Advanced Micro Devices Inc. (NASDAQ:AMD)

Inventory Turnover

The inventory turnover ratio shows a general declining trend since late 2021. Initially fluctuating around 4.0 to 4.35, the ratio decreased steadily throughout 2023 and 2024, reaching levels near 2.3 by mid-2025. This indicates a slowing rate of inventory being sold and replaced, suggesting either increasing inventory levels relative to sales or slower sales velocity.

Receivables Turnover

Receivables turnover experienced volatility over the periods. It peaked around mid-2021 above 6.6 and then generally declined through 2023 to a low near 3.36 by late 2024. However, a recovery occurred in late 2024 and early 2025, with turnover rising back above 5.0. This pattern reflects variations in how quickly the company collects payments from customers, with notably slower collections in 2023 and early 2024 followed by improvement.

Payables Turnover

Payables turnover demonstrated a downward trend from a high above 8.3 in mid-2021 to values close to 4.0 in 2023, recovering somewhat sporadically thereafter. The lower turnover indicates that the company is taking longer to pay its suppliers over time, particularly in 2023 and parts of 2024, which could imply extended credit terms or cash management strategies.

Working Capital Turnover

This ratio peaked around the end of 2021 at approximately 3.78 but then declined steadily, stabilizing around 2.0 to 2.25 during 2023 and 2024. This reduction suggests decreased efficiency in utilizing working capital to generate revenue.

Average Inventory Processing Period

The average days inventory is held before sale increased notably from the mid-80s in 2021 to over 160 days by late 2024 and 2025. This rise indicates slower inventory movement, implying potential overstocking or weaker sales demand affecting inventory management efficiency.

Average Receivable Collection Period

The average period to collect receivables fluctuated, starting around 55-70 days in 2021 and increasing to over 100 days by mid-2024, before declining again toward the end of the observed period. This variation points to intermittent challenges in collecting customer payments promptly.

Operating Cycle

The operating cycle lengthened from approximately 144 days in late 2021 to peaks near 265 days in mid-2024, reflecting the combined effects of longer inventory holding and receivables collection periods. A slight reduction in the final periods suggests some improvement in overall operating efficiency.

Average Payables Payment Period

The payment period to suppliers increased from the mid-40s in days in early 2021 to peaks above 80 days in late 2022 and again near 87 days in mid-2024, indicating the company has extended its payment terms or is delaying payments longer over time. This trend may be part of working capital management efforts.

Cash Conversion Cycle

The cash conversion cycle varied between approximately 84 and 179 days, with a generally upward trend peaking in 2024. This reflects longer durations to convert inputs into cash flows from sales, driven by increased inventory and receivables periods that outweighed extended payables payment times. A partial improvement occurred in 2025 but levels remained elevated relative to early 2021.

Cost of sales

The cost of sales demonstrated an overall upward trend from March 2021 through September 2025. Starting at $1,858 million in March 2021, it increased significantly to $4,466 million by September 2025. Despite some fluctuations, particularly in the second half of 2022 where costs dipped slightly before rising again, the general direction over the entire period is an increase. Notably, there was a steeper rise between mid-2024 and mid-2025.

Inventories

The inventory levels consistently escalated across the observed quarters, starting at $1,653 million in March 2021 and reaching $7,313 million by September 2025. This continuous increase reflects accumulation of stock over time. The most pronounced inventory growth occurred from early 2023 onwards, in particular during 2024 and into 2025, where inventory values nearly doubled compared to the beginning of the dataset.

Inventory turnover ratio

The inventory turnover ratio showed a declining trend from 3.81 in March 2021 to 2.27 by September 2025. This decline indicates that inventory was being converted into sales more slowly over time. The ratio maintained relative stability around 4.0 during 2021 and early 2022 but began a steady drop thereafter, reaching its lowest points in 2024 and 2025. This consistent decrease suggests potential challenges in either inventory management efficiency or changing sales dynamics relative to inventory growth.

Overall analysis

The simultaneous increase in both cost of sales and inventories coupled with the steady decline in inventory turnover ratio suggests that while sales-related expenses and stock holdings expanded, the efficiency in inventory utilization weakened. This pattern may reflect a build-up of excess inventory, slower sales velocity, or strategic stockpiling in anticipation of future demand. The data imply a need for closer monitoring of inventory management practices to improve turnover and maintain cost efficiency going forward.

Net Revenue Trend

The net revenue exhibited a generally upward trend over the observed periods. Starting at $3,445 million in the first quarter of 2021, the revenue increased consistently to reach $7,658 million by the fourth quarter of 2024, with a slight dip observed in the first quarter of 2025 followed by a resurgence to $9,246 million. This indicates strong growth momentum with occasional minor fluctuations.

Accounts Receivable, Net Trend

Accounts receivable showed overall growth, indicating expanding sales on credit. The value increased from $2,178 million in early 2021 to a peak of $7,241 million in the third quarter of 2024. However, subsequent quarters showed some declines, with values dropping to $5,115 million in the third quarter of 2025 before increasing again to $6,201 million. This pattern suggests variability in collections or changes in credit policies.

Receivables Turnover Ratio Trend

The receivables turnover ratio demonstrated a decreasing trend from 5.24 in the first quarter of 2021, reaching a low of 3.36 in the third quarter of 2024. This decline points to slower collection efficiency over this period. Nevertheless, after this low point, the ratio improved, rising back to 5.16 by the third quarter of 2025, indicating a recovery in the speed at which receivables are collected.

Overall Analysis

The simultaneous growth in net revenue and accounts receivable alongside a declining receivables turnover ratio until late 2024 implies that while sales expanded, collection efficiency lagged. This could suggest longer credit terms or slower payment collection during that timeframe. The recovery in turnover ratios in 2025 coupled with fluctuations in accounts receivable levels signals a potential improvement in credit management or payment collection processes. The revenue’s strong upward trajectory highlights robust business growth.

The cost of sales demonstrates a generally increasing trend over the observed periods, with notable fluctuations. Beginning at 1,858 million US dollars, the figure rises steadily to peak around the December 2024 quarter at 3,776 million US dollars, before slightly declining towards the last periods, reaching 4,466 million US dollars by September 2025. This pattern reflects growing operational activity with variability that may be linked to seasonal or market-driven factors.

Accounts payable also display an upward trajectory across the timeline, starting at 989 million US dollars and increasing to 3,483 million US dollars by September 2025. The progression shows some irregularities, including a dip in the mid-2023 periods, which may indicate changes in payment policies or supplier negotiations. Despite fluctuations, the overall increase suggests a rise in outstanding obligations, possibly correlating with the company's growth or procurement needs.

The payables turnover ratio exhibits a declining trend over the majority of the periods, starting from a high of 8.31 and decreasing to values around 4.4-5.7 in the later quarters. Lower turnover ratios generally imply that the company is taking longer to pay its suppliers. Some recovery is noted near the December 2023 quarter, but the ratio again decreases toward the end of the timeline. This shift might reflect changes in working capital management, supplier terms, or cash flow considerations.

Cost of Sales

Shows a consistent rise over the time span with peaks and some periods of decline, indicating increased production or sales activity with some volatility.

Accounts Payable

Increases significantly over the quarters, with intermittent decreases, possibly reflecting evolving payment strategies or increased purchasing volumes.

Payables Turnover Ratio

Generally declines, suggesting longer payment cycles to suppliers relative to cost of sales, which could impact supplier relationships and cash management.

The analysis of the quarterly financial data reveals notable trends in working capital, net revenue, and working capital turnover over the observed periods.

Working Capital

The working capital exhibits a generally upward trajectory, increasing from $4.33 billion in early 2021 to $15.30 billion by the end of the observed period in 2025. This growth is steady, with occasional accelerations, particularly notable from 2024 onward, indicating improving short-term financial health and liquidity management.

Net Revenue

Net revenue displays a fluctuating yet overall increasing trend. Beginning at approximately $3.45 billion in the first quarter of 2021, the revenue rose sharply through 2022, peaking at around $7.66 billion in late 2024. Despite some quarterly dips, such as in 2023 and early 2024, the general progression suggests successful revenue expansion efforts, potentially due to growing market demand or enhanced sales strategies.

Working Capital Turnover

The working capital turnover ratio, which measures how efficiently working capital is used to generate sales, shows a declining trend over time. Initially, this ratio was relatively high, ranging from about 2.64 to 3.78 in 2021, indicating efficient use of working capital. However, through to 2025, it steadily decreased to slightly above 2.00. This decline suggests that although working capital and revenues increased, the efficiency in converting working capital to revenue diminished somewhat, possibly due to increased investment in inventories, receivables, or other short-term assets.

In summary, the company’s working capital and net revenue have both grown significantly over the quarters, reflecting expansion and improving financial stability. However, the declining working capital turnover ratio indicates a reduction in the operational efficiency of capital use, which may warrant further investigation into the underlying causes, such as changes in asset management or sales cycles.

Inventory Turnover

The inventory turnover ratio exhibited an initial increasing trend from 3.81 in the first quarter of 2021 to a peak of 4.35 by the end of the same fiscal year. This indicates an improvement in the efficiency of inventory usage during that period. However, from 2022 onwards, the ratio began a consistent decline, dropping gradually to 2.27 by the third quarter of 2025. This downward trend suggests a reduction in inventory turnover efficiency over the long term.

Average Inventory Processing Period

The average inventory processing period, measured in days, showed an inverse relationship to inventory turnover over the observed timeframe. Initially, the period shortened from 96 days in early 2021 to 84 days at the end of 2021, signaling faster inventory movement. Subsequently, this metric reversed course and steadily lengthened, reaching a high of 169 days in mid-2025 before slightly decreasing to 157 and 161 days in the most recent quarters. This extension in the processing period reflects slower inventory turnover, implying potential challenges in inventory management or changes in sales cycles.

Overall Analysis

The data suggests that while there was an early phase of increasing inventory efficiency, the overall trend indicates a deterioration in inventory management effectiveness from 2022 through 2025. The declining inventory turnover ratio coupled with a rising average processing period point to slower inventory movement and possibly increased inventory holding costs. These trends may highlight the need for strategic adjustments in supply chain, sales forecasts, or product demand management.

Receivables Turnover

The receivables turnover ratio exhibited fluctuations over the observed periods. Initially, it increased from 5.24 to a peak of 6.68, indicating an improvement in the company's ability to collect receivables efficiently. However, following this peak, the ratio generally declined, reaching a low of 3.36 around September 2024. Toward the end of the period, there was a recovery, with the ratio rising again to 5.16. This pattern suggests variability in the effectiveness of collection practices, with a notable dip in mid to late 2024 followed by partial normalization.

Average Receivable Collection Period

The average collection period, measured in days, mirrored the inverse relationship expected with receivables turnover. It started at 70 days and initially improved to 55 days during mid-2021, indicating faster collection cycles. Subsequent periods saw this figure rise, reaching peak durations above 100 days around September 2024. This increase corresponds to the decrease in receivables turnover, signaling slower collection times. After this peak, the collection period decreased again to 71 days by mid-2025, reflecting a return to a more efficient receivables management closer to historical averages.

Overall Observations

The data reveals a period of enhanced receivables management efficiency in early 2021, followed by a gradual decline in collection efficiency that peaked in lateness around mid to late 2024. The subsequent improvement in both turnover ratio and collection period towards mid-2025 suggests corrective actions or changes in management policies. These trends highlight the company's variable performance in converting receivables into cash promptly, which can affect liquidity and working capital management.

Average Inventory Processing Period

The average inventory processing period shows a fluctuating but overall increasing trend over the observed quarters. Starting at 96 days, it decreased to a minimum of 84 days in December 2021 but then experienced a general upward movement reaching a peak of 169 days in March 2025. The latter two years particularly demonstrate extended inventory holding times, indicating potential challenges in inventory turnover or adjustments in inventory management strategies.

Average Receivable Collection Period

The average receivable collection period exhibits variability with no consistent linear trend. It started at 70 days, decreased to around 55 days in mid-2021, bounced back to about 69-71 days by mid-2022, and further fluctuated through the subsequent periods. Notably, there are peaks around September 2024 at 109 days, implying slower receivables collection in some quarters, followed by a reduction back to near 63-71 days towards mid to late 2025. This suggests intermittent challenges in credit control or collection efficiency across the timeline.

Operating Cycle

The operating cycle, which combines the inventory processing and receivable collection periods, reflects an overall increasing trend across the quarters. Beginning at 166 days, it decreased to approximately 143-144 days in late 2021 before rising steadily. It reaches up to 265 days in September 2024 and then slightly decreases but remains elevated near 220-232 days by late 2025. The extended operating cycle indicates a lengthening of the time between inventory purchase and cash collection, which may impact working capital and liquidity management.

Summary Insight

The data reveals a notable lengthening of both inventory processing and operating cycles over the observed time, coupled with fluctuating, occasionally extended receivable collection periods. These trends may signify operational inefficiencies, changing market conditions, or strategic shifts in inventory and credit management. The longer cycles could affect the company’s cash flow and require attention to optimize working capital management in the future.

Payables Turnover

The payables turnover ratio exhibits notable fluctuations throughout the observed periods. It started at 6.38 and increased to a peak of 8.31 within the first two quarters, then generally declined to a low of 3.98 around the seventh to tenth periods. Subsequently, the ratio demonstrated recovery phases, climbing back above 6.5 in the thirteenth period before again showing a downward movement toward the later periods, ending near 4.76. This volatility suggests changes in the company's efficiency in settling payables, with periods of faster payments followed by slower turnover.

Average Payables Payment Period

The average payables payment period shows an inverse trend relative to the payables turnover ratio. Initially, the payment period decreased from 57 days to a low of 44 days, indicative of quicker payments to suppliers. Following this, the payment period extended significantly, reaching a high plateau of around 82-92 days in the mid-periods, reflecting slower payments. Later periods saw some reduction back to the mid-50s, but also spikes back toward the 80+ day range, indicating inconsistency in payment timing.

Overall Analysis

The data reveals a cyclical pattern in the company's payables management. Early aggressive payment strategies gave way to extended payment periods, possibly reflecting liquidity management adjustments or negotiation terms with suppliers. The payables turnover ratio's inverse relationship with the average payment period is consistent with typical financial dynamics where longer payment periods result in lower turnover ratios. The latter periods suggest mixed strategies with fluctuating payment durations. Such variations may impact supplier relationships and working capital requirements.

Average Inventory Processing Period

The average inventory processing period demonstrated variability over the observed quarters. Initially, it declined from 96 days to 84 days between March 2021 and December 2021, indicating improved inventory turnover. However, from early 2022 onward, the period generally increased, reaching a peak of 169 days in the quarter ending March 2025. This trend suggests increasing time to process inventory, implying potential challenges in inventory management or shifts in product mix affecting turnover rates.

Average Receivable Collection Period

The receivable collection period exhibited fluctuations with periods of both improvement and deterioration. Starting at 70 days in March 2021, it decreased to as low as 55 days in mid-2021, indicating more efficient collection efforts. However, from 2023 onward, the period increased again, peaking at 109 days in September 2024, before decreasing to 63 days by September 2025. These changes may reflect varying credit policies, customer payment behaviors, or economic conditions impacting accounts receivable collections.

Average Payables Payment Period

The payables payment period varied moderately. It started at 57 days in March 2021 and increased substantially to 92 days by April 2023, suggesting extended payment terms or improved supplier financing. Subsequent quarters saw fluctuations, with periods around 56 to 87 days, before ending at 77 days by September 2025. The variation indicates efforts to manage cash outflows strategically, possibly balancing supplier relationships and working capital optimization.

Cash Conversion Cycle

The cash conversion cycle (CCC) generally showed a rising trend after an initial decline. Starting at 109 days in March 2021, it declined to 84 days by December 2021, reflecting improved operational efficiency. From early 2022 onward, the CCC increased steadily, reaching a high of 183 days in December 2024, indicating that cash remains tied up longer in the operating cycle. Although there was some improvement towards mid-2025, the cycle remained elevated relative to earlier periods. This lengthening CCC could be attributed to rising inventory days and receivable periods, signaling increased working capital requirements.