United Parcel Service Inc. (NYSE:UPS)

The short-term operating activity ratios exhibit varied trends over the observed period. Generally, fluctuations are present across all metrics, suggesting responsiveness to changing business conditions. A notable increase in working capital turnover is observed in late 2022 and continues into 2023, followed by a period of stabilization and then further volatility.

Receivables Turnover

Receivables turnover generally remained between 8.78 and 10.03 from March 2022 through June 2023. A decline to 8.11 was noted in December 2022, followed by a rebound. The ratio experienced another decrease in December 2023 and December 2025, falling to 7.91. Overall, the ratio demonstrates cyclicality, with periods of increase followed by periods of decrease.

Payables Turnover

Payables turnover consistently remained above 13.36 throughout the period. The ratio generally increased from 14.04 in March 2022 to a peak of 16.89 in June 2024. A subsequent decline to 13.37 was observed in December 2025, indicating a potential lengthening of the time taken to pay suppliers. The trend suggests an efficient management of supplier payments, though with recent signs of potential slowdown.

Working Capital Turnover

Working capital turnover displayed significant volatility. A substantial increase occurred from 14.61 in September 2022 to 52.36 in December 2022, indicating a more efficient use of working capital. This high level continued into 2023, peaking at 27.10 in September 2023, before decreasing to 25.89 in December 2025. The fluctuations suggest a dynamic relationship between sales and working capital investment.

Average Receivable Collection Period

The average receivable collection period remained relatively stable, fluctuating between 36 and 46 days. A slight decrease was observed from 41 days in March 2022 to 36 days in June 2023. The period increased to 46 days in December 2025, mirroring the decline in receivables turnover, suggesting a potential slowdown in collecting receivables.

Average Payables Payment Period

The average payables payment period remained consistently low, generally between 22 and 27 days. A slight increase to 27 days was observed in December 2025, aligning with the decrease in payables turnover, indicating a potential extension in payment terms to suppliers. The overall trend suggests prompt payment to suppliers.

In summary, the observed ratios suggest a generally efficient management of short-term assets and liabilities. However, the recent trends in receivables turnover, collection period, payables turnover, and payment period indicate potential shifts in operational dynamics that warrant further investigation.

The receivables turnover ratio exhibits fluctuations over the observed period, spanning from March 31, 2022, to December 31, 2025. Generally, the ratio indicates the efficiency with which the company converts its receivables into cash. A higher ratio generally suggests more efficient collection practices, while a lower ratio may indicate slower collections or a more lenient credit policy.

Overall Trend

The ratio demonstrates a generally stable pattern, oscillating between approximately 7.9 and 10.0. There isn't a consistent upward or downward trajectory across the entire timeframe. However, a slight decline is observable in the latter portion of the period.

2022 Performance

The ratio began at 8.82 in March 2022, decreased slightly to 8.78 in June 2022, and then increased to 9.21 in September 2022. A notable decrease occurred in December 2022, falling to 7.97. This suggests a potential slowdown in collections during the final quarter of 2022, or a significant increase in accounts receivable.

2023 Performance

The ratio rebounded in the first quarter of 2023, reaching 9.60 in March. It continued to increase to 10.03 in June 2023, representing the highest value in the observed period. The ratio then decreased to 9.84 in September 2023 and further declined to 8.11 in December 2023. This indicates a weakening in receivables collection efficiency during the latter half of 2023.

2024 & 2025 Performance

The ratio remained relatively stable in the first half of 2024, fluctuating between 9.39 and 9.89. A decline was observed in the second half of 2024, reaching 8.38 in December. This downward trend continued into 2025, with the ratio decreasing to 7.91 in December 2025, the lowest value recorded in the period. This suggests a consistent weakening of receivables collection efficiency in the most recent quarters.

Correlation with Revenue

While a detailed correlation analysis requires further investigation, the observed fluctuations in the receivables turnover ratio do not appear to be directly proportional to revenue changes. For example, revenue increased significantly in December 2022, but the receivables turnover ratio decreased. Similarly, revenue increased in December 2024, while the ratio decreased. This suggests factors beyond revenue volume are influencing the ratio.

In conclusion, the receivables turnover ratio demonstrates a generally stable, yet fluctuating, pattern. A slight downward trend is evident in the most recent quarters, warranting further investigation into the underlying causes, such as changes in credit policies, collection procedures, or customer payment behavior.

The accounts payable turnover ratio exhibits fluctuations over the observed period, generally indicating changes in the efficiency with which obligations to suppliers are being managed. An initial period of relative stability is followed by more pronounced variability.

Overall Trend

The ratio demonstrates a generally healthy range, typically between 13 and 17. However, it is not consistently trending upwards or downwards. There appears to be cyclical behavior, with periods of increase followed by periods of decrease.

2022 Performance

The ratio began 2022 at 14.04, decreased slightly to 13.96, then increased to 15.02 before declining to 13.36 by the end of the year. This suggests some inconsistency in payment practices or supplier terms throughout the year.

2023 Performance

2023 saw a rebound, with the ratio increasing from 15.69 in the first quarter to 15.81 in the second. It remained relatively stable through the third quarter at 15.59, before decreasing to 14.35 by year-end. This indicates a potential strengthening of supplier relationships or improved cash management in the first half of the year, followed by a slight easing in the second half.

2024 Performance

A notable increase is observed in 2024, with the ratio rising to 16.63 in the first quarter and peaking at 16.89 in the second. It remained high at 16.76 in the third quarter before decreasing to 14.45 by the end of the year. This suggests a period of very efficient accounts payable management, potentially due to proactive payment strategies or favorable supplier credit terms.

2025 Performance (Partial)

The ratio began 2025 at 16.67, decreased to 14.95, then increased to 15.47, and finally decreased to 13.37. This recent pattern mirrors the fluctuations observed in 2022 and 2023, suggesting a return to more typical variability. The most recent value represents the lowest point in the observed period.

Relationship to Revenue

While the ratio fluctuates, it generally remains within an acceptable range, suggesting that changes in accounts payable are broadly aligned with revenue levels. However, the recent decline in the ratio alongside increasing revenue in the final quarter of 2025 warrants further investigation to determine if it signals a potential slowdown in payment practices or a shift in supplier relationships.

The working capital turnover ratio exhibits considerable fluctuation throughout the observed period, spanning from March 31, 2022, to December 31, 2025. Initially, the ratio demonstrates an increasing trend, culminating in a peak during the final quarter of 2022, before moderating and then experiencing further volatility.

Initial Phase (Mar 31, 2022 – Dec 31, 2022)

The working capital turnover ratio increased from 11.27 to 24.61 over this period. This suggests an improving efficiency in utilizing working capital to generate revenue. The most substantial increase occurred between September 30, 2022, and December 31, 2022, indicating a significant acceleration in the rate at which working capital was converted into sales during that quarter.

Moderation and Volatility (Mar 31, 2023 – Sep 30, 2024)

Following the peak in late 2022, the ratio decreased to 18.10 in March 2023, then increased to 52.36 by December 2023. This was followed by a substantial decline to 23.94 in March 2024, and a subsequent rise to 41.54 in June 2024, before decreasing again to 31.74 in September 2024. This period is characterized by significant swings, suggesting inconsistent performance in managing the relationship between working capital and revenue.

Recent Trend (Dec 31, 2024 – Dec 31, 2025)

The ratio decreased to 25.89 by the end of 2025. While still elevated compared to earlier periods, the recent trend indicates a potential stabilization or slight decrease in the efficiency of working capital utilization. The ratio remains considerably higher than the levels observed in the first half of 2022, suggesting an overall improvement in working capital management compared to the beginning of the analyzed timeframe, despite the recent fluctuations.

The observed fluctuations in the working capital turnover ratio warrant further investigation to determine the underlying drivers. Factors such as changes in sales volume, inventory management practices, accounts receivable collection periods, and accounts payable payment terms could all contribute to these variations. The substantial increase in the ratio during the final quarter of 2022 and again in late 2023, followed by declines, suggests potential seasonality or specific operational events impacting the company’s working capital cycle.

The average receivable collection period exhibited fluctuations over the observed timeframe, generally remaining within a relatively narrow range. An initial period of stability is followed by increased variability, with a recent trend towards longer collection periods.

Overall Trend

The average collection period generally ranged between 36 and 46 days throughout the period. While there isn't a consistently strong upward or downward trend, a slight increase in the average collection period is noticeable in the most recent quarters.

Initial Period (Mar 31, 2022 - Dec 31, 2022)

The average collection period began at 41 days and fluctuated to 46 days before returning to 41 days. This suggests a period of relative stability with some minor variations in collection efficiency.

Period of Improvement (Mar 31, 2023 - Jun 30, 2023)

A period of improvement is observed, with the average collection period decreasing from 45 days to 36 days. This indicates a more efficient collection process during this time.

Subsequent Fluctuations (Sep 30, 2023 - Dec 31, 2025)

Following the improvement, the average collection period experienced increased fluctuation, ranging from 37 to 46 days. The period concludes with a collection period of 46 days, representing a return to levels seen earlier in the observed timeframe. This suggests potential challenges in maintaining consistent collection efficiency.

Recent Observations

The most recent two quarters (Sep 30, 2025 and Dec 31, 2025) show a collection period of 41 and 46 days respectively. This suggests a potential lengthening of the collection cycle, warranting further investigation.

The observed fluctuations in the average receivable collection period may be attributable to various factors, including changes in credit policies, customer payment behavior, or the efficiency of collection efforts. Continued monitoring of this metric is recommended to identify any emerging trends and potential areas for improvement.

The average payables payment period exhibited relative stability over the observed period, with fluctuations primarily occurring within a narrow range. An initial period of consistency is followed by a slight increase, then a return to consistent values, and a final increase.

Overall Trend

The average payables payment period generally remained between 22 and 27 days throughout the analyzed timeframe. The metric demonstrated a consistent pattern for much of the period, with a noticeable increase towards the end of the observation window.

Initial Period (Mar 31, 2022 – Dec 31, 2022)

The average payables payment period began at 26 days and remained at that level for three consecutive quarters. A slight increase to 27 days was observed in the final quarter of 2022, representing a minor deviation from the established baseline.

Period of Consistency (Mar 31, 2023 – Sep 30, 2024)

Following the increase at the end of 2022, the average payables payment period decreased to 23 days and remained at that level for three quarters. It then fluctuated around 22 days for the next four quarters, indicating a period of consistent and efficient management of payables.

Recent Trend (Dec 31, 2024 – Dec 31, 2025)

The average payables payment period increased to 25 days in the final quarter of 2024, and then to 24 days and 27 days in the first three quarters of 2025. This represents a potential shift in payment practices or a change in supplier terms, warranting further investigation.

The observed fluctuations, while generally contained, suggest a dynamic relationship with suppliers and a potential responsiveness to changing business conditions. The recent increase in the average payables payment period merits monitoring to determine if it represents a temporary anomaly or a sustained change in financial strategy.