United Parcel Service Inc. (NYSE:UPS)

The analysis of the financial ratios and periods for the company reveals several notable trends and fluctuations over the examined quarters:

Receivables Turnover

The receivables turnover ratio demonstrates general variability across the periods from March 2020 through March 2025. Starting from a level near 7.87, it increased to peak points above 10.00 in several quarters (notably in June and September 2023). The ratio shows a pattern of rising and falling but depicts generally strong turnover capability, suggesting efficient collection processes during the mid to latter part of the timeline. However, there are dips observed near the end of 2024 and beginning of 2025, indicating some fluctuations in receivables management efficiency.

Payables Turnover

The payables turnover ratio is consistently higher than receivables turnover throughout the timeline, fluctuating around values mostly between 13 and 17. Starting from 13.11 in March 2020, it reached a peak of approximately 16.89 in September 2024. The general upward trend signifies an increasing frequency of payments to suppliers, which could suggest improved supplier management or changing payment policies. The pattern is relatively stable with small periodic declines and recoveries.

Working Capital Turnover

This ratio presents more volatility compared to both receivables and payables turnover. The values range widely, from as low as approximately 11.27 in June 2021 to notably high values exceeding 60.00 in June 2024 and December 2024. The significant spikes from early 2024 onward suggest moments of highly efficient use of working capital to generate sales, although such extreme values followed by substantial decreases may reflect irregularities or exceptional items affecting working capital or sales in certain periods. This volatility implies strategic changes or irregular operational circumstances impacting the working capital management.

Average Receivable Collection Period (Days)

The average collection period remains generally stable, hovering mostly between 36 and 47 days across all periods. Minor reductions over time are seen, with the lowest being 36 days in September 2023. This stability aligns with the behavior of the receivables turnover ratio, indicating general consistency in credit policies and collection effectiveness throughout the quarters.

Average Payables Payment Period (Days)

The average payment period to suppliers exhibits a slight decreasing trend, moving from about 28 days early in the period down to values near 22 days by September 2024 and beyond. This shortening indicates quicker payment cycles, consistent with increasing payables turnover ratios, possibly reflecting a strategy to enhance supplier relationships or take advantage of early payment discounts.

In summary, the company shows effective receivables management with occasional variance, consistent acceleration in payables turnover paired with reductions in payment periods, and highly volatile working capital turnover that warrants further examination for underlying drivers. Overall, the trends suggest an emphasis on optimizing cash flow cycles while managing working capital dynamically in response to operational demands.

Revenue Trends

Revenue demonstrates considerable seasonality and fluctuations throughout the observed periods. There was a notable increase from the first quarter of 2020 through the end of 2020, peaking in the last quarter at 24,896 million USD. However, this was followed by a decline in early 2021, before rising again at the end of that year to 27,771 million USD, surpassing previous peaks. The pattern of quarterly fluctuations continues with periodic rises and drops, showing another peak in Q4 2024 at 25,301 million USD. The general trajectory reveals cyclical variations, likely reflecting seasonal influences on business activity.

Accounts Receivable, Net

The net accounts receivable manipulate a pattern similar to revenue trends, with cyclical rises and falls. Starting at 8,126 million USD in Q1 2020, the figure increased steadily, reaching its highest levels in Q4 2021 and Q4 2022 (around 12,500 million USD). Despite some decreases in certain quarters such as Q2 and Q3 2023 where values dropped below 10,000 million USD, the balances remain relatively elevated compared to the initial periods. This suggests that the company maintains substantial credit sales or customer balances on average, with periodic collection cycles influencing the changes.

Receivables Turnover Ratio

The receivables turnover ratio, available from Q1 2021 onwards, fluctuates between approximately 7.76 and 10.03 times during the periods. The ratio peaked in Q3 2023 at 10.03, indicating relatively efficient collection of receivables during that quarter. Conversely, the lowest turnovers are observed near the start and end of the dataset, such as Q1 2021 and Q3 2025. Overall, the turnover rate’s variability indicates changes in the efficiency of receivables collection, potentially impacted by sales growth, credit policies, or economic conditions influencing customer payment behavior.

Interrelationship of Metrics

Correlation between revenue and accounts receivable is evident, as peaks in revenue often align with increases in receivables. This suggests that higher sales volumes temporarily raise the outstanding customer balances. However, the turnover ratio fluctuates independently to some extent, signaling variance in collection effectiveness or credit terms irrespective of revenue scale. Periods of higher turnover ratio imply enhanced collection efficiency, which is critical to managing working capital demands.

Overall Observations

The data indicates the company experiences strong quarterly variations in key financial metrics, likely due to operational seasonality. Revenue growth is marked by periodic peaks in Q4 of various years, characteristic of end-of-year demand surges. Accounts receivable follow these cycles with increased balances during peak sales periods. Receivable turnover ratios suggest moderately consistent efficiency in collection but with periods of both improvement and decline, reflecting changing business or market conditions. Maintaining steady or improved turnover ratios will be important for optimizing cash flow amidst fluctuating sales.

Revenue Trends

Revenue exhibited noticeable fluctuations over the analyzed quarters. Starting from 18,035 million USD in March 2020, it generally ascended to peak at 27,771 million USD in December 2021. Following this peak, a downward trend is observed through 2022 and early 2023, with revenues declining to approximately 21,061 million USD in September 2023. Nevertheless, the latter part of the timeline shows a recovery, with revenues increasing again to nearly 25,301 million USD in December 2024 before slightly dropping to 21,546 million USD in March 2025. This pattern indicates periods of both significant growth and contraction, suggesting variable demand or operational factors affecting sales.

Accounts Payable Patterns

Accounts payable amounts showed an overall increasing trend with some volatility. From an initial 4,779 million USD in March 2020, the values rose to a high point of 7,512 million USD in December 2022. After this peak, a decline is apparent toward mid-2023, reaching around 5,972 million USD in September 2023. Subsequently, the figures fluctuated slightly but remained above pre-2021 levels, ending at 5,454 million USD in March 2025. This reflects changes in the company’s short-term creditor obligations, possibly due to procurement strategies or payment policies evolving alongside revenue changes.

Payables Turnover Ratio Insights

The payables turnover ratio, available from March 2020 onwards, generally displayed an upward trend, indicating improved efficiency in paying off suppliers. Starting near 13.11 in March 2020, the ratio fluctuated but increased to approximately 16.67 by March 2025. Peaks were observed in mid-2022 and mid-2024, with values exceeding 16.5, suggesting periods where the company accelerated its payment cycle or managed payables more effectively. The fluctuations denote responsive adjustments in working capital management possibly influenced by prevailing economic or industry-specific conditions.

Overall Financial Observations

The interplay between revenues, accounts payable, and payables turnover suggests that while the company experienced significant revenue volatility, it managed to enhance its payables management over time. The increasing payables turnover ratio alongside rising accounts payable until late 2022 indicates an ability to handle larger obligations efficiently. However, revenue downturns in recent quarters may prompt ongoing adjustments in payable practices to maintain financial stability.

Working Capital

The working capital demonstrated notable fluctuations over the observed periods. Starting at 3,543 million USD in March 2020, it gradually increased to peak around 7,371 million USD by September 2021. Subsequently, a downward trend occurred, with a pronounced decline reaching as low as 1,430 million USD by March 2025. Despite some intermittent recoveries, the general trajectory after late 2021 indicated a reduction in working capital levels.

Revenue

Revenue showed variability with an overall growth trend through the initial periods, rising from 18,035 million USD in March 2020 to a peak at 27,771 million USD in December 2021. After this peak, the revenue levels presented alternating rises and falls but generally remained below the peak, oscillating between approximately 21,000 to 25,000 million USD. The data suggests periods of both consolidation and recovery within the revenue stream.

Working Capital Turnover Ratio

The working capital turnover ratio exhibited significant volatility throughout the timeline. Initial values are unavailable, but starting from the available data in March 2021, the ratio was 26.45, followed by a gradual decrease reaching its lowest point at 11.27 by June 2022. Thereafter, a sharp increase occurred, peaking notably at 63.57 by March 2025. This considerable fluctuation indicates substantial variability in how efficiently the company utilized its working capital to generate revenue, with periods of both low and extremely high turnover efficiency.

Patterns and Insights

The data reveals an inverse relationship between working capital and working capital turnover in several periods: as working capital diminished after 2021, turnover ratios tended to spike, reflecting improved efficiency or leaner capital management. Conversely, higher working capital levels correlated with lower turnover ratios, suggesting potentially less efficient use of working capital during those intervals.

The revenue trend, while peaking in late 2021, did not sustain growth in subsequent years, showing signs of cyclicity or seasonal impacts alongside market or operational influences. The fluctuations in revenue combined with the changing working capital structure and efficiency metrics suggest adjustments in operational strategy and capital allocation policies over time.

Overall, the company appears to have transitioned towards a model with reduced working capital base but increased turnover efficiency in recent periods, likely aiming to optimize liquidity and operational performance.

The receivables turnover ratio demonstrates a fluctuating but generally positive trend over the periods reviewed. Starting at a ratio of 7.87 in March 2020, there is a notable increase reaching above 9.0 by the end of 2020 and into 2021, peaking at 10.03 in June 2023. This indicates an improvement in the efficiency of the company's receivables collection process over time, reflecting a faster conversion of receivables into cash. However, some periods show slight declines following peaks, suggesting variability in collection efficiency.

Correspondingly, the average receivable collection period shows an inverse relationship to the receivables turnover ratio, as expected. The number of days decreased from 46 in March 2020 to a lower range around the high 30s by mid-2023, reaching 36 days in September 2023. This reduction in collection days supports the interpretation of improved cash collection practices. The period ends with a slightly increased number of days again, up to 44 in March 2025, which suggests a mild slowdown in collection efficiency towards the latest quarter.

Receivables Turnover Ratio

Increased from under 8 at the start to peaks above 10, indicating better efficiency.

Experienced some volatility with temporary declines after peak points.

Remained generally above 8 for most recent quarters, maintaining relatively strong performance.

Average Receivable Collection Period

Decreased from mid-40s days to mid-30s days by 2023, reflecting quicker collections.

Showed slight upward trends again in the last few quarters, pointing to some variability.

Overall trend correlates inversely with receivables turnover, confirming improvements in receivables management over the period.

In summary, the financial data reflects a company that has improved its receivables turnover efficiency over the analyzed periods, reducing the average days to collect receivables. Despite recent minor fluctuations, the overall pattern indicates enhanced working capital management related to accounts receivable, supporting a generally positive liquidity position in respect to cash collections from customers.

The payables turnover ratio exhibits notable fluctuations throughout the observed periods, beginning from the first available value in March 31, 2020. Initially, the ratio increases from 13.11 to a peak around 15.81 by September 30, 2023, indicating a trend toward more frequent payments to suppliers within the year. This suggests improved efficiency in managing payables over time. However, the ratio shows some variability afterward, with a decline to 14.35 at December 31, 2023, followed by a subsequent rise peaking again around 16.89 by June 30, 2024, then a slight downward trend toward March 31, 2025.

Correspondingly, the average payables payment period, measured in days, inversely correlates with payables turnover as expected. Starting at 28 days during March 31, 2020, this measure steadily shortens, reaching lows in the 22-23 days range from June 30, 2023, through September 30, 2024. This contraction implies the company is paying its trade payables more quickly over time, enhancing supplier relations and possibly taking advantage of early payment discounts. The number of days slightly increases towards quarter-end March 31, 2025, recorded at 25 then back to 22 days, suggesting some variability but overall maintaining an efficient payment cycle.

Overall, the trend across the examined periods points to an increasingly effective accounts payable management process. The consistent rise in payables turnover and reduction in payment period days reflect a strategic emphasis on prompt payment to suppliers, which can strengthen supplier trust and potentially result in favorable procurement terms. Minor fluctuations in these metrics toward the latest periods do not significantly detract from the overall pattern of improved payables efficiency.