General Motors Co. (NYSE:GM)

The financial data reveals notable fluctuations and trends in operational efficiency and liquidity management over the analyzed periods. Generally, there are several key observations related to turnover ratios and cycle periods that reflect changes in working capital management and operational speed.

Inventory Turnover

The inventory turnover ratio initially declines from 9.53 in 2020 to 7.74 in 2021, indicating a slower rate of inventory movement. This ratio partially recovers in subsequent years, rising to 8.26 in 2022 and 8.59 in 2023, followed by a significant increase to 10.37 in 2024, suggesting improved efficiency in inventory management towards the end of the period.

Receivables Turnover

The receivables turnover ratio increases from 13.52 in 2020 to a peak of 15.36 in 2021, signaling faster collection of receivables. However, it drops sharply to 10.80 in 2022 before recovering moderately in 2023 and 2024 to 12.74 and 13.38, respectively. This pattern points to some inconsistency in credit management or customer payment behavior.

Payables Turnover

The payables turnover ratio remains relatively stable in the early years, moving from 4.89 in 2020 to 4.93 in 2021, before a slight dip to 4.62 in 2022. It then increases to 5.03 in 2023 and climbs further to 5.88 in 2024, indicating a trend towards quicker payment to suppliers in the latter years.

Working Capital Turnover

There is a dramatic drop from an extremely high ratio of 107.17 in 2020 to 14.76 in 2021, followed by a modest rise to 15.52 in 2022 and further improvement to 21.98 in 2023 before declining again to 13.97 in 2024. The initial decline suggests a significant change in the efficiency of working capital utilization or changes in working capital components.

Average Inventory Processing Period

The average inventory processing period increases from 38 days in 2020 to a peak of 47 days in 2021, before gradually decreasing to 44 and 43 days in 2022 and 2023, respectively. It further reduces to 35 days in 2024, reinforcing the trend of improved inventory turnover efficiency in the most recent period.

Average Receivable Collection Period

The collection period shortens from 27 days in 2020 to 24 days in 2021, but then lengthens to 34 days in 2022. It improves again to 29 days in 2023 and returns to 27 days in 2024, displaying inconsistency but an overall tendency towards faster collections by the end of the period.

Operating Cycle

The operating cycle lengthens from 65 days in 2020 to a peak of 78 days in 2022, suggesting slower overall conversion of inventory and receivables into sales and cash. It then decreases to 72 days in 2023 and falls further to 62 days in 2024, indicating improved operational efficiency more recently.

Average Payables Payment Period

The payables payment period starts at 75 days in 2020 and remains stable at 74 days in 2021, increasing to 79 days in 2022. It then shortens to 73 days in 2023 and significantly declines to 62 days in 2024. This trend signals a move towards quicker payments, which may affect cash flow or supplier relationships.

Cash Conversion Cycle

The cash conversion cycle is negative in 2020 (-10 days), indicating that payments to suppliers are made after the collection of receivables and inventory sales. This negative value becomes less pronounced in 2021 (-3 days), and it moves closer to zero at -1 day in both 2022 and 2023. No data is available for 2024. This near-zero cycle suggests tight working capital management and efficient cash flow conversion during the most recent years.

Overall, the data illustrates a company that experienced some volatility in operational efficiency and working capital management during the mid-period, particularly in 2021 and 2022. However, there is evidence of recovery and improvement in turnover ratios and cycle periods by 2023 and 2024, highlighting enhanced inventory control, more consistent receivables collection, and more prompt payments to suppliers. These developments point towards a strategic focus on optimizing liquidity and operational processes to support financial stability and potentially better cash flow management.

Automotive and other cost of sales

The automotive and other cost of sales increased each year, rising from 97,539 million US dollars in 2020 to 151,065 million US dollars in 2024. This represents a continuous upward trend with a particularly notable increase between 2021 and 2022.

Inventories

Inventories steadily grew from 10,235 million US dollars in 2020 to 16,461 million US dollars in 2023, followed by a decline to 14,564 million US dollars in 2024. This suggests an accumulation of inventory levels over the initial years, with a reduction observed in the most recent period.

Inventory turnover

The inventory turnover ratio showed variation across the years. It decreased from 9.53 in 2020 to 7.74 in 2021, indicating slower inventory movement. Thereafter, the ratio improved annually to 10.37 in 2024, suggesting enhanced efficiency in managing inventory in the later periods compared to the earlier years.

Automotive net sales and revenue

The automotive net sales and revenue show a consistent upward trend over the five-year period. Starting at $108,673 million in 2020, the revenue increased steadily each year, reaching $171,606 million by 2024. This indicates significant growth in the company's sales and revenue base, with notable acceleration from 2021 to 2022 and continuing through 2024.

Accounts and notes receivable, net of allowance

The accounts and notes receivable exhibit fluctuations over the years. After a decrease from $8,035 million in 2020 to $7,394 million in 2021, there was a marked increase to $13,333 million in 2022. Subsequently, the values decreased slightly to $12,378 million in 2023 and then rose again marginally to $12,827 million in 2024. This variability suggests changes in credit policies or customer payment patterns impacting the receivables balance.

Receivables turnover

The receivables turnover ratio reflects the efficiency of collecting receivables. It improved from 13.52 in 2020 to a peak of 15.36 in 2021, indicating faster collection in that period. However, the ratio declined to 10.8 in 2022, which corresponds with the spike in receivables. The turnover ratio then recovered to 12.74 in 2023 and further to 13.38 in 2024, showing a gradual restoration of collection efficiency but not yet reaching the 2021 level.

Automotive and other cost of sales

The automotive and other cost of sales exhibited a consistent upward trend over the five-year period. Beginning at approximately $97.5 billion in 2020, the cost increased each year, reaching about $151.1 billion by the end of 2024. The most significant annual increase occurred between 2021 and 2022, where the cost rose by roughly $26.3 billion, indicating a substantial rise in operational expenses during that period.

Accounts payable, principally trade

Accounts payable showed fluctuations across the years. Starting at around $19.9 billion in 2020, the balance grew moderately in 2021 to approximately $20.4 billion. A notable increase took place in 2022, with accounts payable rising to nearly $27.5 billion. However, in the subsequent years, there was a slight decline, dropping to about $25.7 billion by 2024. This pattern suggests variability in the company's short-term obligations to suppliers, peaking in 2022 before tapering off.

Payables turnover

The payables turnover ratio displayed variation throughout the timeframe. It remained relatively stable around 4.9 in both 2020 and 2021, dipped to 4.62 in 2022, indicating slower payment to suppliers during that year, then increased to 5.03 in 2023 and further to 5.88 in 2024. The rising ratio in the latter years suggests improved efficiency or faster payment cycles to creditors following the 2022 dip.

Working Capital

The working capital showed a significant increase over the five-year period. Starting at 1,014 million US dollars in 2020, it rose sharply to 7,695 million in 2021 and continued to increase to 9,278 million in 2022. There was a decline to 7,173 million in 2023, followed by a strong recovery reaching 12,280 million in 2024. Overall, this indicates that the company has generally improved its short-term liquidity and ability to cover current liabilities over the years despite a temporary dip in 2023.

Automotive Net Sales and Revenue

The net sales and revenue in the automotive segment demonstrated consistent and substantial growth throughout the five-year span. Starting from 108,673 million US dollars in 2020, revenues increased to 113,590 million in 2021, then more markedly accelerated to 143,975 million in 2022, followed by 157,658 million in 2023, and 171,606 million in 2024. This reflects a positive and steady expansion in the core business revenue, pointing to increased market demand or improved sales performance.

Working Capital Turnover

The working capital turnover ratio experienced notable fluctuations and an overall downward trend from 2020 to 2024. It started at a very high value of 107.17 in 2020, then sharply decreased to 14.76 in 2021 and slightly increased to 15.52 in 2022. The ratio further rose to 21.98 in 2023 but fell again to 13.97 in 2024. The declining trend suggests that the company was generating less revenue per unit of working capital over time, potentially indicating increased investment in working capital or less efficient utilization relative to sales growth.

Inventory Turnover

The inventory turnover ratio exhibits a fluctuating trend over the five-year period. It declined from 9.53 in 2020 to 7.74 in 2021, indicating a slower rate of inventory movement during that year. Subsequently, the ratio improved modestly to 8.26 in 2022 and continued a gradual upward trajectory to 8.59 in 2023. By 2024, the ratio increased significantly to 10.37, reaching its highest level in the period analyzed. This suggests an acceleration in the rate at which inventory was sold and replaced, potentially reflecting improved operational efficiency or stronger sales.

Average Inventory Processing Period

This metric, expressed as the number of days inventory is held on average, illustrates a general inverse pattern relative to the inventory turnover ratio. Starting at 38 days in 2020, the period lengthened notably to 47 days in 2021, aligning with the decline in turnover. In subsequent years, the average processing period decreased steadily to 44 days in 2022, 43 days in 2023, and further down to 35 days in 2024. The reduction in days inventory is held corroborates the increase in inventory turnover, suggesting an enhancement in inventory management and a quicker conversion of stock into sales.

Overall Trends and Insights

The data reveals a period of relative inventory management challenges in 2021, marked by a decrease in turnover and an increase in inventory holding period. However, a recovery phase follows with consistent improvements each year through 2024. The notable jump in inventory turnover ratio accompanied by the reduction in inventory days in 2024 may indicate strategic changes or favorable market conditions leading to more efficient inventory utilization. These trends collectively suggest a strengthening operational performance and greater inventory control over the observed timeframe.

Receivables Turnover

The receivables turnover ratio exhibited fluctuations over the observed period. Starting at 13.52 in 2020, it increased to 15.36 in 2021, indicating improved efficiency in collecting receivables. However, this trend reversed in 2022 with a notable decrease to 10.8, reflecting a slowdown in collection efficiency. An improvement followed in 2023 and 2024, with ratios rising to 12.74 and 13.38 respectively, though these levels did not quite reach those seen in 2021.

Average Receivable Collection Period

This metric, measured in days, showed an inverse pattern relative to the receivables turnover. The collection period decreased from 27 days in 2020 to 24 days in 2021, denoting faster collection. This period lengthened significantly to 34 days in 2022, aligning with the drop in turnover ratio and indicating slower collection. Subsequently, it shortened again to 29 days in 2023 and further to 27 days in 2024, suggesting a recovery in collection efficiency nearing earlier levels.

Overall Analysis

The data reveals a cyclical pattern in receivables management over the five years. The years 2021 and 2022 stand out as contrasting periods, with 2021 showing the most efficient management and 2022 the least. Following this, the company appears to have taken corrective actions to improve the collection process, as seen in the gradual improvements in both the receivables turnover and average collection period towards 2024. Despite this improvement, the metrics in the final year do not surpass the peak efficiency recorded in 2021, indicating room for further optimization.

Average Inventory Processing Period

The average inventory processing period showed an overall decreasing trend over the analyzed years. Beginning at 38 days in 2020, it increased to a peak of 47 days in 2021, before gradually declining to 44 days in 2022, 43 days in 2023, and significantly dropping to 35 days in 2024. This pattern suggests improvements in inventory management efficiency, especially notable in the latest year.

Average Receivable Collection Period

The average receivable collection period experienced fluctuations but maintained a relatively stable range. It started at 27 days in 2020, decreased to 24 days in 2021, then increased to 34 days in 2022. Following this peak, it declined to 29 days in 2023 and further to 27 days in 2024. The data indicates variability in collections, with a tendency to revert to near initial levels by 2024.

Operating Cycle

The operating cycle, representing the total number of days to convert inventory and receivables into cash, demonstrated a rising trend from 65 days in 2020 to a high of 78 days in 2022. Subsequently, it shortened to 72 days in 2023 and further to 62 days in 2024, indicating a general improvement in the overall efficiency of the working capital cycle towards the end of the period.

Payables Turnover

The payables turnover ratio exhibits a fluctuating pattern over the analyzed periods. Starting at 4.89 in 2020, the ratio slightly increased to 4.93 in 2021 before declining to 4.62 in 2022. Subsequently, it rose notably to 5.03 in 2023 and experienced a sharper increase to 5.88 in 2024. This overall upward trend from 2022 onward suggests an improvement in the frequency with which payables are settled.

Average Payables Payment Period

The average payables payment period shows an inverse relationship to the payables turnover ratio. It decreased from 75 days in 2020 to 74 days in 2021, then lengthened to 79 days in 2022. Following this peak, the payment period shortened to 73 days in 2023 and further decreased to 62 days in 2024. This reduction in payment days in recent years indicates an acceleration in the company's payment cycle.

Overall Analysis

The data reveal that after a period of slower payments and lower turnover in 2022, the company improved its payment efficiency in the following years. The payables turnover ratio's increase combined with a decrease in the average payment period in 2023 and 2024 indicates stronger liquidity management and possibly better negotiation or operational capability regarding supplier payments.

The financial data presents several key metrics related to the company's working capital management over a five-year period ending December 31, 2024. These metrics include the average inventory processing period, the average receivable collection period, the average payables payment period, and the cash conversion cycle.

Average Inventory Processing Period

The average inventory processing period shows a decreasing trend in the most recent years. It increased from 38 days in 2020 to a peak of 47 days in 2021, then gradually decreased to 44 days in 2022, 43 days in 2023, and notably dropped to 35 days by the end of 2024. This suggests improved efficiency in inventory management, potentially indicating faster turnover of stock and better responsiveness to market demand.

Average Receivable Collection Period

The average receivable collection period exhibits some variability but aligns overall with efficient collections. Starting at 27 days in 2020, it declined to 24 days in 2021, then rose to 34 days in 2022, decreased again to 29 days in 2023, and returned to 27 days in 2024, essentially the value recorded in 2020. This pattern indicates some fluctuation in credit collection but generally maintains a relatively short collection cycle, which is beneficial for liquidity.

Average Payables Payment Period

The average payables payment period remained elevated throughout the period but demonstrated a downward trend in the last two reported years. It started at 75 days in 2020, slightly decreased to 74 days in 2021, increased to 79 days in 2022, then declined to 73 days in 2023 and further to 62 days in 2024. The reduction in 2023 and 2024 suggests a strategic shift toward faster payment to suppliers, potentially to strengthen supplier relationships or capitalize on early payment discounts.

Cash Conversion Cycle

The cash conversion cycle (CCC) remained negative during the reported years, moving from -10 days in 2020 to -3 days in 2021, improving slightly to -1 day in 2022 and 2023. The value for 2024 is not provided. A negative CCC indicates the company collects cash from customers before it needs to pay its suppliers, reflecting efficient working capital management and implying a favorable cash flow position.

Overall, the data suggests improvements in inventory management and a consistent approach to receivables collection, while payables management shows a recent trend toward quicker payment. The persistently negative cash conversion cycle highlights robust working capital efficiency that likely contributes positively to the company's liquidity and operational flexibility.