Analysis of Short-term (Operating) Activity Ratios
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)
Illinois Tool Works Inc., short-term (operating) activity ratios
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
| Short-term activity ratio | Description | The company |
|---|---|---|
| Inventory turnover | An activity ratio calculated as cost of goods sold divided by inventory. | Illinois Tool Works Inc. inventory turnover ratio deteriorated from 2019 to 2020 and from 2020 to 2021. |
| Receivables turnover | An activity ratio equal to revenue divided by receivables. | Illinois Tool Works Inc. receivables turnover ratio deteriorated from 2019 to 2020 but then slightly improved from 2020 to 2021. |
| Payables turnover | An activity ratio calculated as cost of goods sold divided by payables. | Illinois Tool Works Inc. payables turnover ratio decreased from 2019 to 2020 but then slightly increased from 2020 to 2021. |
| Working capital turnover | An activity ratio calculated as revenue divided by working capital. | Illinois Tool Works Inc. working capital turnover ratio deteriorated from 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level. |
| Short-term activity ratio | Description | The company |
|---|---|---|
| Average inventory processing period | An activity ratio equal to the number of days in the period divided by inventory turnover over the period. | Illinois Tool Works Inc. number of days of inventory outstanding deteriorated from 2019 to 2020 and from 2020 to 2021. |
| Average receivable collection period | An activity ratio equal to the number of days in the period divided by receivables turnover. | Illinois Tool Works Inc. number of days of receivables outstanding deteriorated from 2019 to 2020 but then slightly improved from 2020 to 2021. |
| Operating cycle | Equal to average inventory processing period plus average receivables collection period. | Illinois Tool Works Inc. operating cycle deteriorated from 2019 to 2020 and from 2020 to 2021. |
| Average payables payment period | An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. | Illinois Tool Works Inc. number of days of payables outstanding increased from 2019 to 2020 but then slightly decreased from 2020 to 2021. |
| Cash conversion cycle | A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. | Illinois Tool Works Inc. cash conversion cycle deteriorated from 2019 to 2020 and from 2020 to 2021. |
Inventory Turnover
Illinois Tool Works Inc., inventory turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cost of revenue | 8,489) | 7,375) | 8,187) | 8,604) | 8,309) | |
| Inventories | 1,694) | 1,189) | 1,164) | 1,318) | 1,220) | |
| Short-term Activity Ratio | ||||||
| Inventory turnover1 | 5.01 | 6.20 | 7.03 | 6.53 | 6.81 | |
| Benchmarks | ||||||
| Inventory Turnover, Competitors2 | ||||||
| Boeing Co. | 0.75 | 0.78 | 0.94 | — | — | |
| Caterpillar Inc. | 2.53 | 2.55 | 3.25 | — | — | |
| Eaton Corp. plc | 4.48 | 5.88 | 5.11 | — | — | |
| GE Aerospace | 3.40 | 3.80 | 4.74 | — | — | |
| Honeywell International Inc. | 4.29 | 4.94 | 5.51 | — | — | |
| Lockheed Martin Corp. | 19.45 | 16.01 | 14.22 | — | — | |
| RTX Corp. | 5.65 | 5.11 | 5.21 | — | — | |
| Inventory Turnover, Sector | ||||||
| Capital Goods | 2.28 | 2.28 | 2.61 | — | — | |
| Inventory Turnover, Industry | ||||||
| Industrials | 3.87 | 3.61 | 3.94 | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Inventory turnover = Cost of revenue ÷ Inventories
= 8,489 ÷ 1,694 = 5.01
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Inventory turnover | An activity ratio calculated as cost of goods sold divided by inventory. | Illinois Tool Works Inc. inventory turnover ratio deteriorated from 2019 to 2020 and from 2020 to 2021. |
Receivables Turnover
Illinois Tool Works Inc., receivables turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating revenue | 14,455) | 12,574) | 14,109) | 14,768) | 14,314) | |
| Trade receivables | 2,840) | 2,506) | 2,461) | 2,622) | 2,628) | |
| Short-term Activity Ratio | ||||||
| Receivables turnover1 | 5.09 | 5.02 | 5.73 | 5.63 | 5.45 | |
| Benchmarks | ||||||
| Receivables Turnover, Competitors2 | ||||||
| Boeing Co. | 23.58 | 29.75 | 23.44 | — | — | |
| Caterpillar Inc. | 5.68 | 5.33 | 5.92 | — | — | |
| Eaton Corp. plc | 5.95 | 6.15 | 6.22 | — | — | |
| GE Aerospace | 4.55 | 4.37 | 5.22 | — | — | |
| Honeywell International Inc. | 5.04 | 4.78 | 4.90 | — | — | |
| Lockheed Martin Corp. | 34.15 | 33.06 | 25.59 | — | — | |
| RTX Corp. | 6.66 | 6.11 | 5.70 | — | — | |
| Receivables Turnover, Sector | ||||||
| Capital Goods | 7.57 | 7.30 | 7.40 | — | — | |
| Receivables Turnover, Industry | ||||||
| Industrials | 7.60 | 7.49 | 7.67 | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Receivables turnover = Operating revenue ÷ Trade receivables
= 14,455 ÷ 2,840 = 5.09
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Receivables turnover | An activity ratio equal to revenue divided by receivables. | Illinois Tool Works Inc. receivables turnover ratio deteriorated from 2019 to 2020 but then slightly improved from 2020 to 2021. |
Payables Turnover
Illinois Tool Works Inc., payables turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cost of revenue | 8,489) | 7,375) | 8,187) | 8,604) | 8,309) | |
| Accounts payable | 585) | 534) | 472) | 524) | 590) | |
| Short-term Activity Ratio | ||||||
| Payables turnover1 | 14.51 | 13.81 | 17.35 | 16.42 | 14.08 | |
| Benchmarks | ||||||
| Payables Turnover, Competitors2 | ||||||
| Boeing Co. | 6.40 | 4.94 | 4.63 | — | — | |
| Caterpillar Inc. | 4.36 | 4.75 | 6.15 | — | — | |
| Eaton Corp. plc | 4.75 | 6.24 | 6.78 | — | — | |
| GE Aerospace | 3.32 | 3.67 | 4.20 | — | — | |
| Honeywell International Inc. | 3.40 | 3.86 | 4.25 | — | — | |
| Lockheed Martin Corp. | 74.34 | 64.48 | 40.16 | — | — | |
| RTX Corp. | 5.93 | 5.56 | 5.28 | — | — | |
| Payables Turnover, Sector | ||||||
| Capital Goods | 5.60 | 5.54 | 5.63 | — | — | |
| Payables Turnover, Industry | ||||||
| Industrials | 7.74 | 7.44 | 7.40 | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Payables turnover = Cost of revenue ÷ Accounts payable
= 8,489 ÷ 585 = 14.51
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Payables turnover | An activity ratio calculated as cost of goods sold divided by payables. | Illinois Tool Works Inc. payables turnover ratio decreased from 2019 to 2020 but then slightly increased from 2020 to 2021. |
Working Capital Turnover
Illinois Tool Works Inc., working capital turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current assets | 6,374) | 6,523) | 6,253) | 5,778) | 7,278) | |
| Less: Current liabilities | 3,470) | 2,589) | 2,154) | 3,542) | 3,053) | |
| Working capital | 2,904) | 3,934) | 4,099) | 2,236) | 4,225) | |
| Operating revenue | 14,455) | 12,574) | 14,109) | 14,768) | 14,314) | |
| Short-term Activity Ratio | ||||||
| Working capital turnover1 | 4.98 | 3.20 | 3.44 | 6.60 | 3.39 | |
| Benchmarks | ||||||
| Working Capital Turnover, Competitors2 | ||||||
| Boeing Co. | 2.34 | 1.69 | 15.57 | — | — | |
| Caterpillar Inc. | 3.54 | 2.84 | 4.04 | — | — | |
| Eaton Corp. plc | 65.65 | 5.42 | 5.95 | — | — | |
| GE Aerospace | 4.94 | 2.26 | 7.03 | — | — | |
| Honeywell International Inc. | 5.86 | 3.64 | 5.92 | — | — | |
| Lockheed Martin Corp. | 11.52 | 12.01 | 19.15 | — | — | |
| RTX Corp. | 9.75 | 7.52 | 26.47 | — | — | |
| Working Capital Turnover, Sector | ||||||
| Capital Goods | 5.01 | 3.24 | 8.95 | — | — | |
| Working Capital Turnover, Industry | ||||||
| Industrials | 6.90 | 4.47 | 10.00 | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Working capital turnover = Operating revenue ÷ Working capital
= 14,455 ÷ 2,904 = 4.98
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Working capital turnover | An activity ratio calculated as revenue divided by working capital. | Illinois Tool Works Inc. working capital turnover ratio deteriorated from 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level. |
Average Inventory Processing Period
Illinois Tool Works Inc., average inventory processing period calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Inventory turnover | 5.01 | 6.20 | 7.03 | 6.53 | 6.81 | |
| Short-term Activity Ratio (no. days) | ||||||
| Average inventory processing period1 | 73 | 59 | 52 | 56 | 54 | |
| Benchmarks (no. days) | ||||||
| Average Inventory Processing Period, Competitors2 | ||||||
| Boeing Co. | 486 | 467 | 388 | — | — | |
| Caterpillar Inc. | 144 | 143 | 112 | — | — | |
| Eaton Corp. plc | 82 | 62 | 71 | — | — | |
| GE Aerospace | 107 | 96 | 77 | — | — | |
| Honeywell International Inc. | 85 | 74 | 66 | — | — | |
| Lockheed Martin Corp. | 19 | 23 | 26 | — | — | |
| RTX Corp. | 65 | 71 | 70 | — | — | |
| Average Inventory Processing Period, Sector | ||||||
| Capital Goods | 160 | 160 | 140 | — | — | |
| Average Inventory Processing Period, Industry | ||||||
| Industrials | 94 | 101 | 93 | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 5.01 = 73
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Average inventory processing period | An activity ratio equal to the number of days in the period divided by inventory turnover over the period. | Illinois Tool Works Inc. number of days of inventory outstanding deteriorated from 2019 to 2020 and from 2020 to 2021. |
Average Receivable Collection Period
Illinois Tool Works Inc., average receivable collection period calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Receivables turnover | 5.09 | 5.02 | 5.73 | 5.63 | 5.45 | |
| Short-term Activity Ratio (no. days) | ||||||
| Average receivable collection period1 | 72 | 73 | 64 | 65 | 67 | |
| Benchmarks (no. days) | ||||||
| Average Receivable Collection Period, Competitors2 | ||||||
| Boeing Co. | 15 | 12 | 16 | — | — | |
| Caterpillar Inc. | 64 | 68 | 62 | — | — | |
| Eaton Corp. plc | 61 | 59 | 59 | — | — | |
| GE Aerospace | 80 | 83 | 70 | — | — | |
| Honeywell International Inc. | 72 | 76 | 75 | — | — | |
| Lockheed Martin Corp. | 11 | 11 | 14 | — | — | |
| RTX Corp. | 55 | 60 | 64 | — | — | |
| Average Receivable Collection Period, Sector | ||||||
| Capital Goods | 48 | 50 | 49 | — | — | |
| Average Receivable Collection Period, Industry | ||||||
| Industrials | 48 | 49 | 48 | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 5.09 = 72
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Average receivable collection period | An activity ratio equal to the number of days in the period divided by receivables turnover. | Illinois Tool Works Inc. number of days of receivables outstanding deteriorated from 2019 to 2020 but then slightly improved from 2020 to 2021. |
Operating Cycle
Illinois Tool Works Inc., operating cycle calculation, comparison to benchmarks
No. days
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Average inventory processing period | 73 | 59 | 52 | 56 | 54 | |
| Average receivable collection period | 72 | 73 | 64 | 65 | 67 | |
| Short-term Activity Ratio | ||||||
| Operating cycle1 | 145 | 132 | 116 | 121 | 121 | |
| Benchmarks | ||||||
| Operating Cycle, Competitors2 | ||||||
| Boeing Co. | 501 | 479 | 404 | — | — | |
| Caterpillar Inc. | 208 | 211 | 174 | — | — | |
| Eaton Corp. plc | 143 | 121 | 130 | — | — | |
| GE Aerospace | 187 | 179 | 147 | — | — | |
| Honeywell International Inc. | 157 | 150 | 141 | — | — | |
| Lockheed Martin Corp. | 30 | 34 | 40 | — | — | |
| RTX Corp. | 120 | 131 | 134 | — | — | |
| Operating Cycle, Sector | ||||||
| Capital Goods | 208 | 210 | 189 | — | — | |
| Operating Cycle, Industry | ||||||
| Industrials | 142 | 150 | 141 | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= 73 + 72 = 145
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Operating cycle | Equal to average inventory processing period plus average receivables collection period. | Illinois Tool Works Inc. operating cycle deteriorated from 2019 to 2020 and from 2020 to 2021. |
Average Payables Payment Period
Illinois Tool Works Inc., average payables payment period calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Payables turnover | 14.51 | 13.81 | 17.35 | 16.42 | 14.08 | |
| Short-term Activity Ratio (no. days) | ||||||
| Average payables payment period1 | 25 | 26 | 21 | 22 | 26 | |
| Benchmarks (no. days) | ||||||
| Average Payables Payment Period, Competitors2 | ||||||
| Boeing Co. | 57 | 74 | 79 | — | — | |
| Caterpillar Inc. | 84 | 77 | 59 | — | — | |
| Eaton Corp. plc | 77 | 58 | 54 | — | — | |
| GE Aerospace | 110 | 100 | 87 | — | — | |
| Honeywell International Inc. | 107 | 95 | 86 | — | — | |
| Lockheed Martin Corp. | 5 | 6 | 9 | — | — | |
| RTX Corp. | 62 | 66 | 69 | — | — | |
| Average Payables Payment Period, Sector | ||||||
| Capital Goods | 65 | 66 | 65 | — | — | |
| Average Payables Payment Period, Industry | ||||||
| Industrials | 47 | 49 | 49 | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 14.51 = 25
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Average payables payment period | An estimate of the average number of days it takes a company to pay its suppliers; equal to the number of days in the period divided by payables turnover ratio for the period. | Illinois Tool Works Inc. number of days of payables outstanding increased from 2019 to 2020 but then slightly decreased from 2020 to 2021. |
Cash Conversion Cycle
Illinois Tool Works Inc., cash conversion cycle calculation, comparison to benchmarks
No. days
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Average inventory processing period | 73 | 59 | 52 | 56 | 54 | |
| Average receivable collection period | 72 | 73 | 64 | 65 | 67 | |
| Average payables payment period | 25 | 26 | 21 | 22 | 26 | |
| Short-term Activity Ratio | ||||||
| Cash conversion cycle1 | 120 | 106 | 95 | 99 | 95 | |
| Benchmarks | ||||||
| Cash Conversion Cycle, Competitors2 | ||||||
| Boeing Co. | 444 | 405 | 325 | — | — | |
| Caterpillar Inc. | 124 | 134 | 115 | — | — | |
| Eaton Corp. plc | 66 | 63 | 76 | — | — | |
| GE Aerospace | 77 | 79 | 60 | — | — | |
| Honeywell International Inc. | 50 | 55 | 55 | — | — | |
| Lockheed Martin Corp. | 25 | 28 | 31 | — | — | |
| RTX Corp. | 58 | 65 | 65 | — | — | |
| Cash Conversion Cycle, Sector | ||||||
| Capital Goods | 143 | 144 | 124 | — | — | |
| Cash Conversion Cycle, Industry | ||||||
| Industrials | 95 | 101 | 92 | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 73 + 72 – 25 = 120
2 Click competitor name to see calculations.
| Short-term activity ratio | Description | The company |
|---|---|---|
| Cash conversion cycle | A financial metric that measures the length of time required for a company to convert cash invested in its operations to cash received as a result of its operations; equal to average inventory processing period plus average receivables collection period minus average payables payment period. | Illinois Tool Works Inc. cash conversion cycle deteriorated from 2019 to 2020 and from 2020 to 2021. |