Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
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- Income Statement
- Statement of Comprehensive Income
- Common-Size Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Dividend Discount Model (DDM)
- Current Ratio since 2005
- Analysis of Debt
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Short-term Activity Ratios (Summary)
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Inventory Turnover
- The inventory turnover ratio shows a consistent decline from 5.88 in 2020 to 3.64 in 2024, indicating that inventory is being sold and replaced less frequently over the period, which may suggest slower movement or potential overstocking.
- Receivables Turnover
- Receivables turnover ratio decreased from 6.15 in 2020 to 5.09 in 2022 but then exhibits a slight recovery to 5.39 by 2024. This indicates that the company experienced slower collection of receivables initially but has somewhat improved its efficiency in collecting outstanding customer payments in recent years.
- Payables Turnover
- The payables turnover ratio declined steadily from 6.24 in 2020 to 4.18 in 2024, illustrating that the company is taking longer to pay its suppliers, possibly improving its cash flow position by extending payment terms.
- Working Capital Turnover
- Working capital turnover shows volatility with an exceptional spike to 65.65 in 2021 from 5.42 in 2020, followed by a sharp drop to 8.7 in 2022 and a further decline stabilizing around 6 in the last two years. This irregularity suggests significant changes in working capital management or accounting changes during this period.
- Average Inventory Processing Period
- The average inventory processing period increased from 62 days in 2020 to 100 days in 2024, reflecting slower inventory movement consistent with the declining inventory turnover, indicating longer holding times for inventory items.
- Average Receivable Collection Period
- The average receivable collection period rose from 59 days in 2020 to a peak of 72 days in 2022, then improved slightly to 68 days by 2024. This trend corroborates the decrease and modest recovery observed in receivables turnover, indicating some fluctuations in the effectiveness of credit and collection processes.
- Operating Cycle
- The operating cycle, which combines inventory processing and receivables collection, lengthened steadily from 121 days in 2020 to 168 days in 2024, suggesting an overall extension in the time taken from inventory acquisition to cash collection.
- Average Payables Payment Period
- The average payables payment period increased from 58 days in 2020 to 87 days in 2024, indicating the company is extending the time taken to settle payables. This extended payment cycle could be a strategy to conserve cash or reflect negotiated longer payment terms with suppliers.
- Cash Conversion Cycle
- The cash conversion cycle rose from 63 days in 2020 to 81 days in 2024, with some fluctuation in prior years. The increase suggests a longer gap between outlay of cash for inventory and receipt of cash from sales, reflecting less efficient cash flow management over time.
Turnover Ratios
Average No. Days
Inventory Turnover
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Cost of products sold | ||||||
Inventory | ||||||
Short-term Activity Ratio | ||||||
Inventory turnover1 | ||||||
Benchmarks | ||||||
Inventory Turnover, Competitors2 | ||||||
Boeing Co. | ||||||
Caterpillar Inc. | ||||||
GE Aerospace | ||||||
Honeywell International Inc. | ||||||
Lockheed Martin Corp. | ||||||
RTX Corp. | ||||||
Inventory Turnover, Sector | ||||||
Capital Goods | ||||||
Inventory Turnover, Industry | ||||||
Industrials |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Inventory turnover = Cost of products sold ÷ Inventory
= ÷ =
2 Click competitor name to see calculations.
- Cost of Products Sold
-
There is a consistent upward trend in the cost of products sold over the five-year period. Starting at US$12,408 million in 2020, the cost increased annually, reaching US$15,375 million by 2024. This steady increase suggests rising expenses related to production or procurement of goods, which could be due to higher sales volumes, inflationary pressures, or changes in input prices.
- Inventory
-
Inventory levels have shown a significant rise each year, beginning at US$2,109 million in 2020 and growing to US$4,227 million in 2024. This growth in inventory could indicate an expansion in stocking levels to support increased sales demand or potential buildup due to slower inventory turnover. The more than doubling of inventory over the period warrants attention to the efficiency of inventory management and potential working capital impacts.
- Inventory Turnover Ratio
-
The inventory turnover ratio has demonstrated a declining trend, falling from 5.88 in 2020 to 3.64 in 2024. This decreasing ratio indicates that inventory is being sold or used less frequently over time, suggesting either an acceleration in inventory accumulation or slower sales relative to stock levels. The decline in turnover ratio alongside rising inventory and cost of goods sold might point to less efficient inventory management or changing market conditions impacting sales velocity.
Receivables Turnover
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Net sales | ||||||
Accounts receivable, net | ||||||
Short-term Activity Ratio | ||||||
Receivables turnover1 | ||||||
Benchmarks | ||||||
Receivables Turnover, Competitors2 | ||||||
Boeing Co. | ||||||
Caterpillar Inc. | ||||||
GE Aerospace | ||||||
Honeywell International Inc. | ||||||
Lockheed Martin Corp. | ||||||
RTX Corp. | ||||||
Receivables Turnover, Sector | ||||||
Capital Goods | ||||||
Receivables Turnover, Industry | ||||||
Industrials |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Receivables turnover = Net sales ÷ Accounts receivable, net
= ÷ =
2 Click competitor name to see calculations.
The financial data reflects a period of consistent growth in net sales over five years, increasing from US$17,858 million in 2020 to US$24,878 million in 2024. This upward trend signifies a steady expansion in business activity or sales volume throughout the observed timeframe.
Accounts receivable, net, also show a rising trend, growing from US$2,904 million in 2020 to US$4,619 million in 2024. This increase suggests that while sales are rising, amounts outstanding from customers are also increasing, which may indicate longer collection periods or more sales on credit.
The receivables turnover ratio, which measures how efficiently the company collects its receivables, exhibits a declining trend from 6.15 in 2020 to a low of 5.09 in 2022, followed by a slight recovery to 5.39 in 2024. The initial decline indicates that the company took longer to collect its receivables during those years, which aligns with the growing accounts receivable balance. The modest improvement in the final years implies a partial enhancement in collection efficiency.
- Net Sales
- Demonstrates sustained growth, with an approximate 39% increase over the five-year period, reflecting expanding revenue streams.
- Accounts Receivable, Net
- Rises significantly, by nearly 59%, indicating higher outstanding customer balances, which may affect cash flow dynamics.
- Receivables Turnover Ratio
- Decreases initially, pointing to slower collections, then shows slight recovery, but remains below the initial 2020 level, suggesting ongoing pressure on collection efficiency.
Payables Turnover
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Cost of products sold | ||||||
Accounts payable | ||||||
Short-term Activity Ratio | ||||||
Payables turnover1 | ||||||
Benchmarks | ||||||
Payables Turnover, Competitors2 | ||||||
Boeing Co. | ||||||
Caterpillar Inc. | ||||||
GE Aerospace | ||||||
Honeywell International Inc. | ||||||
Lockheed Martin Corp. | ||||||
RTX Corp. | ||||||
Payables Turnover, Sector | ||||||
Capital Goods | ||||||
Payables Turnover, Industry | ||||||
Industrials |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Payables turnover = Cost of products sold ÷ Accounts payable
= ÷ =
2 Click competitor name to see calculations.
The analysis of the financial data reveals specific trends related to cost of products sold, accounts payable, and payables turnover over the five-year period from 2020 to 2024.
- Cost of Products Sold
- The cost of products sold has shown a consistent upward trend throughout the period. Starting at 12,408 million US dollars in 2020, the figure increased each year reaching 15,375 million US dollars in 2024. This steady increase indicates rising production or procurement costs over the years.
- Accounts Payable
- Accounts payable also exhibited a significant upward trend over the five years. The amount increased from 1,987 million US dollars in 2020 to 3,678 million US dollars in 2024. This growth in payables suggests that the company is taking longer to pay its suppliers or has procured more on credit, aligning with the overall increase in cost of products sold.
- Payables Turnover Ratio
- The payables turnover ratio demonstrates a declining trend, decreasing from 6.24 in 2020 to 4.18 in 2024. A lower payables turnover ratio indicates that the company is paying its suppliers more slowly or managing its payables over a longer period. This concurrent decline alongside increase in accounts payable is consistent with a strategy to extend payment periods.
In summary, the data reflect rising costs and increasing liabilities in terms of accounts payable, combined with a decreasing rate of payables turnover. This suggests the company may be experiencing higher operational costs while concurrently stretching its payment terms with suppliers over time.
Working Capital Turnover
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Current assets | ||||||
Less: Current liabilities | ||||||
Working capital | ||||||
Net sales | ||||||
Short-term Activity Ratio | ||||||
Working capital turnover1 | ||||||
Benchmarks | ||||||
Working Capital Turnover, Competitors2 | ||||||
Boeing Co. | ||||||
Caterpillar Inc. | ||||||
GE Aerospace | ||||||
Honeywell International Inc. | ||||||
Lockheed Martin Corp. | ||||||
RTX Corp. | ||||||
Working Capital Turnover, Sector | ||||||
Capital Goods | ||||||
Working Capital Turnover, Industry | ||||||
Industrials |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Working capital turnover = Net sales ÷ Working capital
= ÷ =
2 Click competitor name to see calculations.
- Working Capital
- The working capital experienced significant fluctuations over the analyzed periods. It started at 3,297 million US dollars in 2020 and sharply declined to 299 million US dollars in 2021. Subsequently, it rebounded to 2,386 million in 2022 and continued to increase, reaching 3,928 million in 2023 and slightly rising again to 3,944 million in 2024. This pattern indicates a temporary tightening of short-term liquidity in 2021 followed by a strong recovery in subsequent years.
- Net Sales
- Net sales showed a consistent upward trend throughout the periods. Starting at 17,858 million US dollars in 2020, sales increased each year: 19,628 million in 2021, 20,752 million in 2022, 23,196 million in 2023, and reaching 24,878 million in 2024. This steady growth suggests expanding business operations or increased market demand over the timeframe.
- Working Capital Turnover
- The working capital turnover ratio exhibited considerable volatility. It was 5.42 at the end of 2020, dramatically spiking to 65.65 in 2021, then decreasing to 8.7 in 2022, followed by further declines to 5.91 in 2023 before slightly rising to 6.31 in 2024. The exceptionally high value in 2021 corresponds to the sharp drop in working capital that year and indicates an intense use of working capital relative to sales. The subsequent stabilization at lower levels reflects a normalization in the relationship between sales and working capital investment.
Average Inventory Processing Period
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Inventory turnover | ||||||
Short-term Activity Ratio (no. days) | ||||||
Average inventory processing period1 | ||||||
Benchmarks (no. days) | ||||||
Average Inventory Processing Period, Competitors2 | ||||||
Boeing Co. | ||||||
Caterpillar Inc. | ||||||
GE Aerospace | ||||||
Honeywell International Inc. | ||||||
Lockheed Martin Corp. | ||||||
RTX Corp. | ||||||
Average Inventory Processing Period, Sector | ||||||
Capital Goods | ||||||
Average Inventory Processing Period, Industry | ||||||
Industrials |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ =
2 Click competitor name to see calculations.
- Inventory Turnover
- The inventory turnover ratio displays a consistent decline over the five-year period, decreasing from 5.88 in 2020 to 3.64 in 2024. This indicates a gradual reduction in the frequency with which inventory is sold and replaced, suggesting potential challenges in inventory management or slowing sales velocity.
- Average Inventory Processing Period
- Conversely, the average inventory processing period shows an upward trend, increasing from 62 days in 2020 to 100 days in 2024. This extension in the duration that inventory remains on hand aligns with the decreasing inventory turnover, reinforcing the indication of slower inventory movement.
- Overall Analysis
- Together, these trends suggest a lengthening of the inventory cycle, with goods staying longer in inventory before being sold. This may point to possible inefficiencies in inventory management, shifts in demand, or other operational considerations impacting working capital and liquidity. The company may need to investigate underlying causes to optimize inventory levels and enhance turnover rates.
Average Receivable Collection Period
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Receivables turnover | ||||||
Short-term Activity Ratio (no. days) | ||||||
Average receivable collection period1 | ||||||
Benchmarks (no. days) | ||||||
Average Receivable Collection Period, Competitors2 | ||||||
Boeing Co. | ||||||
Caterpillar Inc. | ||||||
GE Aerospace | ||||||
Honeywell International Inc. | ||||||
Lockheed Martin Corp. | ||||||
RTX Corp. | ||||||
Average Receivable Collection Period, Sector | ||||||
Capital Goods | ||||||
Average Receivable Collection Period, Industry | ||||||
Industrials |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
- Receivables Turnover
- The receivables turnover ratio exhibits a declining trend from 6.15 in 2020 to 5.09 in 2022, followed by a slight recovery to 5.39 by 2024. This indicates that the company’s efficiency in collecting receivables decreased during the initial years and improved somewhat in the later periods, although it has not returned to the 2020 level.
- Average Receivable Collection Period
- The average receivable collection period increased progressively from 59 days in 2020 to a peak of 72 days in 2022. After that, it decreased moderately to 68 days by 2024. This pattern suggests a lengthening time to collect receivables initially, correlating with the declining turnover ratio, and a subsequent improvement in collection efficiency, though the period remains longer compared to the start of the analysis.
- Overall Insights
- The inverse relationship observed between the receivables turnover ratio and the average receivable collection period is consistent with typical expectations since a lower turnover ratio generally corresponds with a longer collection period. The trends imply that the company experienced some challenges in collections through 2022, which were partially addressed in subsequent years. However, the collection process is still somewhat less efficient compared to the earliest period analyzed.
Operating Cycle
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Average inventory processing period | ||||||
Average receivable collection period | ||||||
Short-term Activity Ratio | ||||||
Operating cycle1 | ||||||
Benchmarks | ||||||
Operating Cycle, Competitors2 | ||||||
Boeing Co. | ||||||
Caterpillar Inc. | ||||||
GE Aerospace | ||||||
Honeywell International Inc. | ||||||
Lockheed Martin Corp. | ||||||
RTX Corp. | ||||||
Operating Cycle, Sector | ||||||
Capital Goods | ||||||
Operating Cycle, Industry | ||||||
Industrials |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= + =
2 Click competitor name to see calculations.
- Average Inventory Processing Period
- The average inventory processing period shows a consistent upward trend over the observed five-year period. Starting at 62 days in 2020, it increases significantly each year, reaching 100 days by 2024. This indicates that the company is taking progressively longer to process its inventory, suggesting possible changes in inventory management, supply chain dynamics, or product turnover rates.
- Average Receivable Collection Period
- The average receivable collection period exhibits moderate fluctuations. It starts at 59 days in 2020, increases to 61 days in 2021, peaks at 72 days in 2022, and then gradually decreases to 68 days by 2024. Despite the slight improvement after 2022, the collection period remains somewhat elevated compared to the starting point, implying some challenges persist in the company's collections efficiency or credit policy management.
- Operating Cycle
- The operating cycle extends steadily throughout the period under review, rising from 121 days in 2020 to 168 days in 2024. The increase corresponds with the lengthening of both inventory processing and receivable collection periods, indicating a longer time span between the acquisition of inventory and the collection of cash from sales. This could impact the company’s liquidity and working capital requirements, suggesting a need for closer attention to cash flow management.
Average Payables Payment Period
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Payables turnover | ||||||
Short-term Activity Ratio (no. days) | ||||||
Average payables payment period1 | ||||||
Benchmarks (no. days) | ||||||
Average Payables Payment Period, Competitors2 | ||||||
Boeing Co. | ||||||
Caterpillar Inc. | ||||||
GE Aerospace | ||||||
Honeywell International Inc. | ||||||
Lockheed Martin Corp. | ||||||
RTX Corp. | ||||||
Average Payables Payment Period, Sector | ||||||
Capital Goods | ||||||
Average Payables Payment Period, Industry | ||||||
Industrials |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
The data reveals a consistent trend in the payables management of the company over the five-year period from 2020 to 2024.
- Payables Turnover Ratio
- This ratio indicates the number of times the company pays off its suppliers during the year. From 2020 to 2024, there is a clear downward trend in the payables turnover ratio, declining from 6.24 in 2020 to 4.18 in 2024. This suggests the company is turning over its payables less frequently, which could imply longer credit terms with suppliers or slower payment processing.
- Average Payables Payment Period
- The average number of days taken to pay suppliers has increased steadily from 58 days in 2020 to 87 days in 2024. This trend aligns inversely with the payables turnover ratio, confirming that the company is taking progressively longer to settle its payables. The lengthening payment period may improve short-term liquidity by delaying cash outflows, but could also affect supplier relationships.
Overall, the analysis suggests a strategic shift toward extending payment terms or a potential delay in settling payables, reflected in longer payment periods and lower turnover ratios. This might help manage cash flow but warrants monitoring to ensure it does not negatively impact supplier credit terms or business operations.
Cash Conversion Cycle
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Average inventory processing period | ||||||
Average receivable collection period | ||||||
Average payables payment period | ||||||
Short-term Activity Ratio | ||||||
Cash conversion cycle1 | ||||||
Benchmarks | ||||||
Cash Conversion Cycle, Competitors2 | ||||||
Boeing Co. | ||||||
Caterpillar Inc. | ||||||
GE Aerospace | ||||||
Honeywell International Inc. | ||||||
Lockheed Martin Corp. | ||||||
RTX Corp. | ||||||
Cash Conversion Cycle, Sector | ||||||
Capital Goods | ||||||
Cash Conversion Cycle, Industry | ||||||
Industrials |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 2024 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= + – =
2 Click competitor name to see calculations.
- Inventory Management
- The average inventory processing period has shown a consistent upward trend over the five-year span. Beginning at 62 days in 2020, it increased significantly to 82 days in 2021, followed by a steady rise to 90 days in 2022, 92 days in 2023, and reaching 100 days in 2024. This indicates a lengthening time for inventory turnover, which may reflect slower movement of stock or changes in inventory management policies.
- Receivables Collection
- The average receivable collection period increased from 59 days in 2020 to 61 days in 2021, and then experienced a further rise to 72 days in 2022. However, from 2022 onwards, a slight improvement is observed, with the period decreasing to 70 days in 2023 and further to 68 days in 2024. Despite this partial recovery, the collection period remains higher compared to the initial years, implying a longer duration for customers to settle their receivables.
- Payables Payment
- The average payables payment period has extended markedly from 58 days in 2020 to 77 days in 2021. It maintained an increasing trend afterwards, reaching 81 days in 2022, 83 days in 2023, and 87 days in 2024. This pattern suggests that the company is taking longer to fulfill its obligations to suppliers, which could be a strategic move to preserve cash or a consequence of altered supplier payment terms.
- Cash Conversion Cycle
- The cash conversion cycle reflects the overall efficiency in managing working capital. Starting at 63 days in 2020, it rose moderately to 66 days in 2021 and further to 81 days in 2022. There is a slight improvement in 2023 to 79 days, but it increased again to 81 days in 2024. The elevated cash conversion cycle over the period suggests a slower cycle in converting investments in inventory and receivables into cash, which may affect liquidity and operational efficiency.