Northrop Grumman Corporation (NOC)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory turnover	3.69	4.21	5.89	6.17	4.63
Receivables turnover	5.50	4.88	5.13	5.54	5.08
Payables turnover	1.94	1.59	2.17	2.59	1.63
Working capital turnover	22.27	40.62	12.32	6.38	27.05

Northrop Grumman Corp.'s activity ratios provide insight into the company's efficiency in managing its operating assets and liabilities. The inventory turnover indicates that the company has been efficient in selling its inventory, with a slight decrease from 2020 to 2023. This could imply either a decrease in sales or an increase in average inventory levels. The receivables turnover shows a fluctuating trend over the years, suggesting variations in the company's ability to collect on credit sales. The increase in payables turnover from 2020 to 2023 signifies the company's ability to settle its payables more rapidly, which may have positive implications for cash flow management. The working capital turnover indicates the number of times working capital is used to generate sales, and the decreasing trend from 2022 to 2023 could suggest a decreased efficiency in this aspect. Overall, Northrop Grumman Corp. has exhibited mixed performance in its activity ratios in recent years, reflecting varying levels of efficiency in managing its operating assets and liabilities.

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	98.87	86.75	62.01	59.20	78.91
Days of sales outstanding (DSO)	days	66.39	74.73	71.22	65.87	71.83
Number of days of payables	days	188.12	229.47	167.97	140.85	224.32

Based on the provided data, the activity ratios of Northrop Grumman Corp. can be analyzed as follows:

Days of inventory on hand (DOH):
- The company's DOH has seen an increasing trend over the past five years, indicating that the average number of days it takes to sell its inventory has been gradually lengthening.
- A longer DOH may suggest inefficiencies in inventory management or potential overstocking, which could tie up working capital and increase holding costs.

Days of sales outstanding (DSO):
- The DSO has fluctuated over the past five years, with a general trend of decrease in 2023 compared to 2022.
- A lower DSO indicates that the company is collecting its accounts receivable more quickly, which can be a positive sign of efficient credit and collection policies.

Number of days of payables:
- The number of days of payables has shown fluctuations over the years, with a decrease in 2023 compared to the previous year.
- A decrease in this ratio may indicate that the company is paying its suppliers more quickly, which can impact its cash conversion cycle and working capital management.

Overall, these activity ratios provide insight into Northrop Grumman Corp.'s efficiency in managing its inventory, collecting receivables, and paying its suppliers. An analysis of these ratios in conjunction with other financial metrics can offer a comprehensive view of the company's operational performance and financial health.

Long-term

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Fixed asset turnover	4.07	4.16	4.52	5.20	4.90
Total asset turnover	0.84	0.84	0.84	0.83	0.82

The long-term activity ratios of Northrop Grumman Corp. provide insights into the efficiency of the company's utilization of its fixed and total assets over the past five years.

The fixed asset turnover ratio measures the company's ability to generate sales from its investment in fixed assets. In this case, Northrop Grumman Corp.'s fixed asset turnover has shown a declining trend from 5.20 in 2020 to 4.07 in 2023. This suggests that the company may be experiencing a decrease in its ability to generate sales from its investment in fixed assets.

On the other hand, the total asset turnover ratio indicates the efficiency of the company in generating sales from its total assets. The constant total asset turnover ratio of 0.84 over the past five years indicates that Northrop Grumman Corp. has been maintaining a stable level of sales in relation to its total asset base.

In summary, while the company's fixed asset turnover has declined, its total asset turnover has remained relatively stable. This trend may indicate the need for Northrop Grumman Corp. to assess and potentially optimize its utilization of fixed assets to enhance its overall long-term activity efficiency.