Raytheon Technologies Corp (RTX)

Activity ratios

Short-term

Turnover ratios

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Inventory turnover	0.51	0.52	0.54	0.64	5.11
Receivables turnover	7.36	6.36	7.36	6.66	6.11
Payables turnover	0.50	0.57	0.58	0.67	5.56
Working capital turnover	—	41.62	20.15	9.75	7.52

Based on the provided data, we can analyze Raytheon Technologies Corp's activity ratios.

1. Inventory Turnover:
- The inventory turnover ratio measures how efficiently a company manages its inventory. Raytheon Technologies Corp's inventory turnover has decreased significantly from 5.11 in 2020 to 0.51 in 2024. This indicates that the company is holding onto its inventory for a longer period, which may tie up capital and potentially lead to obsolete inventory issues.

2. Receivables Turnover:
- The receivables turnover ratio shows how efficiently a company collects cash from its customers. Raytheon Technologies Corp's receivables turnover has fluctuated over the period, with a peak of 7.36 in 2022. A higher turnover ratio indicates that the company is efficiently collecting payments from customers.

3. Payables Turnover:
- The payables turnover ratio measures how effectively a company pays its suppliers. Raytheon Technologies Corp's payables turnover has decreased over the years, from 5.56 in 2020 to 0.50 in 2024. A lower turnover ratio could suggest that the company is taking longer to pay its suppliers, which may affect relationships with vendors.

4. Working Capital Turnover:
- The working capital turnover ratio indicates how efficiently a company utilizes its working capital to generate sales. Raytheon Technologies Corp's working capital turnover has increased significantly from 7.52 in 2020 to an upward trend with no data available for 2024. A higher turnover ratio implies that the company is effectively utilizing its working capital to generate revenue.

In summary, Raytheon Technologies Corp's activity ratios reflect some concerning trends, such as decreasing inventory turnover and payables turnover, which may require attention to improve efficiency in managing inventory and paying suppliers. On the other hand, the increasing working capital turnover indicates improved efficiency in utilizing working capital for generating sales.

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	718.30	703.08	676.18	571.47	71.48
Days of sales outstanding (DSO)	days	49.62	57.40	49.56	54.77	59.69
Number of days of payables	days	725.56	638.66	630.26	544.88	65.62

The activity ratios of Raytheon Technologies Corp indicate how efficiently the company manages its inventory, collects receivables, and pays its suppliers.

1. Days of Inventory on Hand (DOH):
- The Days of Inventory on Hand has shown a significant increase over the years, from 71.48 days in December 2020 to 718.30 days in December 2024. This indicates that the company is holding onto its inventory for a longer period, which may tie up capital and potentially lead to higher storage costs.

2. Days of Sales Outstanding (DSO):
- The Days of Sales Outstanding has fluctuated over the years, with a decrease from 59.69 days in December 2020 to 49.62 days in December 2024. A lower DSO implies that the company is collecting its accounts receivable more quickly, which is generally a positive indicator of efficient credit management.

3. Number of Days of Payables:
- The Number of Days of Payables has also seen a significant increase, from 65.62 days in December 2020 to 725.56 days in December 2024. This indicates that the company is taking a longer time to pay its suppliers, which can be a strategy to manage cash flow effectively but may also impact supplier relationships.

Overall, Raytheon Technologies Corp's activity ratios suggest a need for closer monitoring of inventory management to optimize working capital, improvements in receivables collection efficiency, and a balance in payables to maintain strong supplier relationships while managing cash effectively.

Long-term

	Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Fixed asset turnover	5.02	4.38	4.42	4.30	3.78
Total asset turnover	0.50	0.43	0.42	0.40	0.35

The analysis of Raytheon Technologies Corp's long-term activity ratios reveals a positive trend in both the fixed asset turnover and total asset turnover ratios over the five-year period from 2020 to 2024.

1. Fixed Asset Turnover: The fixed asset turnover ratio measures how efficiently the company generates sales revenue from its investment in fixed assets. The ratio increased steadily from 3.78 in 2020 to 5.02 in 2024. This indicates that Raytheon Technologies Corp has been able to effectively utilize its fixed assets to generate higher sales over time, showcasing improved efficiency in asset management.

2. Total Asset Turnover: The total asset turnover ratio reflects the company's ability to generate sales revenue in relation to its total assets. The ratio also exhibited a positive trend, rising from 0.35 in 2020 to 0.50 in 2024. This indicates that Raytheon Technologies Corp has been increasingly efficient in utilizing its total assets to drive sales growth, reflecting improved operational efficiency and productivity.

Overall, the increasing trend in both fixed asset turnover and total asset turnover ratios suggests that Raytheon Technologies Corp has been effectively managing and utilizing its assets to drive revenue growth and operational performance over the specified period. This improvement in asset utilization efficiency is a positive indicator of the company's long-term operational strength and potential for future growth and profitability.