Lockheed Martin Corp. (NYSE:LMT)

The short-term operating activity ratios exhibit varied trends over the observed period. Generally, the period from March 2022 through December 2023 shows considerable fluctuation, followed by a period of stabilization and then renewed change from March 2024 through December 2025. Several ratios demonstrate significant peaks and valleys, suggesting potential shifts in operational efficiency and management of working capital.

Inventory Turnover

Inventory turnover remained relatively stable between 16.20 and 18.87 for most of the period, with a slight dip in the first half of 2023. The ratio increased to 20.21 in June 2024, before decreasing again to 19.13 by December 2025. This suggests potential variations in inventory management effectiveness or changes in sales patterns.

Receivables Turnover

Receivables turnover demonstrates more pronounced volatility. A significant decrease is observed in June 2022, followed by a recovery and a peak of 33.30 in September 2024. Subsequently, the ratio declines to 19.24 by December 2025. This pattern could indicate changes in credit policies, collection efforts, or customer payment behavior. The high value in September 2024 suggests efficient collection of receivables during that period.

Payables Turnover

Payables turnover fluctuates considerably. A peak of 27.25 is seen in December 2022, followed by a decline to 15.51 in September 2023. The ratio then increases again, reaching 28.85 in December 2024, before settling at 18.58 in December 2025. These changes may reflect shifts in supplier relationships, payment terms, or purchasing strategies.

Working Capital Turnover

Working capital turnover exhibits a substantial increase from 13.24 in March 2024 to 29.25 in December 2024, indicating a more efficient use of working capital. This is followed by a decrease to 37.02 in December 2025. The initial increase suggests improved management of current assets and liabilities, while the subsequent rise could be due to increased investment in working capital or a slowdown in sales. The significant jump in late 2024 warrants further investigation.

Days-Based Ratios (Inventory Processing, Receivable Collection, Payables Payment, Operating & Cash Conversion Cycles)

The average inventory processing period remains relatively stable around 20 days throughout the period. The average receivable collection period fluctuates, with a low of 10 days in March 2025 and a high of 19 days in several periods. The average payables payment period also varies, peaking at 24 days in September 2023. The operating cycle generally remains between 30 and 42 days, while the cash conversion cycle shows a decreasing trend, reaching a low of 8 days in March 2025, suggesting improved efficiency in converting investments in inventory and receivables into cash. The cash conversion cycle then increases to 18 days by December 2025.

Overall, the observed trends suggest a dynamic operating environment. The fluctuations in turnover ratios and days-based metrics indicate potential responsiveness to changing market conditions or deliberate adjustments in operational strategies. The significant changes observed in late 2024 and early 2025, particularly in working capital turnover and the cash conversion cycle, merit further scrutiny to understand the underlying drivers and their implications for the company’s financial performance.

The inventory turnover ratio exhibits a generally stable pattern over the observed period, with fluctuations occurring throughout the quarters. An initial decline is noted from the March 2022 value to June 2022, followed by a recovery and relative stability through December 2022. Subsequent quarters demonstrate a more pronounced variability, with a peak in June 2024 and a slight decline towards the end of the analyzed timeframe.

Overall Trend

The inventory turnover ratio generally remains within a range of 16.20 to 20.21. While fluctuations are present, a clear, sustained upward or downward trend is not readily apparent. The ratio demonstrates a cyclical pattern, suggesting sensitivity to seasonal or operational factors.

Initial Period (Mar 27, 2022 – Dec 31, 2022)

The ratio begins at 18.12 in March 2022, decreases to 16.20 in June 2022, and then recovers to 18.68 by December 2022. This initial period suggests a potential initial slowdown in inventory processing followed by a return to more typical levels. The fluctuations during this period are relatively moderate.

Subsequent Period (Mar 26, 2023 – Dec 31, 2025)

From March 2023 through December 2025, the ratio exhibits greater variability. A peak of 20.21 is observed in June 2024, indicating efficient inventory management during that quarter. However, the ratio subsequently declines to 17.84 in March 2025 before recovering slightly to 19.13 by December 2025. This period suggests a more dynamic inventory environment, potentially influenced by changes in demand, supply chain conditions, or production schedules.

Recent Performance

The most recent quarters show a slight downward trend from the June 2024 peak, but the ratio remains within the historical range. The value of 19.13 in December 2025 suggests continued, though potentially moderating, efficiency in inventory utilization.

In conclusion, the inventory turnover ratio demonstrates a generally healthy level of inventory management, with periodic fluctuations that warrant further investigation to determine underlying causes. The peak observed in June 2024 represents a period of particularly efficient inventory processing, while the subsequent decline suggests a potential need to monitor inventory levels and optimize supply chain operations.

The receivables turnover ratio exhibits fluctuations over the observed period, generally indicating changes in the efficiency with which the company converts its receivables into cash. An initial decline is followed by periods of relative stability and subsequent increases, with a recent softening in the most recent quarters.

Overall Trend

The ratio began at 26.02 in March 2022, decreased significantly to 18.87 by June 2022, and then recovered to 26.06 by September 2022. It remained relatively stable through December 2022 at 26.34, before decreasing again to 25.61 in March 2023. A further decline to 19.67 was observed in June 2023, followed by a strong increase peaking at 33.30 in September 2023. The ratio then moderated to 30.22 by December 2023, decreased to 24.26 in March 2024, and has since shown a downward trend, reaching 19.24 in December 2025.

Short-Term Fluctuations

A notable decrease occurred between March and June 2022, potentially indicating a slowdown in collections or a deliberate extension of credit terms. The subsequent recovery suggests a return to more typical collection patterns. The sharp increase in receivables turnover from December 2022 to September 2023 warrants further investigation, as it could be attributed to aggressive collection efforts, changes in sales terms, or a shift in the customer base. The recent decline from September 2023 through December 2025 suggests a potential lengthening of the collection cycle or an increase in outstanding receivables.

Recent Performance

The most recent four quarters (March 2024 – December 2025) demonstrate a clear downward trend in the receivables turnover ratio. This decrease, from 24.26 to 19.24, could signal emerging issues with credit and collection policies, or a change in the composition of sales, with a greater proportion being credit sales. The ratio in December 2025 is the lowest observed in the entire period, potentially indicating a need for review of receivables management practices.

Relationship to Sales

While sales generally increased over the period, the receivables turnover ratio did not consistently follow suit. This decoupling suggests that changes in sales volume are not the sole driver of the observed fluctuations in the ratio. The ratio’s performance is more closely tied to the net receivables balance, indicating that the company’s ability to efficiently manage its credit and collection processes plays a significant role.

The payables turnover ratio for the analyzed period demonstrates considerable fluctuation. Initially, the ratio exhibited a generally positive trend, followed by a period of decline, and then a resurgence before stabilizing. A detailed examination reveals specific patterns and potential areas of interest.

Initial Trend (Mar 27, 2022 – Dec 31, 2022)

The payables turnover ratio began at 21.92 and generally increased, reaching a peak of 27.25 by the end of 2022. This suggests an improving efficiency in paying suppliers during this timeframe, potentially due to proactive cash management or negotiated payment terms. The increase indicates the company was able to utilize its credit period effectively, minimizing outstanding obligations.

Decline and Recovery (Mar 26, 2023 – Sep 24, 2023)

A noticeable decline in the payables turnover ratio occurred in the first half of 2023, falling to a low of 15.51. This could be attributed to a variety of factors, including increased purchasing activity, slower payment processing, or a deliberate strategy to extend payment terms. However, the ratio partially recovered in the subsequent quarter, reaching 19.48 by September 2023, indicating a potential stabilization or correction of the earlier decline.

Recent Performance (Dec 31, 2023 – Jun 29, 2025)

The ratio experienced a significant increase to 28.85 in December 2023, followed by a decrease to 16.89 in March 2025. The ratio then stabilized between 17.57 and 18.58 for the remainder of the analyzed period. This recent volatility suggests potential seasonal effects or specific events impacting payment cycles. The stabilization in the latter quarters indicates a more consistent approach to managing accounts payable.

Overall, the payables turnover ratio demonstrates a dynamic pattern. While periods of improvement are evident, the fluctuations warrant further investigation to understand the underlying drivers and ensure optimal working capital management. The company appears to be capable of efficiently managing its payables, but the recent volatility suggests a need for continued monitoring and analysis.

The working capital turnover ratio exhibits considerable fluctuation over the observed period. Initially, the ratio demonstrates a gradual decline from 15.14 in March 2022 to 12.93 in December 2022. This suggests a decreasing efficiency in utilizing working capital to generate sales during this timeframe.

Initial Decline (Mar 2022 - Dec 2022)

The ratio’s descent from 15.14 to 12.93 indicates that, relative to sales, the investment in working capital increased. This could be due to a build-up in inventory, slower collection of receivables, or a combination of both. Further investigation into the components of working capital would be necessary to pinpoint the exact cause.

A significant increase is then observed in the first quarter of 2023, with the ratio jumping to 18.85. This substantial rise suggests a more efficient use of working capital, potentially driven by improved inventory management or faster receivables turnover. However, this peak was not sustained.

Volatility and Subsequent Decline (Mar 2023 - Dec 2023)

Following the peak in March 2023, the ratio decreased to 13.24 by December 2023, indicating a return to a more moderate level of working capital efficiency. The ratio then experiences a dramatic surge to 29.25 in the first quarter of 2024, followed by an even more pronounced increase to 44.49 in the subsequent quarter. These exceptionally high values suggest a very rapid turnover of working capital, potentially indicating aggressive working capital management or a temporary reduction in working capital levels.

The ratio then declines sharply, reaching 37.02 by December 2025. This recent decrease, while still representing a relatively high turnover, suggests a stabilization after the extraordinary levels seen in mid-2024. The negative working capital value in June 2025 is noteworthy and likely a key driver of the high turnover ratio in subsequent periods, requiring further scrutiny.

Recent Trends (Sep 2024 - Dec 2025)

The pronounced fluctuations in the latter part of the period, coupled with the negative working capital balance, warrant detailed investigation. A negative working capital position can indicate strong cash management but also potential liquidity risks if not carefully managed. The high turnover ratios during this period should be examined in conjunction with other financial metrics to assess their sustainability and impact on overall financial health.

Overall, the working capital turnover ratio demonstrates significant variability, making it difficult to establish a consistent trend. The fluctuations suggest changes in the company’s operational practices, working capital management strategies, or external factors influencing sales and working capital requirements.

The average inventory processing period remained relatively stable over the observed period, fluctuating within a narrow range. While some variation exists, the metric generally indicates efficient inventory management practices.

Overall Trend

The average inventory processing period exhibited minimal directional trend over the fourteen quarters analyzed. It consistently remained between 18 and 23 days for the majority of the period. A slight decrease is observable in the most recent quarters.

Initial Period (Mar 27, 2022 - Dec 31, 2022)

The average inventory processing period began at 20 days, increased to 23 days, then returned to 20 days, and remained at 20 days through the end of 2022. This suggests a brief period of slightly extended processing times followed by a return to the initial level.

2023 Performance

The period started at 22 days, remained at that level for the second quarter, and then decreased to 20 days for the remainder of the year. This indicates a slight improvement in inventory processing efficiency during the year.

Recent Performance (2024 - 2025)

From March 2024 through December 2025, the average inventory processing period fluctuated between 18 and 20 days. The final reported value, 19 days, represents a continuation of the trend toward slightly shorter processing times observed in 2023.

Consistency

The metric demonstrates a high degree of consistency, with the majority of values clustering around 20 days. This suggests a stable and predictable inventory management system.

The observed stability in the average inventory processing period is a positive indicator, suggesting effective control over inventory levels and efficient operational processes. The slight downward trend in recent quarters warrants continued monitoring to determine if it represents a sustained improvement.

The average receivable collection period demonstrates a generally stable pattern with some quarterly fluctuations over the observed timeframe. The period, measured in days, indicates the average number of days it takes to collect receivables. Throughout much of the period examined, the collection period remained within a relatively narrow range.

Overall Trend

The average receivable collection period generally fluctuated between 10 and 19 days. A consistent pattern of seasonal variation is not immediately apparent, though some clustering of higher values is observed in the second quarter of each year.

Initial Period (Mar 27, 2022 - Dec 31, 2022)

The collection period began at 14 days, increased to 19 days, then returned to 14 days for two consecutive quarters. This suggests a brief period of slower collections followed by a return to the initial rate.

Subsequent Period (Mar 26, 2023 - Dec 31, 2024)

The period remained at 14 days for the first quarter of 2023, then increased to 19 days in the second quarter. This pattern repeated in 2024, with a collection period of 15 days in the second quarter. The period then decreased to 11 days and remained around 12 days for the remainder of the year.

Recent Fluctuations (Mar 30, 2025 - Dec 31, 2025)

The collection period decreased to 10 days in the first quarter of 2025, increased to 17 days in the second quarter, and then remained at 19 days for the final two quarters of the observed period. This represents a recent increase in the time taken to collect receivables.

Notable Observations

The most recent quarters show a sustained increase in the average collection period, reaching 19 days in both the third and fourth quarters of 2025. This warrants further investigation to determine if it represents a systemic change in collection practices, customer payment behavior, or other underlying factors.

The operating cycle, along with its component parts, exhibits relatively stable performance over the observed period, with some fluctuations. The average inventory processing period remains consistently within a narrow range, while the average receivable collection period demonstrates more variability. Overall, the operating cycle length fluctuates, but generally remains within a predictable timeframe.

Average Inventory Processing Period

The average inventory processing period generally remains stable, fluctuating between 20 and 23 days. A slight increase is observed from the March 2022 value of 20 days to 23 days in June 2022, followed by a return to 20 days in September 2022 and remaining at 20 days through December 2022. The period then increases to 22 days in the first half of 2023, before decreasing to 19 days by December 2023. This pattern continues with values oscillating between 18 and 20 days through June 2024, stabilizing at 20 days through June 2025, and concluding at 19 days in December 2025. This suggests efficient inventory management practices are consistently applied.

Average Receivable Collection Period

The average receivable collection period shows more pronounced fluctuations than the inventory processing period. It begins at 14 days in March 2022, increases to 19 days in June 2022, and returns to 14 days by December 2022. A decrease to 12 days is noted in December 2023, with a subsequent increase to 17 days in June 2025, and concludes at 19 days in December 2025. These variations may be attributable to changes in credit policies, customer payment behavior, or the timing of large invoices. The period generally remains below 20 days, indicating reasonably efficient collection practices.

Operating Cycle

The operating cycle, calculated as the sum of the average inventory processing period and the average receivable collection period, reflects the combined effect of these two components. It begins at 34 days in March 2022, rises to a peak of 42 days in June 2022, and then returns to 34 days by December 2022. The cycle increases to 41 days in June 2023, before decreasing to 31 days by December 2023. Fluctuations continue through the period, reaching 39 days in September 2025 and concluding at 38 days in December 2025. The operating cycle generally remains within the range of 30 to 42 days, suggesting a consistent, though variable, timeframe for converting investments in inventory and receivables into cash.

In summary, the observed trends suggest a generally stable operating cycle, with the receivable collection period contributing the most variability. Continued monitoring of these ratios is recommended to identify any significant deviations from established patterns and to assess the effectiveness of working capital management strategies.

The average payables payment period exhibited fluctuations over the observed period, ranging from a low of 13 days to a high of 24 days. An initial period of relative stability is followed by increased variability and a potential stabilizing trend towards the end of the period.

Overall Trend

From March 2022 through December 2022, the average payables payment period remained relatively consistent, fluctuating between 13 and 17 days. A noticeable increase began in March 2023, peaking at 24 days in September 2023, before decreasing to 14 days by December 2023. The period then showed a tendency to stabilize, oscillating between 19 and 22 days through June 2025, concluding at 20 days.

Short-Term Fluctuations

A distinct increase in the average payables payment period is observed from the first quarter of 2023 through the third quarter of 2023. This suggests a potential shift in payment practices or a change in the timing of invoice receipt and payment during this timeframe. The subsequent decrease in the fourth quarter of 2023 indicates a possible return to prior practices or a deliberate effort to reduce payment times.

Recent Performance

The most recent four quarters (March 2024 – December 2025) demonstrate a more stable pattern, with the average payables payment period remaining within a narrow range of 19 to 22 days. This suggests a degree of consistency in managing supplier payments during this period. The final reported value of 20 days in December 2025 is consistent with this recent trend.

Comparison to Initial Period

The average payables payment period in the initial period (March 2022 – December 2022) was generally lower than the period from March 2023 onwards. This indicates a potential lengthening of payment terms or a change in supplier relationships over time. The period has not returned to the initial lower levels.

The short-term operating activity, as measured by the cash conversion cycle and its components, exhibits fluctuations over the observed period. Generally, the cycle demonstrates a tendency towards volatility, with periods of improvement followed by increases. A closer examination of the individual components reveals the drivers behind these changes.

Average Inventory Processing Period

This metric remains relatively stable, fluctuating between 18 and 23 days throughout the period. There is no clear upward or downward trend. The values generally cluster around 20 days, with a slight dip towards the end of the observed timeframe, concluding at 19 days.

Average Receivable Collection Period

The average time to collect receivables shows more pronounced variability. An initial increase from 14 days to 19 days is observed, followed by a return to 14 days and then a further decrease to 12 days. The period then increases again, peaking at 19 days before settling at 19 days at the end of the observation window. This suggests potential inconsistencies in the company’s credit and collection policies or variations in customer payment behavior.

Average Payables Payment Period

The average time taken to settle payables demonstrates the most significant fluctuations. It initially decreases from 17 days to 13 days, then increases substantially to 24 days before decreasing again to 13 days. A subsequent increase to 22 days is noted, followed by a stabilization around 20-21 days. This suggests the company actively manages its payment terms with suppliers, potentially leveraging early payment discounts or extending payment periods to optimize cash flow.

Cash Conversion Cycle

The cash conversion cycle initially increases from 17 days to 27 days, driven primarily by the increase in the receivable collection period. It then decreases to 9 days, reflecting improvements in both inventory processing and receivable collection, alongside an extended payables payment period. The cycle subsequently fluctuates, peaking at 19 days before stabilizing around 17-18 days at the end of the period. The overall trend suggests a cyclical pattern, with periods of efficient cash management followed by periods requiring closer attention to working capital.

In summary, while the inventory processing period remains consistent, the receivable collection and payables payment periods exhibit considerable variation. These fluctuations directly impact the cash conversion cycle, indicating a dynamic working capital management environment. The recent stabilization around 18 days for the cash conversion cycle suggests a potential normalization of these processes, but continued monitoring is recommended.