Northrop Grumman Corporation (NOC)

Working capital turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Revenue	US$ in thousands	39,290,000	36,602,000	35,667,000	36,799,000	33,841,000
Total current assets	US$ in thousands	13,706,000	12,488,000	12,426,000	15,344,000	10,685,000
Total current liabilities	US$ in thousands	11,942,000	11,587,000	9,530,000	9,580,000	9,434,000
Working capital turnover		22.27	40.62	12.32	6.38	27.05

December 31, 2023 calculation

Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $39,290,000K ÷ ($13,706,000K – $11,942,000K)
= 22.27

The working capital turnover ratio measures how effectively a company utilizes its working capital to generate sales revenue. A higher ratio indicates efficient use of working capital. Northrop Grumman Corp.'s working capital turnover has shown fluctuations over the past five years, ranging from 6.38 in 2020 to 40.62 in 2022.

In 2023, the working capital turnover decreased to 22.27, indicating a decline in the company's ability to efficiently convert its working capital into sales. This decrease may raise concerns about the company's management of working capital in relation to its sales performance.

The significant fluctuations in the working capital turnover ratio over the five-year period suggest changes in Northrop Grumman's working capital management efficiency. Further analysis of the company's working capital components and their impact on sales may provide insights into the underlying factors contributing to these fluctuations.