Analysis of Short-term (Operating) Activity Ratios
Quarterly Data
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
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- Income Statement
- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Equity (ROE) since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Book Value (P/BV) since 2005
- Aggregate Accruals
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Short-term Activity Ratios (Summary)
Align Technology Inc., short-term (operating) activity ratios (quarterly data)
Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
The financial data reveals notable trends in the company's operational efficiency and liquidity management over the analyzed periods.
- Inventory Turnover
- The inventory turnover ratio shows a consistent decline from 8.12 in early 2019 to a low around 3.25 at the end of 2022, followed by a slight improvement to 3.89 by late 2023. This indicates that inventory is being held longer over time, suggesting slower movement of goods or increased inventory levels relative to cost of goods sold.
- Receivables Turnover
- The receivables turnover ratio generally hovered around 4.2 to 4.5, with a dip occurring in mid-2020 to under 3.8, before recovering gradually to a range of approximately 4.1 to 4.2 in 2023. This pattern suggests a temporary slowdown in collections during the pandemic period, followed by a stabilization in receivables management.
- Payables Turnover
- Payables turnover exhibited considerable volatility, with values starting near 9 and peaking above 11 in late 2023. Lower values (around 5) can be seen mid-2020 to early 2021, indicating slower payments to suppliers during that period. Faster payables turnover in more recent quarters points to quicker payments and possibly improved supplier relationships or tighter cash management.
- Working Capital Turnover
- There is significant fluctuation in working capital turnover, with a notable spike to 10.4 in mid-2020, followed by cycles of rise and decline ranging roughly between 3.3 and 11.3. The elevated ratio in certain quarters suggests periods of more efficient use of working capital in generating sales, although the inconsistency implies varying operational conditions.
- Average Inventory Processing Period
- The average inventory processing period lengthened steadily from 45 days in early 2019 to a peak exceeding 110 days near the end of 2022, then slightly shortened to 94 days in late 2023. This trend aligns with the declining inventory turnover, reflecting slower inventory movement and possibly excess stock or changes in demand patterns.
- Average Receivable Collection Period
- The collection period remained relatively stable, fluctuating between 80 and 90 days over the full timeline. There is a temporary increase to 100 days during late 2020, coinciding with the pandemic impact, yet the company managed to revert to prior collection norms soon after.
- Operating Cycle
- The operating cycle gradually extended from about 129 days to nearly 196 days by late 2022, then slightly declined to 181 days at the end of the period. This extension includes the longer inventory holding and stable receivables collection times, indicating an overall lengthening of the cash-to-cash cycle.
- Average Payables Payment Period
- The payables payment period varied noticeably, with an increase from around 40 days to highs of approximately 90 days in mid-2021, then receding toward 30 days in late 2023. This pattern suggests strategic adjustments in payment timing, potentially influenced by liquidity considerations or supplier terms renegotiations.
- Cash Conversion Cycle
- The cash conversion cycle lengthened from 88 days in early 2019 up to around 154 days near the end of 2022, before a modest decrease to 149 days by late 2023. This reflects the net effect of longer inventory and receivable periods offset partially by longer payables deferral earlier, and shorter payment periods more recently. The prolonged cycle may indicate increased working capital requirements.
Overall, the data evidences a trend of slower inventory turnover and longer holding periods, combined with relatively stable receivables collection and fluctuating payables management. This results in a longer operating and cash conversion cycle, implying greater funds tied up in day-to-day operations over time, with potential implications for liquidity and operational efficiency.
Turnover Ratios
Average No. Days
Inventory Turnover
Align Technology Inc., inventory turnover calculation (quarterly data)
| Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||||
| Cost of net revenues | |||||||||||||||||||||||||
| Inventories | |||||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||||
| Inventory turnover1 | |||||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||||
| Inventory Turnover, Competitors2 | |||||||||||||||||||||||||
| Abbott Laboratories | |||||||||||||||||||||||||
| Intuitive Surgical Inc. | |||||||||||||||||||||||||
| Medtronic PLC | |||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q3 2023 Calculation
Inventory turnover
= (Cost of net revenuesQ3 2023
+ Cost of net revenuesQ2 2023
+ Cost of net revenuesQ1 2023
+ Cost of net revenuesQ4 2022)
÷ Inventories
= ( + + + )
÷ =
2 Click competitor name to see calculations.
The financial data reveals several notable trends in cost of net revenues, inventories, and inventory turnover ratios over the examined periods.
- Cost of Net Revenues
- The cost of net revenues demonstrates a generally increasing trend from March 2019 to September 2023. Initially, values fluctuated moderately around the range of approximately $146 million to $178 million in 2019. There is a noticeable drop in the middle of 2020, particularly in June 2020, followed by a sharp increase reaching above $280 million by the end of 2020 and continuing to rise throughout 2021 and 2022. The costs plateau slightly but continue ascending through 2023, peaking near $297 million in the latest quarter evaluated. This upward trajectory suggests growing expenses associated with producing goods or services, potentially reflecting increased sales volume or inflationary pressures on production costs.
- Inventories
- Inventories show a consistent and pronounced growth across the period. Starting from roughly $68 million in early 2019, inventory levels climbed steadily each quarter, surpassing $320 million by late 2022. Although a slight reduction is seen in 2023, inventories remain substantially elevated compared to the earlier years, indicating either accumulation of stock, a strategic buildup to meet anticipated demand, or perhaps slower inventory turnover. This rising inventory trend could impact working capital management and indicates a substantial investment in stock over time.
- Inventory Turnover Ratio
- The inventory turnover ratio reveals a declining pattern from the beginning to the end of the data span. Beginning at a relatively high turnover rate above 8.0 in early 2019, the ratio decreases steadily to values near 3.2-3.9 in 2023. This reduction in turnover ratio corresponds with the increase in inventory levels and suggests that inventories are being converted into sales more slowly over time. A declining inventory turnover could indicate either excess inventory or changes in sales velocity, pointing to potential inefficiencies in inventory management or shifts in demand patterns.
Overall, the data illustrates rising costs and inventories paired with a decreasing efficiency in inventory turnover. This combination may warrant further analysis to understand the underlying causes, such as supply chain factors, sales performance, or operational changes affecting cost control and inventory management.
Receivables Turnover
Align Technology Inc., receivables turnover calculation (quarterly data)
| Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||||
| Net revenues | |||||||||||||||||||||||||
| Accounts receivable, net of allowance for doubtful accounts | |||||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||||
| Receivables turnover1 | |||||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||||
| Receivables Turnover, Competitors2 | |||||||||||||||||||||||||
| Abbott Laboratories | |||||||||||||||||||||||||
| Elevance Health Inc. | |||||||||||||||||||||||||
| Intuitive Surgical Inc. | |||||||||||||||||||||||||
| Medtronic PLC | |||||||||||||||||||||||||
| UnitedHealth Group Inc. | |||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q3 2023 Calculation
Receivables turnover
= (Net revenuesQ3 2023
+ Net revenuesQ2 2023
+ Net revenuesQ1 2023
+ Net revenuesQ4 2022)
÷ Accounts receivable, net of allowance for doubtful accounts
= ( + + + )
÷ =
2 Click competitor name to see calculations.
The quarterly financial data reveals distinct trends in net revenues, accounts receivable, and receivables turnover over the analyzed periods.
- Net Revenues
- The net revenues show variability with an overall upward trajectory from early 2019 through mid-2021, peaking in the December 2020 and December 2021 quarters. Specifically, net revenues increased from approximately $549 million at the start of 2019 to a high of over $1 billion in the quarters of mid and late 2021. However, in 2022, revenues experienced a decline with the lowest in the third quarter at around $890 million, followed by a partial recovery in early 2023 where figures approached approximately $943 million. The data suggests that while there was strong growth up to 2021, revenue faced headwinds in 2022 with some stabilization and slight improvement evident in early 2023.
- Accounts Receivable, Net of Allowance for Doubtful Accounts
- Accounts receivable balances generally increased over the period, from about $479 million in early 2019 steadily rising to a peak near $951 million in the first quarter of 2022. Following this peak, receivables decreased somewhat but remained elevated around $884–$908 million through mid and late 2023. The upward trend in receivables broadly corresponds with the increase in net revenues, although there is some lag and variability that may reflect changes in collection efficiency, credit terms, or customer payment behavior.
- Receivables Turnover Ratio
- The receivables turnover ratio fluctuated over the observed period, indicating changes in the speed of collection of receivables relative to revenue. Early 2019 ratios were in the range of approximately 4.3 to 4.4, followed by a decline to levels near 3.65 to 3.76 in late 2020, indicating slower turnover during that period despite generally increasing revenues. From 2021 onwards, turnover ratios improved back towards the 4.1 to 4.4 range, suggesting enhanced collection efficiency or improved cash management practices. Nonetheless, the turnover ratio did not fully recover to early 2019 peak levels, signaling some challenges in receivables management as revenue volumes changed.
In summary, the data reflects strong growth in net revenues until approximately mid-2021, followed by a decline and partial recovery in subsequent quarters. Accounts receivable grew in line with revenues but showed a peak in early 2022 with a slight reduction afterward. The receivables turnover ratio declined during late 2020, improving thereafter but not fully regaining earlier highs, which could indicate shifts in credit policy or customer payment patterns impacting cash flow dynamics.
Payables Turnover
Align Technology Inc., payables turnover calculation (quarterly data)
| Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||||
| Cost of net revenues | |||||||||||||||||||||||||
| Accounts payable | |||||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||||
| Payables turnover1 | |||||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||||
| Payables Turnover, Competitors2 | |||||||||||||||||||||||||
| Abbott Laboratories | |||||||||||||||||||||||||
| Elevance Health Inc. | |||||||||||||||||||||||||
| Intuitive Surgical Inc. | |||||||||||||||||||||||||
| Medtronic PLC | |||||||||||||||||||||||||
| UnitedHealth Group Inc. | |||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q3 2023 Calculation
Payables turnover
= (Cost of net revenuesQ3 2023
+ Cost of net revenuesQ2 2023
+ Cost of net revenuesQ1 2023
+ Cost of net revenuesQ4 2022)
÷ Accounts payable
= ( + + + )
÷ =
2 Click competitor name to see calculations.
- Cost of Net Revenues
- The cost of net revenues exhibits fluctuations across the quarters, with an overall increasing trend from March 2019 to September 2023. Initial quarters show relatively stable values around 146,875 to 177,829 thousand USD. Starting from early 2020, there is noticeable volatility, including a dip in June 2020 followed by a sharp increase to a peak near the end of 2020 and continuing growth through 2021. The cost maintains an upward trajectory in 2022 and into 2023, culminating in values near 297,138 thousand USD by September 2023. This suggests increasing expenditure related to the costs of goods sold or services delivered over the period.
- Accounts Payable
- Accounts payable balances demonstrate substantial variation with a generally increasing trend interspersed with declines. Values rise from approximately 62,512 thousand USD in March 2019 to a plateau around 142,132 thousand USD by December 2020. Following this peak, there is an initial increase reaching a significant high of 225,079 thousand USD by June 2021. Subsequently, accounts payable fluctuate downward and upward in the following quarters without a clear directional trend, ending at 99,693 thousand USD in September 2023. Such volatility may reflect changing supplier credit terms, payment policies, or operational volume shifts.
- Payables Turnover Ratio
- The payables turnover ratio reveals variability correlating inversely with accounts payable levels and exhibiting marked cyclicality. The metric starts near 8.89 times in March 2019, increasing slightly before dropping to a low of 4.99 times by December 2020. The period from late 2020 through early 2022 shows improvement in turnover, reaching values above 8 times. Another notable surge occurs from mid-2022 onward, with the ratio climbing steadily to a peak at 11.56 times by September 2023. Elevated turnover ratios indicate accelerated payments to suppliers or reductions in accounts payable balances, which could suggest shifts in liquidity management or supplier negotiation strategies.
- Overall Analysis
- The financial data present a complex interaction between cost management, liability levels, and payment efficiency. The increasing cost of net revenues reflects growth or inflationary pressures on expenses. Conversely, the fluctuating and sometimes declining accounts payable balances, combined with rising payables turnover ratios in recent quarters, indicate more rapid settlement of obligations. This pattern may imply improved cash flow management or altered credit terms with vendors. The interplay of these indicators suggests the company has navigated varying operational conditions, adjusting financial practices to maintain supplier relationships while managing cost efficiency.
Working Capital Turnover
Align Technology Inc., working capital turnover calculation (quarterly data)
| Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||||
| Current assets | |||||||||||||||||||||||||
| Less: Current liabilities | |||||||||||||||||||||||||
| Working capital | |||||||||||||||||||||||||
| Net revenues | |||||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||||
| Working capital turnover1 | |||||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||||
| Working Capital Turnover, Competitors2 | |||||||||||||||||||||||||
| Abbott Laboratories | |||||||||||||||||||||||||
| Elevance Health Inc. | |||||||||||||||||||||||||
| Intuitive Surgical Inc. | |||||||||||||||||||||||||
| Medtronic PLC | |||||||||||||||||||||||||
| UnitedHealth Group Inc. | |||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q3 2023 Calculation
Working capital turnover
= (Net revenuesQ3 2023
+ Net revenuesQ2 2023
+ Net revenuesQ1 2023
+ Net revenuesQ4 2022)
÷ Working capital
= ( + + + )
÷ =
2 Click competitor name to see calculations.
The financial data reveals fluctuations in key operating metrics over the observed periods. Working capital shows variability with a general pattern of significant declines during mid-2020 and partial recovery thereafter. Net revenues exhibit cyclical trends with periods of both growth and contraction, especially notable during 2020 and early 2023. The working capital turnover ratio demonstrates considerable volatility, reflecting changing efficiency in the use of working capital relative to net revenues.
- Working Capital
- Initially consistent growth is observed from Q1 2019 to Q1 2020, peaking around $665 million. This is followed by a marked decline to approximately $208 million in Q2 2020, correlating with the onset of the global pandemic. Partial recovery occurs through late 2020 and early 2021, reaching levels above $700 million in Q1 2021. Subsequent quarters show fluctuations, with another notable dip in mid-2023, ending with a moderate increase by Q3 2023 at $579 million.
- Net Revenues
- Revenue trends reveal steady growth from $549 million in Q1 2019, peaking at over $1 billion in Q2 2021. A sharp decline is evident in Q2 2020 down to $352 million, likely reflecting pandemic-related disruptions. After recovery, revenues exhibit relative stability with minor fluctuations, including declines in late 2022 followed by a rebound in 2023. This suggests a resilient revenue base with sensitivity to external economic factors.
- Working Capital Turnover Ratio
- The turnover ratio remains relatively stable around 3.3 to 3.6 through 2019, indicating consistent efficiency. A sharp increase to 10.4 in Q2 2020 coincides with the working capital decline, highlighting a rise in turnover due to reduced working capital rather than increased revenues. Subsequent periods show fluctuating ratios between 4.7 and 11.3, reflecting ongoing variability in operational efficiency and working capital management. The highest ratios occur during periods of low working capital levels, suggesting intensive asset utilization or potential liquidity pressures.
Average Inventory Processing Period
Align Technology Inc., average inventory processing period calculation (quarterly data)
| Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||||
| Inventory turnover | |||||||||||||||||||||||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||||||
| Average inventory processing period1 | |||||||||||||||||||||||||
| Benchmarks (no. days) | |||||||||||||||||||||||||
| Average Inventory Processing Period, Competitors2 | |||||||||||||||||||||||||
| Abbott Laboratories | |||||||||||||||||||||||||
| Intuitive Surgical Inc. | |||||||||||||||||||||||||
| Medtronic PLC | |||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q3 2023 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ =
2 Click competitor name to see calculations.
- Inventory Turnover
-
The inventory turnover ratio demonstrates a clear downward trend over the analyzed periods, declining significantly from 8.12 in March 2019 to levels around 3.5 to 3.9 by 2023. This decline suggests a gradual reduction in the frequency at which inventory is sold and replaced. The steepest decreases occur from early 2019 through 2022, stabilizing somewhat but remaining lower through 2023.
- Average Inventory Processing Period
-
The average inventory processing period, expressed in number of days, reveals an opposite trend to the inventory turnover ratio. There is a consistent increase from 45 days in March 2019 up to over 100 days by 2023. This implies that inventory is being held for longer periods before being sold or processed. The rise is relatively steady and pronounced, especially from 2019 through 2022, with minor fluctuations but remaining elevated into 2023.
- Analysis and Insights
-
The inverse relationship between inventory turnover and average inventory processing period aligns with expectations, as lower turnover ratios correspond to more extended holding periods. The data indicates a noteworthy shift in inventory management or sales velocity over the period analyzed, potentially implying slower sales, overstocking, or supply chain challenges that increase inventory holding times.
This trend could have various implications, including higher holding costs, increased risk of obsolescence, and impacts on liquidity. It may suggest the need for a strategic review of inventory policies or market conditions affecting product demand and supply chain efficiency.
Average Receivable Collection Period
Align Technology Inc., average receivable collection period calculation (quarterly data)
| Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||||
| Receivables turnover | |||||||||||||||||||||||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||||||
| Average receivable collection period1 | |||||||||||||||||||||||||
| Benchmarks (no. days) | |||||||||||||||||||||||||
| Average Receivable Collection Period, Competitors2 | |||||||||||||||||||||||||
| Abbott Laboratories | |||||||||||||||||||||||||
| Elevance Health Inc. | |||||||||||||||||||||||||
| Intuitive Surgical Inc. | |||||||||||||||||||||||||
| Medtronic PLC | |||||||||||||||||||||||||
| UnitedHealth Group Inc. | |||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q3 2023 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
The analysis of the receivables turnover ratio and the average receivable collection period over the quarterly periods reveals several trends and fluctuations in the company’s credit management and cash collection efficiency.
- Receivables Turnover Ratio
-
The receivables turnover ratio, which measures how efficiently the company collects its receivables, exhibited moderate variation throughout the analyzed periods. Starting from a ratio of 4.34 in the first quarter of 2019, it experienced a slight decline towards mid-2019, then improved somewhat in the first half of 2020 reaching 4.56. A notable dip occurred during the third and fourth quarters of 2020, where the ratio decreased to values around 3.65 and 3.76, indicating a slower collection pace during that time. From 2021 onward, the ratio rebounded and stabilized mostly in the range of 4.2 to 4.5, showing a relatively steady performance in receivables management. Toward the most recent quarters in 2023, a minor downward trend appeared as the ratio moved from 4.19 to 4.11 and then rebounded mildly to 4.21.
- Average Receivable Collection Period
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The average collection period, expressed in days, showed an inverse relationship to the receivables turnover ratio as expected. Initially, the collection period hovered in the range of approximately 83 to 87 days through 2019. During 2020, this metric increased significantly, peaking at 100 days in the third quarter, reflecting slower collection processes corresponding with the drop in turnover ratio. In 2021, the collection period improved, reducing to the low 80s range, indicating enhanced effectiveness in collecting receivables. After some fluctuations in 2022, with days ranging primarily between 81 and 86, the period slightly increased again in 2023, moving from 87 to 89 days in the middle of the year before a slight improvement was observed toward the third quarter.
Overall, the data suggests that the company experienced a period of increased delay in receivables collection during 2020, possibly due to external factors impacting payment cycles, followed by a recovery phase in 2021 and 2022. In 2023, early signs indicate a slight relaxation in collection efficiency, though remaining relatively stable. Continuous monitoring would be advisable to determine if the recent trends represent the beginning of a new phase or temporary fluctuations.
Operating Cycle
Align Technology Inc., operating cycle calculation (quarterly data)
No. days
| Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||||
| Average inventory processing period | |||||||||||||||||||||||||
| Average receivable collection period | |||||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||||
| Operating cycle1 | |||||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||||
| Operating Cycle, Competitors2 | |||||||||||||||||||||||||
| Abbott Laboratories | |||||||||||||||||||||||||
| Intuitive Surgical Inc. | |||||||||||||||||||||||||
| Medtronic PLC | |||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q3 2023 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= + =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals distinct trends in the average inventory processing period, the average receivable collection period, and the overall operating cycle over the given timeframe.
- Average Inventory Processing Period
- This metric shows a consistent upward trend from March 2019 to December 2022, increasing from 45 days to a peak of 112 days. This indicates a lengthening of the time inventory remains before processing, which may suggest challenges in inventory turnover or changes in inventory management strategies. From March 2023 to September 2023, a modest decline is observed, reducing the period to 94 days by the latest quarter. Despite this recent decrease, the inventory processing period remains notably higher than the initial periods, indicating a sustained extension compared to earlier years.
- Average Receivable Collection Period
- This period remained relatively stable with mild fluctuations throughout the analyzed quarters. Initially, it decreased slightly from 84 days in March 2019 to a low of 80 days in June 2020. Subsequently, there was an increase to around 100 days in September 2020, then a gradual decrease to values in the low to mid-80s through 2021 and 2022. The most recent data from 2023 shows a moderate rise to the high 80s around September, indicating a slight lengthening in the time taken to collect receivables compared to previous stable periods. Overall, while there have been some fluctuations, this period has not exhibited extreme volatility.
- Operating Cycle
- The operating cycle, combining the inventory processing and receivable collection periods, shows a general upward trajectory over the period analyzed. Starting at 129 days in March 2019, it progressively extended to a maximum of 196 days by December 2022, indicating a longer duration between resource acquisition and cash collection. Thereafter, the cycle slightly shortened to 181 days by September 2023. The rising trend up to late 2022 suggests increasing capital tied up in operational processes, which could impact liquidity and working capital efficiency. The subsequent shortening indicates some improvement or adjustments made in operational management.
Average Payables Payment Period
Align Technology Inc., average payables payment period calculation (quarterly data)
| Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||||
| Payables turnover | |||||||||||||||||||||||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||||||
| Average payables payment period1 | |||||||||||||||||||||||||
| Benchmarks (no. days) | |||||||||||||||||||||||||
| Average Payables Payment Period, Competitors2 | |||||||||||||||||||||||||
| Abbott Laboratories | |||||||||||||||||||||||||
| Elevance Health Inc. | |||||||||||||||||||||||||
| Intuitive Surgical Inc. | |||||||||||||||||||||||||
| Medtronic PLC | |||||||||||||||||||||||||
| UnitedHealth Group Inc. | |||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q3 2023 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
- Payables Turnover Ratio
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The payables turnover ratio exhibited considerable fluctuations over the observed periods. Initially, the ratio increased from 8.89 in March 2019 to a peak of 10.05 in September 2019, indicating an acceleration in the rate at which the company settled its payables.
Following this peak, a notable decline occurred by December 2019, falling to 7.6, after which the turnover ratio decreased more sharply during the first half of 2020, reaching its low of 4.99 in December 2020. This lower ratio suggests a slower rate of payable settlements during this interval, which might correspond with operational or liquidity challenges.
From 2021 onwards, a general upward trend is discernible, with the ratio rising steadily from 6.19 in March 2021 to 11.56 by September 2023, surpassing earlier peak levels. This upward movement indicates a strengthened payables management, with the company expediting its payments towards suppliers in recent quarters.
- Average Payables Payment Period
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The average payables payment period inversely mirrors the trends of the payables turnover, as expected. The period initially decreased from 41 days in March 2019 to 36 days in September 2019, consistent with an improved turnover ratio.
Subsequently, a significant lengthening of the payment period is observed, reaching a peak of 73 days by December 2020. This extension suggests delayed payments or extended credit terms from suppliers during that period.
In 2021, the payment period fluctuated but generally began to shorten from 59 days in December 2021 down to 32 days by September 2023. This reduction aligns with the rising payables turnover ratio and indicates a sustained improvement in the company’s payment discipline and cash management strategies.
- Summary of Insights
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The data reveals two distinct phases in the company's management of payables over the observed period. From 2019 through 2020, the company exhibited a trend towards slower payable settlements and longer payment periods, possibly reflecting financial or operational pressures.
However, starting in 2021 and continuing through to the latest quarter, there is a marked improvement in payables turnover and a reduction in payment days. This suggests enhanced liquidity management and operational efficiency in dealing with suppliers.
Overall, the most recent data points to a company that has optimized its accounts payable process, paying suppliers more quickly than in previous years, which could improve supplier relations and possibly take advantage of early payment discounts.
Cash Conversion Cycle
Align Technology Inc., cash conversion cycle calculation (quarterly data)
No. days
| Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||||
| Average inventory processing period | |||||||||||||||||||||||||
| Average receivable collection period | |||||||||||||||||||||||||
| Average payables payment period | |||||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||||
| Cash conversion cycle1 | |||||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||||
| Cash Conversion Cycle, Competitors2 | |||||||||||||||||||||||||
| Abbott Laboratories | |||||||||||||||||||||||||
| Intuitive Surgical Inc. | |||||||||||||||||||||||||
| Medtronic PLC | |||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2023-09-30), 10-Q (reporting date: 2023-06-30), 10-Q (reporting date: 2023-03-31), 10-K (reporting date: 2022-12-31), 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31).
1 Q3 2023 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= + – =
2 Click competitor name to see calculations.
- Average Inventory Processing Period
- The average inventory processing period demonstrates a clear increasing trend throughout the examined timeline. Starting at 45 days in March 2019, it rises steadily with minor fluctuations, peaking at 112 days in December 2022. Although a slight decrease is observed towards the end of the period, the number remains elevated at 94 days by September 2023 compared to the initial value. This suggests a progressively slower turnover of inventory over the years.
- Average Receivable Collection Period
- The average receivable collection period exhibits relative stability with moderate variations. Beginning at 84 days in March 2019, the period fluctuates mildly within a range roughly between 80 and 100 days. Notable is an uptick to 100 days in September 2020, followed by a general decrease and stabilization around the mid-to-high 80s by late 2021. The values continue to hover within the mid to high 80-day range through 2023, implying consistent collection efficiency with no significant long-term improvement or deterioration.
- Average Payables Payment Period
- The average payables payment period displays notable volatility over the years. Initially around 41 days in early 2019, it shows a sharp increase between mid-2019 and late 2020, reaching 73 days by December 2020. Subsequently, the period drops fluctuatingly, reaching a low of 32 days by September 2023. This pattern suggests varying payment strategies or changes in credit terms with suppliers, with a trend towards faster payment in the most recent quarters.
- Cash Conversion Cycle
- The cash conversion cycle (CCC) shows a general upward trend from 88 days in March 2019 to a peak of 154 days in December 2022. This increase indicates that the company requires more time to convert its investments in inventory and other resources into cash flows from sales. The CCC remains elevated, with a slight decline but sustained length (149 days) at September 2023. The spikes and sustained high periods in CCC are primarily influenced by the substantial increases in inventory processing time and variations in the payables payment period.
- Overall Insights
- The analyzed financial periods reveal a pattern of increasing liquidity strain, highlighted by a rising inventory processing period and an extended cash conversion cycle. While the receivable collection period remains relatively stable, the payables payment period shows a shift from prolonged payment durations to faster payments in recent quarters, potentially indicating changes in supplier credit terms or cash management policies. These factors collectively contribute to a longer cash conversion cycle, which may have implications for working capital management and operational efficiency.