RTX Corp. (NYSE:RTX)

Inventory Turnover

The inventory turnover ratio started at 5.11 and showed a slight increase through 2021, peaking around 5.65. It then gradually declined, reaching a low near 4.6 in late 2023 and early 2024 before stabilizing around 4.9 near the end of the data. This suggests a modest slowdown in the speed at which inventory is sold and replaced over the periods.

Receivables Turnover

This ratio oscillates moderately, beginning at 6.11 and fluctuating between approximately 6 and 7.8. A peak is observed in late 2024 with a value near 7.83, followed by a slight decrease thereafter. Overall, the changes imply relatively consistent effectiveness in collecting receivables, with some periods of improved efficiency.

Payables Turnover

The payables turnover ratio shows a rising trend early on, moving from 5.56 to above 6.5 in late 2020, followed by a gradual decline to below 5 by mid to late 2025. This gradual decrease indicates that payables are being settled somewhat slower in the later periods compared to earlier ones.

Working Capital Turnover

This metric displays high volatility, with values ranging from 7.52 to a pronounced spike above 279 near the end of the period. Notably, there are huge surges around late 2023 to 2025, suggesting extraordinary fluctuations in operating efficiency relative to working capital. These spikes may reflect unusual operational or financial events affecting working capital utilization.

Average Inventory Processing Period

The average days inventory is held decreases slightly from 71 days to a low near 65 in 2021, then reverses to a longer duration, peaking around 79 days in 2023 and 2024 before a mild decline. This pattern aligns with the slowdown seen in inventory turnover, indicating a longer holding period of inventory in later periods.

Average Receivable Collection Period

The days required to collect receivables fluctuates between 47 and 61 days, with no clear directional trend but minor periodic increases and decreases. The consistency suggests stable credit and collection policies over time, with slightly improved collection efficiency towards the end of the observation period.

Operating Cycle

The operating cycle length remains relatively stable, ranging from about 118 to 134 days across the quarters. This stability reflects consistent timing in the overall process from inventory acquisition to receipt of cash from sales.

Average Payables Payment Period

Days to pay payables exhibit a gradual increase from 56 to about 77 days towards the end of the timeline, pointing to a slower payment pace. This trend may indicate extended credit terms with suppliers or strategic cash flow management.

Cash Conversion Cycle

The cash conversion cycle mildly declines from mid-60s days down to a low under 50 days around late 2024, followed by some small fluctuations near the 50-60 day range. The shortening cash conversion cycle implies improved efficiency in managing the conversion of investments in inventory and receivables back into cash.

Cost of Sales

The cost of sales demonstrates a generally increasing trend over the observed periods, starting at $8,572 million and rising to $17,898 million by the end of the last reported quarter. There are some fluctuations throughout the quarters, with notable moderate decreases in certain periods such as from December 2022 to September 2023, where cost of sales declined before rebounding sharply in the following quarters. This suggests variability in production or procurement costs aligned with operational activities or market conditions.

Inventory, Net

Inventory levels show a gradual overall increase from $11,506 million initially to around $13,806 million in the last quarter analyzed. There is some short-term volatility, such as a decline in early quarters followed by recovery and growth. The increase in inventory levels, especially noticeable from mid-2022 onwards, could indicate accumulation of stock, possibly in anticipation of higher sales demand or due to supply chain adjustments.

Inventory Turnover Ratio

The inventory turnover ratio maintains a relatively stable pattern with minor fluctuations, mostly ranging between approximately 4.6 and 5.6 times. The ratio peaked around early 2021 and has since experienced a gradual decline, bottoming near 4.6 before slightly recovering towards the most recent quarters. This slight downward trend may imply a modest slowdown in the rate at which inventory is converted into sales, potentially reflecting changes in sales velocity or inventory management efficiency.

Overall Analysis

There is a consistent rise in cost of sales and inventory levels over the period under review. However, the inventory turnover ratio’s gradual decline suggests that despite holding higher inventory, the company is turning over stock at a slightly slower pace recently. This combination might point to evolving operational dynamics or market demand conditions, potentially impacting working capital efficiency. The data signals the need for ongoing attention to inventory management to optimize turnover relative to growing inventory balances and cost structures.

Net Sales

The net sales figures exhibit a generally upward trend over the analyzed periods, with quarterly fluctuations. Beginning at approximately $11,360 million in Q1 2020, net sales rose significantly to a peak of $18,315 million in Q2 2023. A noticeable dip occurs in Q3 2023, dropping to $13,464 million, before rebounding sharply to $19,927 million in Q4 2023. Following this, net sales maintain an overall increasing pattern, reaching approximately $22,478 million by Q4 2025. This demonstrates overall growth despite some volatility in mid-2023.

Accounts Receivable, Net

The accounts receivable balance reveals some variability but generally remains within a range that suggests relative stability in credit extended to customers. Initially at about $13,104 million in Q1 2020, there is a significant decline through mid-2020, bottoming near $8,912 million by Q2 2021. Subsequently, it fluctuates moderately, trending upward from Q4 2023 onward, reaching around $12,837 million by Q4 2025. The pattern indicates fluctuations potentially tied to sales cycles or shifting credit terms but no prolonged upward or downward trend outside of normal business activity.

Receivables Turnover

The receivables turnover ratio, available from Q3 2020 onward, generally fluctuates around 6.0 to 7.8, suggesting consistency in the firm's efficiency at collecting receivables. Early values in late 2020 range roughly between 6.0 and 7.0, with periodic increases observed, particularly in 2024 during Q1 to Q4, where the ratio peaks at 7.83. However, the ratio dips slightly in later quarters, settling near 6.7 by Q4 2025. These movements imply occasional changes in collection effectiveness or credit policy adjustments, but overall the turnover remains within a moderate range indicative of stable credit management.

Summary Insights

The data suggests that the company has experienced steady growth in net sales over the period with some episodic volatility, particularly around mid-2023. Accounts receivable values fluctuate but stay relatively stable relative to net sales, while the receivables turnover ratio supports the conclusion that credit collection remains consistently managed. The balance between rising sales and stable receivables turnover implies effective working capital management, although the noticeable dip and rebound in sales during 2023 may warrant attention to underlying operational factors or market conditions impacting that period.

The financial data reveals several notable trends in the cost of sales, accounts payable, and payables turnover ratios over the observed periods.

Cost of Sales

The cost of sales exhibits considerable fluctuations across the quarters. Initially, from March 2020 to December 2020, there is a general upward trajectory, rising from approximately 8,572 million USD to 14,266 million USD. Following this peak, fluctuations are noticeable with values oscillating around the 12,000 to 16,000 million USD range. Noteworthy is the substantial increase to 15,918 million USD in December 2023 and a further rise continuing into 2024, culminating in a peak of nearly 17,898 million USD by September 2025. This pattern suggests overall growth with intermittent volatility possibly linked to operational scale changes or external market factors.

Accounts Payable

Accounts payable starts at 10,976 million USD in March 2020 but drops significantly in the second quarter to 7,182 million USD. From then on, a gradual and steady increase is observed, reaching around 14,552 million USD by September 2025. This long-term increase in payables may be reflective of growing purchasing activity or extended payment terms. The trend indicates increasing obligations to suppliers consistent with the rising scale of business transactions implied by the cost of sales movement.

Payables Turnover Ratio

The payables turnover ratio, which measures how quickly the company pays off suppliers, shows an initial increase from 5.56 to a peak of 6.52 during 2021, indicating faster payments in that period. Subsequently, a gradual decline is observed, with the ratio decreasing below 5.0 by mid-2025. This downward trend suggests that the settlement of accounts payable is slowing relative to the volume of purchases, possibly due to longer payment terms negotiated or cash flow management strategies.

Overall, the data suggests that while the company’s cost of sales is increasing over time, indicating growth or increased production, the accounts payable are rising at a somewhat proportional rate, yet the payables turnover ratio declining implies slower payments to suppliers. This could reflect strategic cash management in response to market conditions or operational considerations.

Working Capital

Working capital exhibited fluctuations throughout the observed periods. Initially, it decreased from 7,373 million USD at the end of March 2020 to 6,193 million USD in March 2021, followed by a modest recovery and subsequent decline reaching a trough of -483 million USD in June 2024. In the final period observed, working capital improved markedly to 3,884 million USD. This indicates occasional liquidity pressures interspersed with periods of recovery in the short-term financial position.

Net Sales

Net sales showed an overall upward trend over the entire period, rising from 11,360 million USD in March 2020 to 22,478 million USD in March 2025. There were some short-term fluctuations, notably a dip to 13,464 million USD in September 2023, but the longer-term trajectory was growth. The steady increase in net sales reflects expansion in revenue generation capacity despite periodic volatility.

Working Capital Turnover Ratio

The working capital turnover ratio demonstrated significant volatility, with values ranging from approximately 7.52 to a peak of 44.25 before decreasing again. The data indicates periods of substantial improvement in the efficiency of working capital utilization, particularly from late 2022 to early 2024, when the ratio surged dramatically. However, this was followed by a sharp decline, reaching negative values in some periods, signaling potential inefficiencies or changes in working capital management.

Overall Analysis

The company’s financial data reveals an underlying pattern of increasing revenues accompanied by inconsistent working capital levels, implying fluctuating short-term liquidity. The volatility in the working capital turnover ratio suggests changes in operational efficiency or shifts in asset and liability management strategies. The latter part of the timeframe shows both challenges and recovery in working capital, while net sales continuously grew, highlighting resilience in top-line performance despite short-term liquidity strains.

Inventory Turnover

The inventory turnover ratio begins reporting from March 31, 2020, with a value of 5.11. It shows a gradual increase through the first quarters of 2021, reaching a peak of 5.65 by March 31, 2021. Following this, there is a consistent decline from mid-2021 to early 2023, dropping to a low around 4.6-4.8. Towards the end of the observed periods, notably from late 2023 to 2025, the ratio fluctuates moderately between approximately 4.64 and 5.12, ending near 4.97. Overall, the trend suggests a peak in turnover efficiency in early 2021, followed by a deterioration and some recovery in later periods.

Average Inventory Processing Period

This metric inversely reflects the inventory turnover. Starting at 71 days as of March 31, 2020, the average inventory processing period shortens steadily through 2020 and the first quarter of 2021, reaching a low near 65 days. Subsequently, from mid-2021, the period lengthens consistently, reaching around 79 days in several quarters during 2022 and 2023, indicating slower inventory movement. In the final periods of 2024 and into 2025, the processing period shows some volatility but trends towards a slight decrease, moving back toward the early 70s by September 30, 2025. This pattern highlights an initial improvement in inventory efficiency, followed by a notable slowdown and partial recovery in more recent quarters.

Overall Observations

The inverse relationship between inventory turnover and the average inventory processing period is evident throughout the timeline. The initial period shows improving operational efficiency, with faster inventory turnover and reduced holding periods. However, mid-2021 onwards, a deterioration phase occurs, with turnover ratios declining and processing periods increasing, reflecting a slowdown in inventory management or changes in demand or supply chain dynamics. Late 2023 into 2025 exhibits stabilization with modest improvement signs but remains below the peak efficiencies observed earlier. These patterns may warrant further investigation into operational practices, market conditions, or external factors affecting inventory management.

The analysis of the quarterly financial ratios related to receivables reveals several discernible patterns and trends over the covered periods.

Receivables Turnover Ratio

The receivables turnover ratio displays a generally stable yet fluctuating pattern from the initial available data in March 2020 onward. Starting at around 6.11, the ratio experiences moderate variation, with values typically oscillating between approximately 6.0 and 7.8. Peaks were observed near June 2022 and September 2024, indicating intervals where the company was more effective at collecting its receivables relative to its credit sales. Conversely, the ratio slightly declined toward the later periods, particularly after June 2025, suggesting a modest reduction in collection efficiency.

Average Receivable Collection Period

The average receivable collection period, expressed in days, exhibits a corresponding inverse movement to the turnover ratio, consistent with financial theory. Initially recorded around 60 days, the collection period showed improvement over time, with intermittent fluctuations mostly within the range of 47 to 60 days. Notably, periods with higher turnover ratio coincide with reduced days in receivable collection, indicating accelerated collection activities. The variation between 47 and 60 days suggests the company maintains a reasonable collection cycle, though some quarters demonstrate slight elongation or contraction in terms of days outstanding.

Overall, the receivables metrics reflect a consistent ability to manage collections effectively, with temporary variations that could be attributed to external economic factors or operational changes. No extreme deviations or trends indicating deteriorating receivables management are evident from the data provided.

The financial data reveals several notable trends concerning the company's operational efficiency over multiple quarters, focusing primarily on inventory processing, receivable collection periods, and the overall operating cycle.

Average Inventory Processing Period

This metric, measured in days, displays a gradual increase over the observed quarters. Starting from 71 days around the first quarter of 2021, it decreased slightly to a low of 65 days by the end of 2020 but then generally trended upward, reaching peaks around 79 days during 2023. In the most recent quarters, there is a minor decline and some fluctuation, with values settling around the low to mid-70s. This pattern suggests a moderately lengthening inventory turnover time, indicating that inventory may be staying longer on hand before being processed or sold.

Average Receivable Collection Period

The average receivable collection period reflects some variability but maintains a relatively stable range between 47 and 61 days. There was a decline observed from approximately 60 days in early 2021 to a low near 47 days by mid-2024, implying an improvement in the company's ability to collect receivables more quickly. However, fluctuations occur, including increases to about 57 days in late 2022 and early 2023, indicating periodic delays in collections. Overall, the trend suggests efforts to optimize the credit collection process, albeit with occasional setbacks.

Operating Cycle

The operating cycle, representing the sum of inventory processing and receivable collection periods, generally follows the combined effects of the two components. It ranges from about 118 days to 134 days over the quarters, with a noticeable peak occurring in late 2022 and early 2023. After hitting this peak, the cycle length contracts slightly and then stabilizes near 125-130 days. This pattern points to a fluctuating but overall steady level of operational efficiency, with some periods experiencing slower cash conversion cycles, potentially impacting liquidity.

In summary, the company shows indications of a lengthening inventory processing period combined with a gradually improving but somewhat volatile receivable collection period. The overall operating cycle reflects these dynamics, suggesting varying degrees of efficiency in working capital management across the analyzed timeframe. Management may need to focus on controlling inventory levels and ensuring consistent receivable collections to optimize the cash conversion process further.

Payables Turnover Ratio

The payables turnover ratio exhibits an overall declining trend from the earliest available data point onwards. Initial figures around 5.56 to 6.52 show relatively higher turnover, indicating faster payment to suppliers. However, after reaching peaks mid-period such as 6.28 in June 2022, the ratio gradually decreases over subsequent quarters, falling below 5 by the end of the analyzed timeframe, reaching 4.72 in the last reported quarter. This signals a slowing in the frequency of payables being settled, reflecting potentially extended payment periods or changes in procurement and payment practices.

Average Payables Payment Period

The average payables payment period in days inversely mirrors the payables turnover ratio trend. Starting from mid-2020 data, the payment period begins around 66 days, fluctuating somewhat but generally increasing over time. Notable increases occur toward the later quarters, with the period reaching values in the low to mid-70s days, peaking at 77 days in the final quarter. This lengthening of the payment period suggests a strategic extension of the time taken to settle accounts payable, possibly aimed at optimizing cash flow or reflecting changes in supplier terms.

Trend Analysis and Insights

The inverse relationship between these two key metrics is evident: as the payment period extends, the payables turnover ratio declines. The gradual lengthening of the average payment period by roughly 10 days over several years corresponds with a noticeable decrease in the payables turnover ratio from above 6 to below 5. This pattern suggests a deliberate or circumstantial shift toward slower payment practices. Such a trend could indicate an effort to better manage liquidity or may reflect pressures on working capital. However, extended payment periods may have implications for supplier relationships and credit terms that should be monitored.

Average Inventory Processing Period

Beginning from the available data in the first quarter of 2021, the average inventory processing period initially shows a gradual decline, moving from 71 days down to 65 days by the end of 2021. However, from 2022 onwards, this period fluctuates with a general upward trend reaching a peak of 79 days in the third quarter of 2023. Subsequently, a mild decline is observed toward the first and second quarters of 2025, stabilizing around 73 to 77 days. This pattern suggests increasing time tied up in inventory management after 2021, with some short-term improvements late in the period.

Average Receivable Collection Period

The receivable collection period demonstrates moderate variability but generally maintains a range between approximately 47 and 61 days over the full timeline. Early data through 2021 show a slight downward trend, with accelerated collections in mid-2022 where it dips to a low of 50 days. Despite some oscillations, the average period hovers close to the mid-50 day mark in later years, indicating relatively stable collections with occasional periods of efficiency improvement.

Average Payables Payment Period

The payables payment period displays notable fluctuations from 56 days to 77 days through the covered quarters. Initial quarters of 2021 see a reduction in days outstanding to 56, followed by a jump back and forth between the high 60s and mid-70s. Toward mid-2024 and into 2025, a trend towards lengthening payment terms surfaces, with the average nearing and surpassing 75 days. This suggests a strategic extension in payment terms potentially aimed at managing cash flow more effectively during this later period.

Cash Conversion Cycle

The cash conversion cycle values begin near 65 days in early 2021 with a general decreasing trend observed through 2021 into early 2022, reaching around 55 days. Thereafter, small oscillations occur with a recovery toward the mid-60 day range during 2023, followed by a decrease again toward late 2024 and early 2025, where it hovers around 50 to 58 days. Overall, this indicates an improvement in operational efficiency over time, reducing the number of days between outlay and cash recovery, with short-term variations reflecting changes in working capital management.