Abiomed Inc. (NASDAQ:ABMD)

Inventory Turnover

The inventory turnover ratio demonstrates a generally declining trend from mid-2017 through early 2019, dropping from 2.1 to approximately 1.55. This indicates a slower rate of inventory sales or increased inventory levels during this period. From 2019 onward, the ratio exhibits a recovery trend, gradually improving to approximately 2.05 by mid-2021 before slightly declining again to around 1.96 by late 2022. This pattern suggests efforts to optimize inventory management, with periods of both reduced and improved efficiency.

Receivables Turnover

The receivables turnover ratio fluctuates with some volatility but maintains an overall increasing trend from 8.86 in mid-2017 to a peak of nearly 11.59 by mid-2022. This upward movement reflects enhanced efficiency in collecting receivables, contributing to improved liquidity. Occasional dips occur, notably around late 2017 and early 2021, but these are short-lived and followed by strong recoveries.

Payables Turnover

Payables turnover shows considerable variability, with values ranging from a low of approximately 3.99 in late 2017 to a high of 7.09 in late 2020. The periods of low turnover indicate slower payment to suppliers, potentially reflecting cash flow management strategies, while spikes in the ratio suggest expedited payments. Since late 2020, the payables turnover stabilizes around a mid-range value (approximately 5.5–6), indicating a more consistent payment pattern.

Working Capital Turnover

Working capital turnover ratios exhibit a moderate downward trend overall, starting near 1.63 in mid-2017 and gradually declining to about 1.15 by late 2022. This decline could indicate reduced efficiency in utilizing working capital to generate revenue over time, highlighting potential areas to improve operational efficiency and asset management.

Average Inventory Processing Period

The average inventory processing period increases noticeably from 174 days in mid-2017 to a peak of 236 days in mid-2019, indicating inventory is held longer before being sold. After mid-2019, the period steadily decreases to around 178 days by late 2021 but shows signs of slight increase again in late 2022. This pattern aligns inversely with inventory turnover trends and reflects changing inventory management strategies or market demand conditions.

Average Receivable Collection Period

Receivable collection days mostly decrease over the timeline, moving from 41 days in mid-2017 to a low near 31–32 days by mid-2022. This decline suggests improved credit and collection policies, resulting in quicker conversion of receivables to cash, which supports better liquidity management.

Operating Cycle

The operating cycle lengthens from approximately 215 days in mid-2017 to over 275 days by mid-2019, indicating an increased time between inventory acquisition and cash collection from sales. Post-2019, this cycle shortens back toward 209–218 days by late 2022. The extended period in 2018–2019 is consistent with longer inventory and receivable periods, while the subsequent reduction suggests a focus on operational efficiency improvements.

Average Payables Payment Period

Payment period to suppliers fluctuates significantly, ranging from around 50 days to over 90 days across the quarters. Peaks occur in late 2017 and early 2019, signifying delayed payments potentially employed to conserve cash. Conversely, low points around late 2020 indicate a shift toward quicker payment. These fluctuations likely represent tactical cash management responses to varying business conditions.

Cash Conversion Cycle

The cash conversion cycle remains relatively high throughout the period, fluctuating between approximately 140 and 195 days. It peaks around 180–195 days during 2019 and early 2020, reflecting prolonged inventory and receivables periods combined with shorter payables periods. A notable improvement occurs in 2020-2021, with a reduction to around 145 days, signaling enhanced operational cash flow efficiency. Slight increases in late 2022 suggest a minor reversal or operational adjustments.

The analysis of the financial data reveals several notable trends related to cost of revenue, inventories, and inventory turnover ratios over the observed periods.

Cost of Revenue

The cost of revenue shows a generally increasing trend over the periods analyzed. Starting at approximately 21,862 thousand US dollars in mid-2017, the cost fluctuates somewhat but generally rises, reaching a peak of 52,626 thousand US dollars by the end of 2021. There is a slight decrease observed in the subsequent quarter to 48,880 thousand. This upward trajectory suggests increasing expenses associated with revenue generation, potentially reflective of growth in sales volume, input costs, or operational expansions.

Inventories, Net

The net inventories demonstrate a steady and pronounced increase throughout the timeframe. From an opening figure of 36,926 thousand US dollars in mid-2017, inventories rise consistently, peaking over 102,237 thousand by late 2022. This substantial accumulation implies either stockpiling in anticipation of higher sales, longer production cycles, or challenges in inventory management. The consistent increase might warrant further analysis to understand turnover efficiency and potential implications for working capital.

Inventory Turnover Ratio

The inventory turnover ratio trends downward initially, declining from 2.1 in mid-2017 to a low point around 1.55-1.6 in mid to late 2019. This decline coupled with rising inventory levels indicates slower movement of stock relative to sales. However, starting in late 2019 and through 2021, the ratio improves steadily, reaching approximately 2.05, suggesting enhanced efficiency in clearing inventory. The ratio dips slightly to 1.96 towards late 2022. These fluctuations reflect varying inventory management effectiveness and could be influenced by changes in demand, supply chain factors, or operational adjustments.

Overall, the rising cost of revenue alongside growing inventory levels indicates expanding operational scale or input cost increases, while movements in inventory turnover suggest phases of both inventory accumulation and subsequent efficiency improvements. Monitoring these dynamics remains critical to optimizing cost structures and working capital management.

The financial data reveals various trends in revenue, accounts receivable, and receivables turnover over the observed quarterly periods.

Revenue

Revenue demonstrates an overall upward trend from the beginning of the period to the most recent quarter analyzed. Starting at approximately $132.5 million in the second quarter of 2017, it experiences consistent increases, reaching a peak of $277.1 million by the fourth quarter of 2021. Although fluctuations occur, including a notable dip in mid-2020, revenue generally recovers quickly and maintains growth momentum, ending slightly lower than the previous peak in the third quarter of 2022.

Accounts Receivable, Net

Accounts receivable show a gradual increase over time, starting around $53.6 million in mid-2017 and rising to approximately $94.5 million by the third quarter of 2022. The pattern suggests expansion in credit sales or slower collections, although some quarters reveal minor decreases or stabilization periods. Notably, a decline occurs in the first half of 2020, possibly reflecting tighter credit management or reduced sales activity during that time frame.

Receivables Turnover Ratio

The receivables turnover ratio exhibits some variability across periods but generally trends upwards, improving from around 8.8 times in mid-2017 to over 11 times by 2022. This indicates enhanced efficiency in collecting receivables relative to credit sales. Despite temporary dips in certain quarters, the ratio's increase signals accelerating collection processes or improved customer payment behaviors in recent years.

In summary, the data depicts a company expanding its top-line revenue significantly over the examined periods, with accounts receivable growing at a slower pace, reflected in an improving receivables turnover ratio. The trends suggest successful revenue growth accompanied by increasingly efficient receivables management, despite occasional variances likely influenced by external or operational factors.

The analysis of the quarterly financial data reflects several notable trends concerning cost of revenue, accounts payable, and the payables turnover ratio over the observed periods.

Cost of Revenue

The cost of revenue exhibits a general upward trajectory from mid-2017 through late 2022. Starting at approximately 21,862 thousand US dollars in June 2017, it increases consistently, reaching a peak near 52,626 thousand US dollars in December 2021 before showing a slight decline to 48,880 thousand US dollars in September 2022. This indicates an expansion in operational scale or increased costs associated with producing goods or services over time.

Accounts Payable

Accounts payable values fluctuate more irregularly compared to cost of revenue. Initially, accounts payable rose from 12,784 thousand US dollars in June 2017 to a peak of 32,185 thousand US dollars in March 2019. Following this peak, there are cyclical variations, notably a substantial rise to 34,842 thousand US dollars in March 2021 followed by more moderate changes, ending at 35,070 thousand US dollars in September 2022. This pattern may reflect changing payment terms, supplier negotiations, or shifts in purchasing activity.

Payables Turnover Ratio

The payables turnover ratio, indicating the number of times accounts payable is paid off during a period, shows considerable variation. The ratio declined from 6.06 in June 2017 to a low around 3.99 in December 2017, signaling slower turnover initially. Subsequently, it increased with fluctuations, peaking at 7.09 in September 2020, suggesting periods of faster payment cycles. The ratio stabilizes somewhat in the range of 5.3 to 5.7 in the last several quarters, indicating a moderate payment frequency relative to purchases.

Overall, the company demonstrates growth in cost of revenue aligned with expanding operations or cost structures. Accounts payable levels exhibit volatility likely driven by operational and supplier dynamics. Meanwhile, the payables turnover ratio’s fluctuations suggest variations in payment practices or working capital management over time. This combination of trends underscores the evolving nature of the company’s supply chain management and cost absorption patterns across the reported periods.

Working Capital

Working capital exhibited a general upward trend over the observed periods, starting at approximately 292 million USD and increasing to above 928 million USD by the end of the timeline. Notably, some quarters showed sharper increases, such as between June 2020 and September 2020 and again from March 2021 onwards. Despite slight fluctuations, the overall progression indicates strengthening liquidity and operational efficiency in managing current assets and liabilities.

Revenue

Revenue demonstrated a fluctuating yet generally increasing pattern, commencing at around 132 million USD and reaching higher levels, peaking above 277 million USD near the end of the observed periods. There were intervals of decline, such as from March 2020 to June 2020, which may correlate with external economic conditions during that time. Nonetheless, recovery and growth resumed in subsequent quarters, suggesting resilience in sales performance.

Working Capital Turnover

The working capital turnover ratio, which measures the efficiency of using working capital to generate revenue, showed a slight downward trend overall. Initially starting at approximately 1.63, the ratio declined at various points, reaching lows around 1.15 to 1.16 towards the final quarters. This decline implies that although both working capital and revenue increased, the growth in working capital outpaced revenue increases, indicating a relative decrease in efficiency in generating sales from working capital.

Summary of Trends

In summary, the company's working capital grew steadily over time, reflecting enhanced capacity to support operational needs. Revenue experienced growth with some volatility, including a dip potentially linked to external disruptions. The working capital turnover ratio's gradual decline signals that revenue growth did not keep pace proportionally with the increase in working capital, suggesting room for improving capital utilization efficiency. The observed data points to solid financial health accompanied by opportunities to optimize the use of working capital to drive revenue.

The analysis of the inventory turnover ratio and the average inventory processing period over the reported quarters reveals distinct trends and fluctuations that inform on the company's inventory management efficiency.

Inventory Turnover Ratio

This ratio shows a gradual decline from 2.1 in June 2017 to a low of 1.55 in June 2019, indicating a decreasing frequency of inventory being sold and replaced over this period. Following this downturn, there is a recovery trend starting in late 2019, with the ratio increasing steadily to 2.05 by mid-2021. From this point onward, the ratio demonstrates minor fluctuations but remains relatively stable around the 2.0 mark through September 2022.

Average Inventory Processing Period

The number of days inventory remains before being sold reflects an inverse trend to the inventory turnover ratio. It lengthens significantly from 174 days in June 2017 to a peak of 236 days in June 2019, suggesting slower inventory movement and potential overstock or inefficiencies during that period. Post mid-2019, the processing period shortens consistently, reaching approximately 178 days by late 2021, indicating improved inventory efficiency. By September 2022, a slight increase to 186 days appears, though this remains below the prior peak levels.

Overall, the data suggest a period of declining inventory management efficiency from 2017 through mid-2019, followed by a recovery and stabilization phase. The improvements after mid-2019 may point to operational enhancements or strategic changes in inventory control. However, minor fluctuations towards the end of the timeline highlight the need for ongoing monitoring to maintain inventory turnover performance.

Receivables Turnover Ratio

The receivables turnover ratio demonstrates a fluctuating pattern over the examined periods, starting at 8.86 and displaying minor declines and increases within the span from 2017 to early 2019, generally oscillating around the 8 to 9 range. From mid-2019 onwards, there is a noticeable upward trend, particularly significant from early 2021 through 2022, where it rises sharply from approximately 8.7 to values exceeding 11. This suggests an improved efficiency in collecting receivables during this later period.

Average Receivable Collection Period

The average receivable collection period inversely correlates with the receivables turnover ratio, beginning at around 41 days in mid-2017 and generally trending downward with minor variability. Between 2017 and early 2019, the collection period fluctuates mostly between 39 and 44 days, with some periods showing lower days which indicate faster collection. From mid-2019 forward, a more consistent decline is evident, culminating in a reduction to approximately 31-32 days by late 2022. This decreasing collection period aligns with the increase in turnover, suggesting an overall acceleration in receivables management and cash flow efficiency over the analyzed timeframe.

Overall Insights

The combined analysis of the receivables turnover ratio and the average collection period signals a positive trend towards more efficient credit and collections management. The improvements noted especially after 2019 could reflect enhanced operational processes, stricter credit policies, or improved customer payment behaviors. Consequently, this leads to faster conversion of receivables into cash, potentially benefiting the company's liquidity and working capital management.

Average Inventory Processing Period

The average inventory processing period shows an initial increasing trend, rising from 174 days in June 2017 to a peak of 236 days in June 2019. Following this peak, there is a general decline, reaching a low of 178 days in September 2021. The period experiences a slight uptick again towards the end, finishing at 186 days in September 2022. This pattern indicates that inventory turnover slowed significantly until mid-2019, followed by improved inventory management or faster processing in the subsequent years.

Average Receivable Collection Period

The average receivable collection period displays moderate fluctuations around a range of approximately 31 to 44 days throughout the period. It starts at 41 days in June 2017, experiences minor variations, and trends downward after 2019, reaching its lowest point of 31 days by June 2022. This suggests an enhancement in the company's efficiency in collecting receivables, with a reduction of collection days over time.

Operating Cycle

The operating cycle follows a similar pattern to the inventory processing period, beginning at 215 days in June 2017, growing steadily to a peak of 276 days in September 2019. After this peak, the cycle shortens consistently, dropping to around 212–218 days by late 2021 and mid-2022. This suggests that overall cash conversion from inventory through receivables improved after 2019, reflecting more efficient operations and working capital management.

Summary

Overall, the data reveal an initial elongation in inventory turnover and operating cycle duration until roughly mid-2019, followed by a notable improvement in operational efficiency set by shorter inventory processing and operating cycles. Simultaneously, the company has enhanced its receivable collection process, reducing the collection period in later years. These trends indicate an overall positive development in working capital management over the observed periods.

Payables Turnover

The payables turnover ratio exhibited notable fluctuations across the analyzed periods. Initially, the ratio decreased from 6.06 to a low of 3.99 within the first three quarters, suggesting a slowdown in the rate at which payables were settled. Subsequently, the ratio showed a modest recovery and maintained values generally between 4.0 and 5.5 through the majority of the periods. A significant spike occurred around the third and fourth quarters of 2020, reaching peaks of 7.09 and 6.58, indicating a faster payment of payables during that timeframe. After this peak, the turnover ratio moderated and stabilized in the range of approximately 4.6 to 6.4 through late 2021 and into 2022.

Average Payables Payment Period

The average payables payment period, measured in days, showed an inverse pattern relative to the payables turnover ratio, as expected. It increased from 60 days to a peak of 91 days within the first four quarters, indicating that the company was taking longer to settle its payables during that period. A decline followed, with the payment period shortening significantly to approximately 51 days by the third quarter of 2020, coinciding with the peak in payables turnover ratio. For the remainder of the analysis period, the payment period generally stabilized between 55 and 80 days, with some minor fluctuations but no sustained upward or downward trend.

Insights

The data indicates variability in the company's payment practices over the observed timeframe. Early periods showed a tendency to extend payment timings, evidenced by the lengthening of the average payable days and reduction in turnover. The sharp reversal in payment timing during 2020 suggests a strategic shift toward faster settlement of payables, which could imply improved liquidity or a change in supplier payment terms. Subsequent stabilization in both metrics indicates the establishment of a more consistent payment cycle. These patterns reflect dynamic financial management possibly influenced by operational needs or external economic conditions.

Average Inventory Processing Period

The average inventory processing period generally exhibits an upward trend from mid-2017 through late 2019, increasing from 174 days to a peak of 236 days in mid-2019. Subsequently, it shows a gradual decline through late 2020 to around 178 days by the end of 2021. In 2022, the period fluctuates slightly between 178 and 186 days. This pattern indicates an initial lengthening of inventory holding times followed by efforts or circumstances leading to improved inventory turnover efficiencies in recent periods.

Average Receivable Collection Period

The average receivable collection period remains relatively stable over the entire timeframe, with values typically fluctuating between 31 and 44 days. There is a subtle downward trend from 2017 through 2022, moving from the low 40s to just above 30 days by mid-2022. This reduction suggests gradual improvements in the effectiveness of receivables management, allowing for quicker customer payments and improved cash inflow timing.

Average Payables Payment Period

The average payables payment period displays greater variability. It starts at 60 days in mid-2017, peaks at 91 days several times through 2018 and into early 2019, followed by a general decline reaching a low near 51 days in late 2020. The period then increases moderately to around the mid-60 day range through 2021 and 2022. These fluctuations imply changes in the company's payment policies or supplier terms, swinging between longer payment extensions and more accelerated payments over time.

Cash Conversion Cycle

The cash conversion cycle (CCC) largely follows the trend of inventory and receivables periods. It increases from 155 days in mid-2017 to highs close to 195 days from late 2018 to late 2019, indicating a lengthening cycle and tying up capital longer in operations. From early 2020 onwards, the CCC decreases to levels near 144-155 days through 2022, signifying improved efficiency in converting investments in inventory and receivables into cash. However, the cycle remains relatively elevated compared to early periods, suggesting room for further optimization.