General Dynamics Corporation (GD)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover	0.38	0.52	0.59	0.53	5.63
Receivables turnover	3.84	3.34	3.33	3.39	3.45
Payables turnover	1.06	0.97	0.99	1.04	11.24
Working capital turnover	5.89	6.89	6.40	6.80	11.28

General Dynamics Corp.'s activity ratios provide insight into how efficiently the company manages its assets and liabilities.

1. Inventory turnover: General Dynamics Corp.'s inventory turnover has been decreasing gradually over the past five years, from 5.12 in 2019 to 4.15 in 2023. This implies that the company is holding onto its inventory for a longer period before selling it. This could indicate potential inefficiencies in inventory management or a slowdown in sales.

2. Receivables turnover: The receivables turnover indicates how quickly General Dynamics is collecting payments from its customers. The trend shows slight fluctuations but has generally been stable over the past five years. A higher turnover ratio signifies that the company is efficient in collecting payments, which is beneficial for cash flow management.

3. Payables turnover: The payables turnover ratio has been increasing over the years, from 10.21 in 2019 to 11.50 in 2023. This uptrend suggests that the company is taking longer to pay its creditors, which can be advantageous for cash flow management as it delays cash outflows.

4. Working capital turnover: The working capital turnover ratio has shown a downward trend over the years, from 13.21 in 2019 to 5.89 in 2023. A lower turnover ratio may indicate that General Dynamics is less efficient in utilizing its working capital to generate sales. This could be a concern as it implies that the company may not be maximizing the potential of its current assets.

In conclusion, while General Dynamics Corp. has shown strength in managing its receivables and payable efficiently, there are areas of concern regarding its inventory management and working capital turnover. Further analysis and monitoring of these ratios will be necessary to assess the company's overall operational efficiency and financial health.

Average number of days

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	951.66	700.31	621.72	683.04	64.78
Days of sales outstanding (DSO)	days	94.99	109.32	109.48	107.65	105.75
Number of days of payables	days	343.37	376.41	368.73	350.97	32.48

General Dynamics Corp.'s activity ratios indicate the efficiency of the company in managing its inventory, accounts receivable, and accounts payable over the past five years.

1. Days of Inventory on Hand (DOH): The DOH reflects the average number of days it takes for General Dynamics to sell its inventory. The trend shows an increasing number of days from 2019 to 2023, indicating that the company is holding onto its inventory for a longer period. This might imply inefficiencies in inventory management, potentially tying up more capital.

2. Days of Sales Outstanding (DSO): DSO measures how many days on average it takes for General Dynamics to collect its accounts receivable. The trend in DSO from 2019 to 2023 shows a decrease, which could suggest that the company has been improving its collections process, converting sales into cash more efficiently over time.

3. Number of Days of Payables: This ratio represents the average number of days General Dynamics takes to pay its suppliers. The declining trend in payables days from 2019 to 2023 indicates that the company has been paying its suppliers more quickly. While this may improve relationships with suppliers, it could also suggest potential liquidity challenges or difficulties in negotiating extended payment terms.

In combination, these ratios provide insights into General Dynamics' working capital management. The increasing DOH and decreasing DSO may indicate a need to optimize inventory levels and enhance collections processes. However, the declining payables days should be monitored to ensure it does not impact the company's liquidity position.

Long-term

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Fixed asset turnover	6.82	6.68	7.10	7.44	8.79
Total asset turnover	0.77	0.76	0.77	0.74	0.80

General Dynamics Corp. has maintained relatively stable long-term activity ratios over the past five years. The fixed asset turnover, measuring the efficiency of using fixed assets to generate revenue, has ranged between 6.68 and 8.79, indicating that the company has effectively utilized its fixed assets to generate sales.

The total asset turnover, which reflects the company's ability to generate revenue from its total assets, has remained between 0.74 and 0.81 during the same period. This suggests that General Dynamics Corp. has efficiently utilized its overall assets to generate sales, though there has been a slight decrease in 2023 compared to the previous year.

Overall, the company's long-term activity ratios indicate that General Dynamics Corp. has been able to effectively utilize both fixed and total assets to generate revenue, demonstrating operational efficiency and effective asset management over the years.