Analysis of Short-term (Operating) Activity Ratios
Quarterly Data
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Short-term Activity Ratios (Summary)
United Rentals Inc., short-term (operating) activity ratios (quarterly data)
Based on: 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
- Inventory Turnover
- The inventory turnover ratio demonstrated a generally high level throughout the periods, peaking near the end of 2019 and into 2020 with values above 50. However, starting from early 2021, there is a noticeable decline, falling to under 30 by the last reported quarter in 2022. This suggests a slower rate of inventory movement in the most recent quarters compared to earlier periods.
- Receivables Turnover
- Receivables turnover experienced moderate fluctuations without a clear upward or downward trend. After peaking in mid-2020, the ratio declined towards the end of 2021 and into 2022, moving around the mid-5 to 6 range. This indicates relatively stable but slightly lengthening collection periods for receivables in recent quarters.
- Payables Turnover
- The payables turnover ratio exhibited substantial volatility across the observed quarters. After an initial drop in the first half of 2019, it surged in late 2019 and mid-2020, followed by a decline through 2021 and 2022, settling around the mid-5 range. This variability reflects changes in payment rhythms to suppliers over time.
- Working Capital Turnover
- Data on working capital turnover is partially available and shows very high values in some reported quarters, such as mid-2020, early 2021, and mid-2022, with a remarkable peak close to 176 in mid-2022. Such spikes suggest periods of improved efficiency in using working capital to generate sales. However, the inconsistency and data gaps limit comprehensive trend analysis.
- Average Inventory Processing Period
- This metric has remained relatively stable around a 7 to 13 day range. Early periods show shorter processing times near 7 to 9 days, but there appears to be a gradual increase in recent quarters, peaking at 13 days near the end of 2022. This indicates that inventory was held slightly longer before being processed towards the later periods.
- Average Receivable Collection Period
- The average time taken to collect receivables has generally fluctuated around two months, mostly between 50 and 64 days. There was a decrease during 2020, improving collection speed, but it reverted back to higher days in late 2021 and 2022. This pattern signifies a temporary efficiency improvement followed by stabilization around earlier levels.
- Operating Cycle
- The operating cycle displayed a downward trend leading into 2020, reaching the lowest point at 57 days, before lengthening again towards the end of 2022 to about 76 days. This suggests that the overall time from inventory acquisition to cash collection shortened during 2020 but extended back thereafter.
- Average Payables Payment Period
- The average payment period to suppliers has shown significant variation, ranging from as low as 21 days in mid-2020 to peaks near 68 days in late 2021. More recently, the payment period remained extended, maintaining around 60 days. This likely indicates a strategy of longer payables deferral in recent years.
- Cash Conversion Cycle
- The cash conversion cycle exhibited fluctuations, reaching lows of 6 to 10 days in mid to late 2021 and mid-2022, indicating efficient cash flow management during these periods. Earlier quarters showed longer cycles, sometimes exceeding 30 days. Overall, the trend points to improved cash flow efficiency in recent quarters, despite some periodic increases.
Turnover Ratios
Average No. Days
Inventory Turnover
United Rentals Inc., inventory turnover calculation (quarterly data)
| Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||
| Cost of revenues | 1,808) | 1,685) | 1,621) | 1,532) | 1,615) | 1,493) | 1,412) | 1,343) | 1,410) | 1,301) | 1,238) | 1,398) | 1,491) | 1,455) | 1,379) | 1,356) | |||||
| Inventory | 232) | 193) | 199) | 179) | 164) | 166) | 174) | 114) | 125) | 108) | 107) | 115) | 120) | 130) | 135) | 123) | |||||
| Short-term Activity Ratio | |||||||||||||||||||||
| Inventory turnover1 | 28.65 | 33.44 | 31.46 | 33.81 | 35.75 | 34.08 | 31.41 | 46.42 | 42.78 | 50.26 | 52.17 | 49.77 | 47.34 | 42.29 | 38.67 | 40.25 | |||||
| Benchmarks | |||||||||||||||||||||
| Inventory Turnover, Competitors2 | |||||||||||||||||||||
| Boeing Co. | 0.81 | 0.78 | 0.74 | 0.74 | 0.75 | 0.77 | 0.76 | 0.74 | — | — | — | — | — | — | — | — | |||||
| Caterpillar Inc. | 2.54 | 2.36 | 2.40 | 2.46 | 2.53 | 2.44 | 2.49 | 2.46 | — | — | — | — | — | — | — | — | |||||
| Eaton Corp. plc | 4.04 | 3.95 | 3.87 | 4.03 | 4.48 | 4.73 | 4.86 | 5.12 | — | — | — | — | — | — | — | — | |||||
| GE Aerospace | 3.19 | 3.10 | 3.04 | 3.25 | 3.40 | 3.21 | 3.28 | 3.46 | — | — | — | — | — | — | — | — | |||||
| Honeywell International Inc. | 4.04 | 4.09 | 4.06 | 4.20 | 4.55 | 4.72 | 4.88 | 4.85 | — | — | — | — | — | — | — | — | |||||
| Lockheed Martin Corp. | 18.68 | 18.09 | 16.20 | 18.12 | 19.45 | 19.81 | 18.64 | 17.58 | — | — | — | — | — | — | — | — | |||||
| RTX Corp. | 5.03 | 5.03 | 5.14 | 5.33 | 5.65 | 5.57 | 5.49 | 5.48 | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q4 2022 Calculation
Inventory turnover
= (Cost of revenuesQ4 2022
+ Cost of revenuesQ3 2022
+ Cost of revenuesQ2 2022
+ Cost of revenuesQ1 2022)
÷ Inventory
= (1,808 + 1,685 + 1,621 + 1,532)
÷ 232 = 28.65
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals notable trends in cost of revenues, inventory levels, and inventory turnover ratios over the observed periods.
- Cost of Revenues
- The cost of revenues displays a general upward trend from the first quarter of 2019 through the end of 2022. Beginning at $1,356 million in March 2019, it experienced moderate fluctuations but maintained an overall increase, peaking at $1,808 million in December 2022. Minor declines are observed mid-2020, likely influenced by external market factors, followed by steady growth throughout 2021 and 2022, indicating increased operational activity or rising input costs.
- Inventory Levels
- Inventory levels remained relatively stable from early 2019 to early 2020, fluctuating slightly between $115 million and $135 million. Thereafter, a gradual increase is evident beginning mid-2021, rising from $114 million to $232 million by the end of 2022. This steady rise in inventory suggests either stockpiling in anticipation of higher demand or slower inventory turnover rates in later periods.
- Inventory Turnover Ratio
- The inventory turnover ratio demonstrates significant variability. Early data points in 2019 show high turnover ratios exceeding 40, indicating efficient inventory movement relative to cost of revenues. This efficiency appears to peak around mid-2020 at ratios above 50, signaling very rapid inventory cycles during that period. However, from 2021 onwards, the ratio declines noticeably, dropping to approximately 28.65 by December 2022. This downward trend suggests a slowdown in the rate at which inventory is sold or used, possibly reflecting increased inventory levels and changes in demand dynamics or supply chain conditions.
In summary, while the cost of revenues steadily increased throughout the period, inventory levels rose markedly in the latter part of the timeframe, accompanied by a declining inventory turnover ratio. These patterns may indicate evolving operational strategies, market demand shifts, or supply chain impacts affecting inventory management efficiency.
Receivables Turnover
United Rentals Inc., receivables turnover calculation (quarterly data)
| Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||
| Revenues | 3,296) | 3,051) | 2,771) | 2,524) | 2,776) | 2,596) | 2,287) | 2,057) | 2,279) | 2,187) | 1,939) | 2,125) | 2,456) | 2,488) | 2,290) | 2,117) | |||||
| Accounts receivable, net | 2,004) | 1,934) | 1,744) | 1,607) | 1,677) | 1,602) | 1,400) | 1,254) | 1,315) | 1,324) | 1,226) | 1,413) | 1,530) | 1,595) | 1,525) | 1,487) | |||||
| Short-term Activity Ratio | |||||||||||||||||||||
| Receivables turnover1 | 5.81 | 5.75 | 6.12 | 6.34 | 5.79 | 5.75 | 6.29 | 6.75 | 6.49 | 6.58 | 7.35 | 6.62 | 6.11 | 5.77 | 5.79 | 5.67 | |||||
| Benchmarks | |||||||||||||||||||||
| Receivables Turnover, Competitors2 | |||||||||||||||||||||
| Boeing Co. | 26.46 | 22.98 | 20.27 | 25.37 | 23.58 | 27.95 | 24.76 | 23.97 | — | — | — | — | — | — | — | — | |||||
| Caterpillar Inc. | 6.39 | 6.59 | 6.10 | 5.46 | 5.68 | 5.97 | 5.51 | 5.07 | — | — | — | — | — | — | — | — | |||||
| Eaton Corp. plc | 5.09 | 5.28 | 5.15 | 5.39 | 5.95 | 5.75 | 5.72 | 5.79 | — | — | — | — | — | — | — | — | |||||
| GE Aerospace | 4.09 | 4.19 | 4.39 | 4.43 | 4.55 | 4.83 | 4.74 | 4.59 | — | — | — | — | — | — | — | — | |||||
| Honeywell International Inc. | 4.77 | 4.74 | 4.45 | 4.82 | 5.04 | 4.78 | 4.89 | 4.89 | — | — | — | — | — | — | — | — | |||||
| Lockheed Martin Corp. | 26.34 | 26.06 | 18.87 | 26.02 | 34.15 | 29.27 | 25.59 | 29.81 | — | — | — | — | — | — | — | — | |||||
| RTX Corp. | 7.36 | 7.15 | 6.28 | 7.15 | 6.66 | 6.69 | 6.99 | 6.03 | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q4 2022 Calculation
Receivables turnover
= (RevenuesQ4 2022
+ RevenuesQ3 2022
+ RevenuesQ2 2022
+ RevenuesQ1 2022)
÷ Accounts receivable, net
= (3,296 + 3,051 + 2,771 + 2,524)
÷ 2,004 = 5.81
2 Click competitor name to see calculations.
The financial data reveals several notable trends over the analyzed periods.
- Revenues
- Revenues exhibited a generally increasing trend from the first quarter of 2019 through the end of 2022, despite a temporary decline during 2020. Initially, revenues rose steadily from approximately 2,117 million to about 2,488 million in the third quarter of 2019. However, with the onset of 2020, revenues dropped sharply to a low near 1,939 million in the second quarter, coinciding with broader economic disruptions. Subsequently, revenues recovered and consistently increased, reaching a peak of around 3,296 million by the fourth quarter of 2022. This suggests resilient demand and effective operational recovery following the downturn.
- Accounts Receivable, Net
- Accounts receivable, net, followed a pattern somewhat mirroring revenues, though with less volatility. Initially rising from approximately 1,487 million to 1,595 million in late 2019, receivables then decreased sharply to about 1,226 million by mid-2020. Afterward, they gradually increased again and reached approximately 2,004 million by the end of 2022. The increase toward the end of the period indicates higher credit sales volume or longer collection periods accompanying the revenue growth.
- Receivables Turnover Ratio
- The receivables turnover ratio demonstrated volatility across quarters, reflecting changes in collection efficiency relative to net receivables. This ratio rose from around 5.67 in early 2019 to a peak of 7.35 in mid-2020, signaling improved efficiency in receivables collection during the downturn phase. Post mid-2020, the ratio fluctuated but generally trended downward, stabilizing near 5.75 to 6.34 toward the end of 2022. This suggests that while collection efficiency initially improved, it normalized as business conditions stabilized and sales volumes increased.
In summary, the data reflects a significant impact from economic challenges in 2020, with a clear rebound in revenues and receivables thereafter. The turnover ratio changes indicate adaptive credit and collection management practices during periods of volatility, ultimately converging toward pre-disruption efficiency levels.
Payables Turnover
United Rentals Inc., payables turnover calculation (quarterly data)
| Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||
| Cost of revenues | 1,808) | 1,685) | 1,621) | 1,532) | 1,615) | 1,493) | 1,412) | 1,343) | 1,410) | 1,301) | 1,238) | 1,398) | 1,491) | 1,455) | 1,379) | 1,356) | |||||
| Accounts payable | 1,139) | 1,136) | 1,065) | 828) | 816) | 1,057) | 897) | 562) | 466) | 541) | 316) | 484) | 454) | 839) | 752) | 557) | |||||
| Short-term Activity Ratio | |||||||||||||||||||||
| Payables turnover1 | 5.83 | 5.68 | 5.88 | 7.31 | 7.19 | 5.35 | 6.09 | 9.42 | 11.47 | 10.03 | 17.66 | 11.82 | 12.51 | 6.55 | 6.94 | 8.89 | |||||
| Benchmarks | |||||||||||||||||||||
| Payables Turnover, Competitors2 | |||||||||||||||||||||
| Boeing Co. | 6.18 | 6.36 | 6.17 | 6.73 | 6.40 | 6.20 | 5.45 | 4.90 | — | — | — | — | — | — | — | — | |||||
| Caterpillar Inc. | 4.76 | 4.81 | 4.72 | 4.43 | 4.36 | 4.61 | 4.57 | 4.46 | — | — | — | — | — | — | — | — | |||||
| Eaton Corp. plc | 4.51 | 4.61 | 4.43 | 4.67 | 4.75 | 5.11 | 5.22 | 5.66 | — | — | — | — | — | — | — | — | |||||
| GE Aerospace | 2.98 | 3.14 | 3.14 | 3.32 | 3.32 | 3.33 | 3.35 | 3.56 | — | — | — | — | — | — | — | — | |||||
| Honeywell International Inc. | 3.53 | 3.68 | 3.63 | 3.66 | 3.61 | 3.83 | 3.76 | 3.86 | — | — | — | — | — | — | — | — | |||||
| Lockheed Martin Corp. | 27.25 | 21.48 | 24.07 | 21.92 | 74.34 | 37.83 | 36.15 | 30.31 | — | — | — | — | — | — | — | — | |||||
| RTX Corp. | 5.40 | 5.82 | 5.36 | 6.28 | 5.93 | 6.06 | 6.52 | 5.67 | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q4 2022 Calculation
Payables turnover
= (Cost of revenuesQ4 2022
+ Cost of revenuesQ3 2022
+ Cost of revenuesQ2 2022
+ Cost of revenuesQ1 2022)
÷ Accounts payable
= (1,808 + 1,685 + 1,621 + 1,532)
÷ 1,139 = 5.83
2 Click competitor name to see calculations.
The financial data reveals several notable trends in the company's cost management and payables activity over the reported quarters.
- Cost of Revenues
- The cost of revenues exhibited an overall upward trajectory throughout the periods analyzed. Starting from 1,356 million USD in the first quarter of 2019, costs showed incremental growth with slight fluctuations, culminating in the highest figure of 1,808 million USD by the last quarter of 2022. This trend suggests increasing operational expenses or expanded business activities over time. The cost dipped notably from the fourth quarter of 2019 to the second quarter of 2020, likely reflecting the initial impact of external factors, before resuming its upward trend steadily across 2021 and 2022.
- Accounts Payable
- Accounts payable balances demonstrated significant volatility. From 557 million USD in early 2019, payables increased steadily to reach a peak of 1,057 million USD in the third quarter of 2021. This was followed by a period of moderate fluctuation, with payables remaining above 1,000 million USD in the final quarters of 2022. The increase in accounts payable generally aligns with the rising cost of revenues, indicating a proportional growth in obligations to suppliers or vendors.
- Payables Turnover Ratio
- The payables turnover ratio showed marked variability, ranging from lows around 5.35 to highs above 17 over the period. Higher ratios, seen notably in the second quarter of 2020 (17.66), indicate faster payment cycles during that phase, potentially reflecting strategic attempts to manage supplier relationships or optimize working capital. Conversely, lower ratios observed in late 2021 and throughout 2022 suggest slower payment cycles or extended payment terms. The decreasing trend in payables turnover ratio through 2021 and 2022, concurrent with higher accounts payable balances, implies the company may be taking longer to pay its suppliers as operational volumes increase.
In summary, the company’s cost of revenues consistently increased, supported by rising accounts payable balances, indicating growth in operational scale. The payables turnover ratio’s fluctuations suggest varying management of supplier payments, with a tendency toward slower turnover in the most recent quarters.
Working Capital Turnover
United Rentals Inc., working capital turnover calculation (quarterly data)
| Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||
| Current assets | 2,723) | 2,327) | 2,164) | 2,010) | 2,151) | 2,200) | 2,154) | 2,004) | 2,017) | 1,728) | 1,622) | 2,214) | 1,842) | 1,881) | 1,840) | 1,720) | |||||
| Less: Current liabilities | 2,445) | 2,264) | 2,023) | 2,597) | 2,603) | 2,752) | 2,544) | 1,841) | 1,890) | 1,916) | 1,921) | 1,996) | 2,198) | 2,643) | 2,535) | 2,238) | |||||
| Working capital | 278) | 63) | 141) | (587) | (452) | (552) | (390) | 163) | 127) | (188) | (299) | 218) | (356) | (762) | (695) | (518) | |||||
| Revenues | 3,296) | 3,051) | 2,771) | 2,524) | 2,776) | 2,596) | 2,287) | 2,057) | 2,279) | 2,187) | 1,939) | 2,125) | 2,456) | 2,488) | 2,290) | 2,117) | |||||
| Short-term Activity Ratio | |||||||||||||||||||||
| Working capital turnover1 | 41.88 | 176.54 | 75.65 | — | — | — | — | 51.91 | 67.17 | — | — | 42.93 | — | — | — | — | |||||
| Benchmarks | |||||||||||||||||||||
| Working Capital Turnover, Competitors2 | |||||||||||||||||||||
| Boeing Co. | 3.42 | 3.13 | 2.87 | 2.51 | 2.34 | 2.02 | 2.00 | 1.88 | — | — | — | — | — | — | — | — | |||||
| Caterpillar Inc. | 4.62 | 4.35 | 3.93 | 3.83 | 3.54 | 2.87 | 2.80 | 2.52 | — | — | — | — | — | — | — | — | |||||
| Eaton Corp. plc | 8.70 | 10.69 | — | — | 65.65 | 12.41 | 21.65 | 5.34 | — | — | — | — | — | — | — | — | |||||
| GE Aerospace | 7.93 | 13.29 | 10.55 | 7.14 | 4.94 | 1.57 | 1.57 | 1.27 | — | — | — | — | — | — | — | — | |||||
| Honeywell International Inc. | 7.03 | 7.91 | 8.84 | 8.07 | 5.86 | 5.94 | 4.52 | 4.27 | — | — | — | — | — | — | — | — | |||||
| Lockheed Martin Corp. | 12.93 | 14.03 | 14.28 | 15.14 | 11.52 | 10.48 | 12.30 | 11.93 | — | — | — | — | — | — | — | — | |||||
| RTX Corp. | 20.15 | 19.15 | 17.77 | 11.41 | 9.75 | 8.11 | 10.24 | 9.77 | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q4 2022 Calculation
Working capital turnover
= (RevenuesQ4 2022
+ RevenuesQ3 2022
+ RevenuesQ2 2022
+ RevenuesQ1 2022)
÷ Working capital
= (3,296 + 3,051 + 2,771 + 2,524)
÷ 278 = 41.88
2 Click competitor name to see calculations.
The analysis of the financial data reveals several trends and fluctuations across the examined quarters, focusing primarily on working capital, revenues, and working capital turnover.
- Working Capital
- The working capital figures show considerable volatility throughout the periods. Initially, working capital is negative, starting at -518 million USD in the first quarter of 2019 and reaching a low of -762 million USD in the third quarter of 2019. A notable improvement occurs in the first quarter of 2020, when working capital turns positive to 218 million USD. However, this is followed by a decline again into negative territory by the third and fourth quarters of 2020. Starting from the first quarter of 2021, working capital continues to fluctuate between negative and positive values, ending in the last quarter of 2022 at 278 million USD. This pattern indicates challenges in maintaining a stable working capital position over time, reflecting changes in current assets or liabilities management.
- Revenues
- Revenues demonstrate an overall growth trend across the entire period. Beginning at 2,117 million USD in the first quarter of 2019, revenues steadily increase with some fluctuations. There is a dip in revenue in the second quarter of 2020 to 1,939 million USD, likely influenced by external factors affecting business operations during that period. After this trough, revenues consistently rise, reaching a peak value of 3,296 million USD by the fourth quarter of 2022. This indicates a strong recovery and expansion in sales or services rendered.
- Working Capital Turnover
- Data for working capital turnover is sparse, with values available for only selected quarters. The turnover ratio shows remarkably high values during certain periods, such as 42.93 in the first quarter of 2020 and peaking at 176.54 in the third quarter of 2022. These high turnover ratios suggest efficient utilization of working capital in generating revenues during those specific periods. However, the lack of continuous data limits the ability to discern a consistent trend. The variability in turnover likely mirrors the fluctuations in working capital and revenue levels noted above.
Overall, the company exhibits strong revenue growth accompanied by fluctuating working capital levels, resulting in variable working capital turnover ratios. The data suggests that while revenue expansion is robust, managing working capital effectively remains an area with notable instability, which could impact operational liquidity and efficiency metrics.
Average Inventory Processing Period
United Rentals Inc., average inventory processing period calculation (quarterly data)
| Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||
| Inventory turnover | 28.65 | 33.44 | 31.46 | 33.81 | 35.75 | 34.08 | 31.41 | 46.42 | 42.78 | 50.26 | 52.17 | 49.77 | 47.34 | 42.29 | 38.67 | 40.25 | |||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||
| Average inventory processing period1 | 13 | 11 | 12 | 11 | 10 | 11 | 12 | 8 | 9 | 7 | 7 | 7 | 8 | 9 | 9 | 9 | |||||
| Benchmarks (no. days) | |||||||||||||||||||||
| Average Inventory Processing Period, Competitors2 | |||||||||||||||||||||
| Boeing Co. | 452 | 468 | 494 | 493 | 486 | 475 | 478 | 496 | — | — | — | — | — | — | — | — | |||||
| Caterpillar Inc. | 144 | 155 | 152 | 148 | 144 | 150 | 146 | 149 | — | — | — | — | — | — | — | — | |||||
| Eaton Corp. plc | 90 | 92 | 94 | 90 | 82 | 77 | 75 | 71 | — | — | — | — | — | — | — | — | |||||
| GE Aerospace | 114 | 118 | 120 | 112 | 107 | 114 | 111 | 105 | — | — | — | — | — | — | — | — | |||||
| Honeywell International Inc. | 90 | 89 | 90 | 87 | 80 | 77 | 75 | 75 | — | — | — | — | — | — | — | — | |||||
| Lockheed Martin Corp. | 20 | 20 | 23 | 20 | 19 | 18 | 20 | 21 | — | — | — | — | — | — | — | — | |||||
| RTX Corp. | 73 | 73 | 71 | 69 | 65 | 65 | 66 | 67 | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q4 2022 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 28.65 = 13
2 Click competitor name to see calculations.
The analysis of inventory management metrics over the examined periods reveals several notable trends. Inventory turnover exhibited a general increase from early 2019 through mid-2020, reaching its peak during the second quarter of 2020. This upward movement suggests an improvement in how quickly inventory was being sold or utilized during that timeframe. However, following this peak, a decline is evident from late 2020 onwards, with inventory turnover falling substantially by the end of 2022. This decrease indicates a potential slowdown in inventory movement or increased stock levels relative to sales.
Correspondingly, the average inventory processing period, which represents the number of days inventory remains before being sold or used, shows an inverse pattern to inventory turnover. It remained relatively stable at around 7 to 9 days from 2019 until mid-2020, then began to rise noticeably from late 2020 through 2022. The average number of days increased from around 9 days to as high as 13 days by the end of the reported period, indicating that inventory was held longer before turnover occurred.
The inverse relationship between these two metrics is consistent with standard inventory dynamics: as inventory turnover decreases, the processing period lengthens. The peak turnover and shortest processing periods during 2020 may suggest operational efficiencies or strong demand, whereas the subsequent deterioration may imply challenges such as reduced sales velocity, increased inventory accumulation, or supply chain disruptions impacting inventory flow.
Overall, the data indicates that the company effectively managed inventory to improve turnover until mid-2020 but faced difficulties maintaining this level in the following quarters, resulting in slower inventory movement and longer holding periods by late 2022.
Average Receivable Collection Period
United Rentals Inc., average receivable collection period calculation (quarterly data)
| Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||
| Receivables turnover | 5.81 | 5.75 | 6.12 | 6.34 | 5.79 | 5.75 | 6.29 | 6.75 | 6.49 | 6.58 | 7.35 | 6.62 | 6.11 | 5.77 | 5.79 | 5.67 | |||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||
| Average receivable collection period1 | 63 | 63 | 60 | 58 | 63 | 63 | 58 | 54 | 56 | 56 | 50 | 55 | 60 | 63 | 63 | 64 | |||||
| Benchmarks (no. days) | |||||||||||||||||||||
| Average Receivable Collection Period, Competitors2 | |||||||||||||||||||||
| Boeing Co. | 14 | 16 | 18 | 14 | 15 | 13 | 15 | 15 | — | — | — | — | — | — | — | — | |||||
| Caterpillar Inc. | 57 | 55 | 60 | 67 | 64 | 61 | 66 | 72 | — | — | — | — | — | — | — | — | |||||
| Eaton Corp. plc | 72 | 69 | 71 | 68 | 61 | 63 | 64 | 63 | — | — | — | — | — | — | — | — | |||||
| GE Aerospace | 89 | 87 | 83 | 82 | 80 | 76 | 77 | 80 | — | — | — | — | — | — | — | — | |||||
| Honeywell International Inc. | 77 | 77 | 82 | 76 | 72 | 76 | 75 | 75 | — | — | — | — | — | — | — | — | |||||
| Lockheed Martin Corp. | 14 | 14 | 19 | 14 | 11 | 12 | 14 | 12 | — | — | — | — | — | — | — | — | |||||
| RTX Corp. | 50 | 51 | 58 | 51 | 55 | 55 | 52 | 61 | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q4 2022 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 5.81 = 63
2 Click competitor name to see calculations.
The analysis of the receivables turnover and average receivable collection period over the observed quarters reveals distinct patterns and trends in the company's credit management and cash collection efficiency.
- Receivables Turnover Trend
- The receivables turnover ratio showed an initial upward trend from early 2019 through mid-2020, increasing from 5.67 to a peak of 7.35. This suggests an improvement in how quickly the company collected its receivables during that timeframe. However, from the third quarter of 2020 onward, the ratio generally declined, reaching approximately 5.75 to 5.81 by the end of 2022. This decline indicates a slowdown in the turnover rate of receivables compared to the peak periods.
- Average Receivable Collection Period Trend
- Corresponding to the receivables turnover, the average receivable collection period shortened during the early periods, moving from 64 days in March 2019 to 50 days in June 2020, reflecting enhanced efficiency in collecting receivables. After June 2020, the collection period lengthened again, stabilizing around the 60 to 63-day range through to the end of 2022. This longer collection period suggests a reduced pace in receiving payments from customers compared to the mid-2020 low points.
- Relation Between Metrics
- The inverse relationship between receivables turnover and the average collection period is evident; as turnover increased, collection days decreased, indicating improved liquidity management. Conversely, as turnover declined, collection days increased, pointing to a potentially weaker receivables management environment in the latter periods.
- Overall Insight
- The fluctuations in these metrics suggest that the company experienced enhanced receivables efficiency during 2019 and early to mid-2020, likely driven by operational or market conditions favoring quicker payments. Post mid-2020, the efficiency gains reversed partially, with receivables being turned over and collected at a slower pace, possibly reflecting changes in customer payment behavior, credit terms, or external economic factors affecting collection timings.
Operating Cycle
United Rentals Inc., operating cycle calculation (quarterly data)
No. days
| Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||
| Average inventory processing period | 13 | 11 | 12 | 11 | 10 | 11 | 12 | 8 | 9 | 7 | 7 | 7 | 8 | 9 | 9 | 9 | |||||
| Average receivable collection period | 63 | 63 | 60 | 58 | 63 | 63 | 58 | 54 | 56 | 56 | 50 | 55 | 60 | 63 | 63 | 64 | |||||
| Short-term Activity Ratio | |||||||||||||||||||||
| Operating cycle1 | 76 | 74 | 72 | 69 | 73 | 74 | 70 | 62 | 65 | 63 | 57 | 62 | 68 | 72 | 72 | 73 | |||||
| Benchmarks | |||||||||||||||||||||
| Operating Cycle, Competitors2 | |||||||||||||||||||||
| Boeing Co. | 466 | 484 | 512 | 507 | 501 | 488 | 493 | 511 | — | — | — | — | — | — | — | — | |||||
| Caterpillar Inc. | 201 | 210 | 212 | 215 | 208 | 211 | 212 | 221 | — | — | — | — | — | — | — | — | |||||
| Eaton Corp. plc | 162 | 161 | 165 | 158 | 143 | 140 | 139 | 134 | — | — | — | — | — | — | — | — | |||||
| GE Aerospace | 203 | 205 | 203 | 194 | 187 | 190 | 188 | 185 | — | — | — | — | — | — | — | — | |||||
| Honeywell International Inc. | 167 | 166 | 172 | 163 | 152 | 153 | 150 | 150 | — | — | — | — | — | — | — | — | |||||
| Lockheed Martin Corp. | 34 | 34 | 42 | 34 | 30 | 30 | 34 | 33 | — | — | — | — | — | — | — | — | |||||
| RTX Corp. | 123 | 124 | 129 | 120 | 120 | 120 | 118 | 128 | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q4 2022 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= 13 + 63 = 76
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several important trends related to the company’s inventory processing, receivable collection, and overall operating cycle durations over the period from March 2019 through December 2022.
- Average Inventory Processing Period
- The inventory processing period generally remained stable around 8 to 9 days during most of 2019, with a slight decrease to 7 days observed in the first three quarters of 2020. However, starting in the fourth quarter of 2020 and continuing through 2022, the period showed a gradual lengthening trend, increasing from 9 days to 13 days by the end of 2022. This indicates a slower movement of inventory toward the end of the period analyzed.
- Average Receivable Collection Period
- This period exhibited a downward trend from 64 days in early 2019 to a low of 50 days in the second quarter of 2020, indicating an improvement in the speed of collecting receivables during that time. Following this improvement, the collection period began to rise again, fluctuating between 56 and 63 days from late 2020 through the end of 2022. Overall, the receivable collection period returned close to its earlier levels by the close of 2022, suggesting a stabilization but not a sustained improvement over the longer term.
- Operating Cycle
- The operating cycle, which combines inventory processing and receivable collection periods, decreased from 73 days in early 2019 to 57 days by mid-2020, reflecting enhanced operational efficiency during that period. Nonetheless, from the third quarter of 2020 onward, the operating cycle lengthened consistently, reaching 76 days by the end of 2022. This overall increase in the operating cycle indicates that more time was needed to convert inventory into cash, potentially signaling delays in inventory turnover, receivable collection, or both.
In summary, while the company showed improvements in asset management efficiency during early 2020, the latter part of the period analyzed presented a reversal, with longer inventory processing and operating cycles, as well as stabilizing but not reduced receivable collection periods. These trends suggest some challenges in maintaining the previously achieved operational improvements in inventory and receivables management.
Average Payables Payment Period
United Rentals Inc., average payables payment period calculation (quarterly data)
| Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||
| Payables turnover | 5.83 | 5.68 | 5.88 | 7.31 | 7.19 | 5.35 | 6.09 | 9.42 | 11.47 | 10.03 | 17.66 | 11.82 | 12.51 | 6.55 | 6.94 | 8.89 | |||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||
| Average payables payment period1 | 63 | 64 | 62 | 50 | 51 | 68 | 60 | 39 | 32 | 36 | 21 | 31 | 29 | 56 | 53 | 41 | |||||
| Benchmarks (no. days) | |||||||||||||||||||||
| Average Payables Payment Period, Competitors2 | |||||||||||||||||||||
| Boeing Co. | 59 | 57 | 59 | 54 | 57 | 59 | 67 | 74 | — | — | — | — | — | — | — | — | |||||
| Caterpillar Inc. | 77 | 76 | 77 | 82 | 84 | 79 | 80 | 82 | — | — | — | — | — | — | — | — | |||||
| Eaton Corp. plc | 81 | 79 | 82 | 78 | 77 | 71 | 70 | 65 | — | — | — | — | — | — | — | — | |||||
| GE Aerospace | 123 | 116 | 116 | 110 | 110 | 109 | 109 | 103 | — | — | — | — | — | — | — | — | |||||
| Honeywell International Inc. | 103 | 99 | 101 | 100 | 101 | 95 | 97 | 95 | — | — | — | — | — | — | — | — | |||||
| Lockheed Martin Corp. | 13 | 17 | 15 | 17 | 5 | 10 | 10 | 12 | — | — | — | — | — | — | — | — | |||||
| RTX Corp. | 68 | 63 | 68 | 58 | 62 | 60 | 56 | 64 | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q4 2022 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 5.83 = 63
2 Click competitor name to see calculations.
- Payables Turnover
- The payables turnover ratio exhibits significant fluctuations over the analyzed periods. Initially, the ratio started at 8.89, then decreased to a low of 6.55 within 2019 before rising sharply to a peak of 17.66 in June 2020. Following this peak, the ratio declined again, showing a pattern of volatility with values oscillating between approximately 5.35 and 12.51 in subsequent quarters. More recent quarters demonstrate a downward trend with the ratio stabilizing around the 5.68 to 7.31 range.
- Average Payables Payment Period
- The payment period, measured in days, shows an inverse relationship to the payables turnover ratio as expected. Starting at 41 days, the payment period increased to 56 days in late 2019, then sharply decreased to 21 days by mid-2020, consistent with the peak observed in payables turnover. Post mid-2020, the payment period generally trends upward, reaching values between 60 and 68 days in late 2021, and maintaining a higher level around 62 to 64 days through 2022. This indicates a gradual extension in the time taken to pay suppliers compared to earlier periods.
- Overall Insights
- The data suggest periods of both aggressive and relaxed payables management. The surge in payables turnover in mid-2020 coincided with a substantial reduction in payment days, indicating faster payments during that period. Conversely, the recent stabilization of the payables turnover ratio at lower levels, coupled with longer payment periods, points to a shift toward slower supplier payments. These trends may reflect changes in operational strategies, cash flow management, or adjustments to supplier credit terms across the timeline.
Cash Conversion Cycle
United Rentals Inc., cash conversion cycle calculation (quarterly data)
No. days
| Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||
| Average inventory processing period | 13 | 11 | 12 | 11 | 10 | 11 | 12 | 8 | 9 | 7 | 7 | 7 | 8 | 9 | 9 | 9 | |||||
| Average receivable collection period | 63 | 63 | 60 | 58 | 63 | 63 | 58 | 54 | 56 | 56 | 50 | 55 | 60 | 63 | 63 | 64 | |||||
| Average payables payment period | 63 | 64 | 62 | 50 | 51 | 68 | 60 | 39 | 32 | 36 | 21 | 31 | 29 | 56 | 53 | 41 | |||||
| Short-term Activity Ratio | |||||||||||||||||||||
| Cash conversion cycle1 | 13 | 10 | 10 | 19 | 22 | 6 | 10 | 23 | 33 | 27 | 36 | 31 | 39 | 16 | 19 | 32 | |||||
| Benchmarks | |||||||||||||||||||||
| Cash Conversion Cycle, Competitors2 | |||||||||||||||||||||
| Boeing Co. | 407 | 427 | 453 | 453 | 444 | 429 | 426 | 437 | — | — | — | — | — | — | — | — | |||||
| Caterpillar Inc. | 124 | 134 | 135 | 133 | 124 | 132 | 132 | 139 | — | — | — | — | — | — | — | — | |||||
| Eaton Corp. plc | 81 | 82 | 83 | 80 | 66 | 69 | 69 | 69 | — | — | — | — | — | — | — | — | |||||
| GE Aerospace | 80 | 89 | 87 | 84 | 77 | 81 | 79 | 82 | — | — | — | — | — | — | — | — | |||||
| Honeywell International Inc. | 64 | 67 | 71 | 63 | 51 | 58 | 53 | 55 | — | — | — | — | — | — | — | — | |||||
| Lockheed Martin Corp. | 21 | 17 | 27 | 17 | 25 | 20 | 24 | 21 | — | — | — | — | — | — | — | — | |||||
| RTX Corp. | 55 | 61 | 61 | 62 | 58 | 60 | 62 | 64 | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q4 2022 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 13 + 63 – 63 = 13
2 Click competitor name to see calculations.
The analysis of the financial periods reveals distinct trends and fluctuations in the company's operational efficiency, particularly in inventory management, receivables, payables, and overall cash conversion cycle over the evaluated quarters.
- Average Inventory Processing Period
- The average inventory processing period mostly remained stable around 7 to 9 days throughout 2019 and 2020, indicating consistent inventory turnover. However, starting from 2021, there was a noticeable increase, peaking at 13 days by the end of 2022. This suggests a gradual slowdown in inventory movement which could reflect changes in demand, supply chain inefficiencies, or inventory management strategies.
- Average Receivable Collection Period
- Receivables collection times showed a decreasing trend from around 64 days in early 2019 to approximately 50 days in mid-2020, indicating improved efficiency in collecting customer payments. From mid-2020 onward, the receivable collection period stabilized in the range of 54 to 63 days, showing some fluctuation but generally maintaining a consistent level without significant improvement or deterioration.
- Average Payables Payment Period
- The payment period to suppliers exhibited higher volatility over the analyzed periods. Initially increasing sharply from 41 days in Q1 2019 to as high as 56 days by Q3 2019, then dropping to 29 days by the end of 2019. In 2020 and onwards, the period continued to fluctuate from 21 to 64 days, with a general upward trend toward longer payment durations in recent quarters. This might indicate a strategic extension of payables terms or cash flow management adjustments.
- Cash Conversion Cycle
- The cash conversion cycle initially improved from 32 days in Q1 2019 to a low of 6 days in Q3 2021, reflecting enhanced overall working capital efficiency through quicker inventory turnover, faster receivables collection, and optimized payables payment timing. However, in the last year of data, it increased again to about 13 days by Q4 2022, indicating a slight decline in efficiency but still better than earlier periods.
Overall, the data suggest that while the company achieved notable improvements in cash conversion efficiency through mid-2021, recent trends point to easing of those gains, especially due to slower inventory turnover and lengthening payables periods. Receivable collection remained relatively stable after initial improvements. The dynamics among these metrics should be monitored closely to ensure continued working capital optimization.