United Parcel Service Inc (UPS)
Working capital turnover
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Revenue | US$ in thousands | 90,120,000 | 99,706,000 | 96,557,000 | 83,936,000 | 73,435,000 |
| Total current assets | US$ in thousands | 19,413,000 | 22,217,000 | 24,934,000 | 20,216,000 | 17,103,000 |
| Total current liabilities | US$ in thousands | 17,676,000 | 18,140,000 | 17,569,000 | 17,016,000 | 15,413,000 |
| Working capital turnover | 51.88 | 24.46 | 13.11 | 26.23 | 43.45 |
December 31, 2023 calculation
Working capital turnover = Revenue ÷ (Total current assets – Total current liabilities)
= $90,120,000K ÷ ($19,413,000K – $17,676,000K)
= 51.88
United Parcel Service, Inc.'s working capital turnover has shown considerable fluctuations over the past five years. The working capital turnover ratio measures how efficiently a company is utilizing its working capital to generate revenue. A higher ratio indicates better efficiency.
In 2023, the working capital turnover ratio significantly increased to 52.36 compared to the previous year. This surge suggests that UPS has improved its efficiency in converting its working capital into revenue. This could be attributed to better management of current assets and liabilities or increased sales.
In 2022, the ratio decreased to 24.61 from 13.21 in 2021. This decline may indicate that UPS experienced challenges in managing its working capital effectively, potentially due to issues such as excess inventory or slow collection of receivables.
The ratio rebounded in 2021 to 13.21 from 26.45 in 2020. This improvement suggests that UPS was able to enhance its working capital utilization compared to the previous year, possibly through more effective management of liquidity and operational efficiency.
In 2020, the ratio decreased to 26.45 from 43.84 in 2019. This decline could suggest a temporary dip in efficiency in utilizing working capital to generate revenue, which might have been influenced by economic conditions or company-specific factors.
In 2019, UPS achieved a high working capital turnover ratio of 43.84, indicating strong efficiency in converting its working capital into revenue during that period.
Overall, UPS's working capital turnover has shown variability, reflecting fluctuations in the company's ability to efficiently manage its working capital in generating revenue over the past five years. Investors and analysts may further investigate the reasons behind these fluctuations to assess the company's operational and financial performance.