accounts payable balances at those times. For instance, in Q4 2021, the ratio dropped to approximately 12.93, while it rose above 16.5 in certain first or third quarters such as Q1 2024 and Q3 2024. This pattern suggests slower payments to suppliers when accounts payable are high, possibly reflecting strategic working capital management during peak revenue cycles. Additionally, the higher ratios in the first half of 2024 and some periods in 2025 indicate accelerated payment practices compared to earlier years. Overall, the turnover ratio indicates that payables are managed flexibly in response to operational or seasonal cash flow needs.

Working Capital

There is a general downward trend in working capital from early 2022 through most of 2023, falling from a peak of 8,759 million US$ in March 2022 to a low of 1,737 million US$ in December 2023. This is followed by significant fluctuations in 2024, with values alternating between approximately 1,400 million and 3,700 million US$. The working capital stabilizes somewhat in 2025, ranging from about 1,400 million to 4,600 million US$.

Revenue

Revenue exhibits a cyclical pattern with quarterly fluctuations but generally remains within the range of approximately 21,000 million to 27,700 million US$. There is a noticeable peak in December quarters, such as at the end of 2021 (27,771 million US$) and 2022 (27,033 million US$). However, in the first three quarters of 2023 and into 2025, revenue appears to slightly decline or stabilize around the lower end of this range, roughly 21,000 to 22,000 million US$.

Working Capital Turnover

The working capital turnover ratio demonstrates considerable volatility throughout the periods. It declined from 19.13 in March 2021 to a low point near 11.27 by March 2022, indicating slower turnover relative to working capital during that time. Subsequently, it increased sharply, peaking at extraordinarily high levels during late 2023 and 2024, with values above 50 and even exceeding 60 in some quarters. This spike suggests either significantly improved revenue generation relative to working capital or a substantial reduction in working capital balances. Late 2024 and early 2025 show continued high but more stabilized turnover ratios, ranging mostly between 19 and 64.

Overall Insights

The data reflects a pattern of declining working capital from early 2022, reaching lows in late 2023, while revenue remains relatively stable with seasonal peaks in the fourth quarters. The sharp increase in working capital turnover from late 2023 onward indicates either enhanced efficiency in utilizing working capital for revenue generation or a structural shift resulting in lower working capital levels. The volatility in working capital alongside relatively stable revenue suggests changing asset-liability dynamics or operational adjustments affecting liquidity and capital management strategies.

Receivables Turnover Ratio

The receivables turnover ratio exhibits cyclical fluctuations over the examined periods, generally oscillating between lows near 7.7 and highs exceeding 10. The ratio tends to dip in the fourth quarters of each year, indicating a relative slowdown in receivables collection during these periods. The highest turnover values are noted in the mid-year quarters, particularly around June and September, suggesting more efficient receivables management or stronger collections. Over the full span, the figures remain within a relatively narrow range, reflecting stable but seasonally influenced operational performance.

Average Receivable Collection Period

Complementing the turnover ratio, the average receivable collection period inversely corresponds, with days ranging approximately between 36 and 47 days. The collection period extends notably during the last fiscal quarters each year, reaching upper levels near 46 to 47 days, consistent with the decreased turnover ratio observed concurrently. Conversely, the shortest collection periods occur in mid-year quarters, sometimes dropping to the mid-30s in days, which aligns with the periods of higher turnover ratios. This cyclical pattern underscores a seasonal variation in cash conversion efficiency.

Overall Trends and Insights

The data reveals a distinct seasonal trend, with receivables turnover weakening and collection periods lengthening in the final quarters annually. This pattern may reflect operational factors, such as increased sales volume or altered credit terms during year-end periods, impacting collections. Despite these fluctuations, the company's receivables management demonstrates consistency, maintaining turnover ratios mostly between 8 and 10 and collection periods within a narrow range around 40 days. The persistence of this pattern over multiple years indicates stable credit and collection policies, with predictable seasonal impacts that could be addressed through targeted cash management strategies.

The payables turnover ratio demonstrates some fluctuations over the observed periods but generally exhibits a slight upward trend. Initially, the ratio hovers around 14 in early 2021, dips closer to 13 towards the end of 2021, then rises and reaches peaks around 16 to 17 in several quarters throughout 2023 and 2024. This indicates an improvement in the frequency with which the company settles its payables, suggesting more efficient management of accounts payable in more recent periods.

The average payables payment period, expressed in days, complements this observation. The period starts around 26 days in early 2021 and shows variability across quarters, with values mostly ranging between 22 and 28 days. Notably, there is a tendency towards shorter payment periods (around 22 to 23 days) in the quarters of 2023 and 2024, which aligns with the higher payables turnover ratios observed during those times. This reduction in the number of days taken to pay suppliers indicates a potentially stronger liquidity position or a strategic shift towards quicker payments.

Overall, the data suggest that over the analyzed timeline, there has been a gradual increase in the company's efficiency in managing its payables, reflected in higher turnover ratios and shorter average payment periods. However, some quarters show reversals or fluctuations, indicating that these improvements have not been completely steady or uniform.