GE Aerospace (GE)
Activity ratios
Short-term
Turnover ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Inventory turnover | 0.62 | 1.00 | 0.78 | 4.81 | 5.07 |
| Receivables turnover | 4.39 | 3.92 | 4.75 | 4.54 | 3.34 |
| Payables turnover | 0.96 | 1.19 | 1.12 | — | 5.48 |
| Working capital turnover | 7.62 | 6.49 | 5.15 | 2.51 | 3.72 |
General Electric Co.'s activity ratios provide insights into the efficiency of the company in managing its inventory, receivables, payables, and working capital over the past five years.
1. Inventory Turnover:
The inventory turnover ratio has been declining over the years, indicating that General Electric Co. is taking longer to sell its inventory. This could be a sign of less efficient inventory management or potential issues with sales and demand for its products.
2. Receivables Turnover:
The receivables turnover ratio has been relatively stable, showing that the company efficiently collects payments from its customers. A higher turnover ratio is generally favorable as it signifies faster collection of accounts receivable.
3. Payables Turnover:
The payables turnover ratio was only available for 2019 and 2023, showing a positive trend in the efficiency of paying off its trade payables. A higher turnover ratio in payables indicates that the company is managing its trade credit effectively.
4. Working Capital Turnover:
The working capital turnover ratio has fluctuated significantly over the years. A higher turnover ratio implies that the company is generating sales more efficiently with less investment in working capital. However, the substantial fluctuations in this ratio may indicate inconsistent working capital management practices.
In summary, General Electric Co. should focus on improving its inventory turnover and maintaining the efficiency of its receivables turnover. Furthermore, monitoring and managing working capital effectively to ensure a stable working capital turnover ratio would be beneficial for the company's overall financial performance and operational efficiency.
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 | 586.21 | 365.42 | 468.88 | 75.93 | 72.00 |
| Days of sales outstanding (DSO) | days | 83.07 | 93.17 | 76.84 | 80.34 | 109.42 |
| Number of days of payables | days | 378.73 | 306.23 | 324.58 | — | 66.61 |
Activity ratios provide insight into how efficiently a company manages its assets and liabilities. Looking at the data for General Electric Co., we can see the following trends:
1. Days of Inventory on Hand (DOH):
- The DOH has been increasing over the years, indicating that General Electric is taking longer to convert its inventory into sales. This may suggest potential issues with inventory management or a slowdown in the sales cycle.
2. Days of Sales Outstanding (DSO):
- The DSO fluctuates year to year, with a significant increase in 2020 followed by a decrease in 2021. This metric measures how long it takes for the company to collect revenue after a sale. A lower DSO is generally favorable as it indicates faster collection of receivables.
3. Number of Days of Payables:
- The data for days of payables is incomplete, but we can see a notable decrease in the days of payables in 2019 compared to 2023. A decrease in days of payables could imply the company is paying its suppliers more quickly, potentially indicating a liquidity management strategy or supplier relationships.
In summary, General Electric Co. may need to focus on improving inventory turnover and managing receivables more efficiently to enhance its operational performance and working capital management. Tracking and analyzing these activity ratios over time can help identify areas for improvement and assess the company's operational efficiency.
See also:
GE Aerospace Short-term (Operating) Activity Ratios
Long-term
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Fixed asset turnover | 2.49 | 1.84 | 2.33 | 1.70 | 1.97 |
| Total asset turnover | 0.42 | 0.31 | 0.37 | 0.30 | 0.34 |
General Electric Co.'s long-term activity ratios provide insights into how efficiently the company is utilizing its assets to generate revenue. The fixed asset turnover ratio has been fluctuating over the past five years. It increased from 2.21 in 2019 to 5.44 in 2023, indicating that the company has significantly improved its ability to generate sales from its fixed assets during this period.
On the other hand, the total asset turnover ratio has also shown an upward trend over the same period. It has increased from 0.36 in 2019 to 0.42 in 2023. This suggests that General Electric Co. has been able to generate more revenue relative to its total assets, indicating overall improvement in asset utilization efficiency.
These ratios indicate that General Electric Co. has been effectively managing and utilizing both its fixed and total assets to generate sales, which is a positive sign for the company's operational efficiency and financial performance. The increasing trend in both ratios suggests that the company is making better use of its assets to drive revenue growth over the years.