Lockheed Martin Corporation (LMT)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover	18.87	18.68	19.45	16.01	14.22
Receivables turnover	31.69	26.34	34.15	33.06	25.59
Payables turnover	25.56	27.25	74.34	64.48	40.16
Working capital turnover	18.85	12.93	11.52	12.01	19.15

The activity ratios of Lockheed Martin Corp. provide insights into its efficiency in managing inventory, receivables, payables, and working capital.

The inventory turnover ratio measures the number of times the company's inventory is sold and replaced within a period. From 2019 to 2023, Lockheed Martin's inventory turnover has consistently improved, indicating efficient management of inventory.

The receivables turnover ratio indicates how many times the company collects its accounts receivable during a period. The increasing trend in this ratio from 2019 to 2023 reflects Lockheed Martin's effectiveness in collecting revenues from its customers.

The payables turnover ratio measures how efficiently the company pays its suppliers. The decreasing trend of this ratio from 2019 to 2023 indicates that Lockheed Martin is taking longer to pay its suppliers, which may suggest improved cash management.

The working capital turnover ratio demonstrates how effectively the company utilizes its working capital to generate sales. The fluctuating trend from 2019 to 2023 suggests that Lockheed Martin's efficiency in utilizing working capital has varied over the years.

Overall, the activity ratios show that Lockheed Martin has exhibited improvements in managing inventory and collecting receivables, while also possibly improving its cash management by extending payment periods to suppliers.

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	19.35	19.54	18.77	22.80	25.68
Days of sales outstanding (DSO)	days	11.52	13.86	10.69	11.04	14.26
Number of days of payables	days	14.28	13.39	4.91	5.66	9.09

The activity ratios for Lockheed Martin Corp. provide insights into the efficiency of its inventory management and the management of its accounts receivable and accounts payable.

Days of inventory on hand (DOH) measures the number of days the company takes, on average, to sell its inventory. In this case, the DOH has decreased from 25.68 days in 2019 to 19.38 days in 2023, indicating an improvement in inventory turnover and potentially more efficient inventory management.

Days of sales outstanding (DSO) assesses the average number of days it takes for the company to collect its accounts receivable. The DSO has fluctuated over the years but decreased from 14.26 days in 2019 to 11.52 days in 2023, suggesting that the company has been more efficient in collecting its receivables.

Number of days of payables reflects the average number of days it takes for the company to pay its suppliers. The increase in this ratio from 9.09 days in 2019 to 14.30 days in 2023 implies that the company is taking longer to settle its payables.

In summary, Lockheed Martin Corp. has managed to reduce its inventory holding period and days of sales outstanding, indicating enhanced efficiency in managing inventory and collecting receivables. However, the increase in the number of days of payables suggests that the company is taking longer to settle its payables, which may have implications for its relationships with suppliers.

Long-term

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Fixed asset turnover	8.07	8.27	8.83	9.07	9.07
Total asset turnover	1.29	1.25	1.32	1.29	1.26

The fixed asset turnover ratio measures the efficiency of a company in generating sales from its fixed assets. A higher ratio indicates better efficiency. Lockheed Martin Corp.'s fixed asset turnover has shown a decreasing trend from 9.07 in 2019 to 8.07 in 2023. This suggests a decline in the company's ability to generate sales from its fixed assets over the years.

On the other hand, the total asset turnover ratio reflects the company's ability to generate sales from its total assets. A higher total asset turnover ratio indicates efficient use of assets in generating sales. Lockheed Martin Corp.'s total asset turnover ratio fluctuated within a narrow range from 1.25 in 2022 to 1.32 in 2021, showing relatively stable performance in utilizing its total assets to generate sales over the years.

In summary, while Lockheed Martin Corp.'s fixed asset turnover ratio has been decreasing, its total asset turnover ratio has remained relatively stable, signifying a need for the company to address the efficiency of its fixed asset utilization to improve overall asset turnover.