Northrop Grumman Corporation (NOC)

Payables turnover

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cost of revenue	US$ in thousands	4,049,000	4,094,000	4,115,000	4,774,000	4,680,000
Payables	US$ in thousands	2,599,000	2,110,000	2,587,000	2,197,000	1,806,000
Payables turnover		1.56	1.94	1.59	2.17	2.59

December 31, 2024 calculation

Payables turnover = Cost of revenue ÷ Payables
= $4,049,000K ÷ $2,599,000K
= 1.56

The payables turnover ratio measures how many times a company pays off its accounts payable during a specific period. In the case of Northrop Grumman Corporation, the payables turnover has shown a declining trend over the past five years.

As of December 31, 2020, the payables turnover ratio was 2.59 times, indicating that the company paid off its accounts payable approximately 2.59 times during that year. By December 31, 2021, the ratio decreased to 2.17, suggesting a slightly slower rate of paying off its obligations to suppliers.

Further, by December 31, 2022, the ratio declined to 1.59, signifying a significant decrease in the frequency of paying off accounts payable. However, there was a slight improvement by December 31, 2023, with the ratio increasing to 1.94, although it still remained below the levels of the previous years.

As of December 31, 2024, the payables turnover ratio dropped further to 1.56, indicating a continued reduction in the rate of paying off accounts payable compared to the earlier years.

Overall, the declining trend in Northrop Grumman Corporation's payables turnover ratio may suggest potential liquidity challenges or changes in payment terms with suppliers that could be impacting the company's ability to settle its accounts payable in a timely manner. Further analysis of the company's financial health and cash flow management practices would be beneficial to fully understand the implications of this trend.