Northrop Grumman Corporation (NOC)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Inventory turnover	2.78	3.69	4.21	5.89	6.17
Receivables turnover	5.71	5.50	4.88	5.13	5.54
Payables turnover	1.56	1.94	1.59	2.17	2.59
Working capital turnover	281.05	22.27	40.62	12.32	6.38

Northrop Grumman Corporation's activity ratios show fluctuations in the efficiency of its management of inventory, receivables, payables, and working capital over the five-year period.

1. Inventory Turnover: The inventory turnover ratio indicates how many times a company's inventory is sold and replaced during a period. Northrop Grumman's inventory turnover decreased from 6.17 in 2020 to 2.78 in 2024, suggesting a slowdown in the sales of inventory over the years.

2. Receivables Turnover: The receivables turnover ratio measures how efficiently a company is collecting its accounts receivable. Northrop Grumman's receivables turnover fluctuated from 5.54 in 2020 to 5.71 in 2024, indicating a relatively stable collection of receivables over the period.

3. Payables Turnover: The payables turnover ratio reflects how quickly a company pays off its suppliers. Northrop Grumman's payables turnover declined from 2.59 in 2020 to 1.56 in 2024, suggesting a slowdown in the payment of trade payables over the years.

4. Working Capital Turnover: The working capital turnover ratio indicates how effectively a company is utilizing its working capital to generate sales. Northrop Grumman's working capital turnover increased significantly from 6.38 in 2020 to 281.05 in 2024, reflecting a substantial improvement in the efficiency of utilizing working capital to drive revenue growth.

Overall, Northrop Grumman Corporation's activity ratios show mixed performance in managing its operational resources efficiently. Efforts may be needed to address the decline in inventory turnover and payables turnover, while maintaining the positive trend seen in working capital turnover.

Average number of days

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	131.16	98.87	86.75	62.01	59.20
Days of sales outstanding (DSO)	days	63.87	66.39	74.73	71.22	65.87
Number of days of payables	days	234.29	188.12	229.47	167.97	140.85

The activity ratios of Northrop Grumman Corporation provide valuable insight into the efficiency of the company's operations.

1. Days of Inventory on Hand (DOH):
- The number of days of inventory on hand has shown an increasing trend from 59.20 days in December 31, 2020, to 131.16 days in December 31, 2024. This indicates that Northrop Grumman is carrying more inventory in recent years, which could be a sign of slowing sales or inefficient inventory management.

2. Days of Sales Outstanding (DSO):
- The days of sales outstanding have fluctuated over the years but have generally decreased from 65.87 days in December 31, 2020, to 63.87 days in December 31, 2024. A lower DSO suggests that the company is collecting its accounts receivable more quickly, which is a positive sign of efficient credit and collection practices.

3. Number of Days of Payables:
- The number of days of payables has varied significantly, with a notable increase from 140.85 days in December 31, 2020, to 234.29 days in December 31, 2024. This indicates that Northrop Grumman is taking longer to pay its suppliers, which could be a strategic move to manage cash flow but may also impact relationships with suppliers.

In summary, Northrop Grumman's activity ratios show mixed performance in different areas of its operations. The company has been carrying more inventory and extending payment periods to suppliers, though it has improved its collection of accounts receivable. Further analysis and context are needed to understand the reasons behind these changes and their impact on the overall efficiency and financial health of the company.

Long-term

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Fixed asset turnover	3.89	4.07	4.16	4.52	5.20
Total asset turnover	0.83	0.84	0.84	0.84	0.83

The fixed asset turnover ratio for Northrop Grumman Corporation has exhibited a declining trend over the years, decreasing from 5.20 in 2020 to 3.89 in 2024. This indicates that the company's ability to generate sales from its investment in fixed assets has weakened over time.

On the other hand, the total asset turnover ratio has remained relatively stable, hovering around 0.83 to 0.84 from 2020 to 2024. This suggests that Northrop Grumman Corporation has been able to efficiently utilize its total assets to generate revenue during this period.

Overall, the decreasing trend in fixed asset turnover may raise concerns about the company's efficiency in utilizing its fixed assets to generate sales, whereas the stable total asset turnover indicates a consistent performance in generating revenue relative to its total asset base.