Amgen Inc. (NASDAQ:AMGN)

Inventory Turnover

The inventory turnover ratio displays moderate fluctuations over the observed periods, generally declining from 1.53 in early 2021 to a low of 0.89 by late 2023. This indicates a slower turnover of inventory during this time. However, starting in early 2024, the ratio demonstrates a strong upward trend, rising steadily to 1.92 by late 2025, reflecting improved efficiency in inventory management and faster inventory movement towards the end of the timeline.

Receivables Turnover

There is a gradual decrease in receivables turnover from 5.41 in early 2021 to around 3.7 by late 2023, implying a lengthening in the time taken to collect receivables. This trend suggests that the company may have experienced slower cash inflows from its customers. From early 2024 onwards, the turnover ratio stabilizes somewhat, fluctuating modestly between 3.85 and 4.72, indicating some recovery but still below the initial levels.

Payables Turnover

The payables turnover ratio exhibits variability with peaks and troughs throughout the periods. Starting at 4.4 in early 2021, it rises to a peak of 6.74 in late 2024, then drops notably to around 4.12-4.29 by late 2025. This pattern could reflect changes in the company’s payment policies or supplier negotiations, where there was a period of faster payment followed by a return to slower payment cycles.

Working Capital Turnover

Working capital turnover shows significant volatility, with values oscillating widely. Noticeably low values near 0.81-0.84 around early 2023 suggest a period of inefficiency in generating sales from net working capital. However, starting in 2024, there is a pronounced upward trend reaching a peak of 8.36 in mid-2025, which indicates a marked improvement in utilizing working capital to drive revenue during the latter part of the period.

Average Inventory Processing Period

The average inventory processing period generally increased from 239 days in early 2021 to a high of 411 days by late 2023, signifying slower inventory turnover and possible accumulation of stock. Following this peak, the period decreased significantly to 190 days by late 2025, aligning with the improvement noted in the inventory turnover ratio and indicating enhanced inventory management efficiency.

Average Receivable Collection Period

This metric gradually lengthened from 67 days in early 2021 to a peak of 99 days in late 2023, indicating slower collection of receivables. After this peak, the collection period shows some improvement, falling to the range of 86-90 days by late 2025. Despite the improvement, receivables are collected more slowly compared to the beginning of the period.

Operating Cycle

The operating cycle lengthens from around 306 days at the start of 2021 to a peak of 510 days near late 2023, reflecting an extended time to convert inventory and receivables into cash. This extension may suggest operational inefficiencies or delays in processing during that period. From 2024 onward, the cycle shortens considerably to approximately 280 days by late 2025, marking a positive trend towards more efficient operations.

Average Payables Payment Period

The average payables payment period fluctuates moderately but overall shows a slight lengthening, particularly towards the latter part of the timeline where it increases from about 60 days in early 2024 to peaks near 89 days in mid-2025 before declining slightly. This suggests the company may have extended payment terms with suppliers during several quarters, possibly as a working capital management strategy.

Cash Conversion Cycle

The cash conversion cycle increases notably from 223 days in early 2021 to a peak of 441 days in late 2023, indicating a significant delay in the cycle of converting resources into cash. Afterwards, there is a decreasing trend to 195 days by late 2025, which closely corresponds with improvements in inventory turnover, receivables collection, and the operating cycle. This decrease signals a strengthening in liquidity management and operational efficiency in the most recent periods.

Cost of Sales

The cost of sales exhibited fluctuations over the observed periods. From March 2021 to December 2021, there was a general upward trend, with values increasing from 1,490 million USD to 1,718 million USD. Subsequently, the cost decreased somewhat in early 2022, dropping to 1,510 million USD in June 2022, before rising again towards the end of 2022. Notably, the cost of sales spiked sharply in December 2023, reaching 3,112 million USD, nearly doubling the previous quarter's figure. Following this peak, the cost slightly decreased but remained elevated through 2024 and 2025, hovering around the 3,000 million USD mark.

Inventories

Inventories showed an overall increasing trend from March 2021 through September 2023. Starting at 4,017 million USD in early 2021, inventory levels gradually rose to 5,026 million USD by September 2023. Thereafter, a significant jump was observed in December 2023 with inventories reaching 9,518 million USD, nearly doubling the prior quarter. After this surge, inventories steadily declined throughout 2024 and into 2025, decreasing from 8,724 million USD in March 2024 to 6,346 million USD by March 2025.

Inventory Turnover

The inventory turnover ratio remained relatively stable and slightly above 1.5 during the first three years, fluctuating between 1.3 and 1.58. In December 2023, this ratio dropped sharply to 0.89, coinciding with the spike in inventory levels and cost of sales. However, the ratio rebounded quickly in 2024, increasing from 1.14 in March to 1.75 in September and continuing to improve, reaching 1.92 by March 2025. This improvement suggests enhanced efficiency in inventory management in the later periods, following the earlier anomaly.

Overall Trends and Insights

The data indicates stable cost of sales and inventory levels through 2021 to mid-2023, followed by significant disruptions near the end of 2023, marked by a sharp increase in both cost of sales and inventories. This was accompanied by a marked decline in inventory turnover, implying slower inventory movement during this period. Subsequently, through 2024 and into 2025, a corrective trend appears, with inventories and cost of sales moderating from their peaks and inventory turnover improving markedly. This pattern may suggest an unusual event or operational challenge around late 2023, followed by an adjustment phase and return toward more efficient inventory management practices.

The financial data reveals several noteworthy trends in product sales, trade receivables, and receivables turnover across the observed periods.

Product Sales

Product sales exhibit considerable variability but demonstrate an overall upward trend from March 2021 to September 2025. Starting at approximately 5,592 million US dollars in March 2021, sales increase intermittently, with some quarters showing slight declines or stagnation. Notable growth phases occur towards the end of 2023 and into 2024 and 2025, where sales notably exceed 8,000 million US dollars. This indicates a strong recovery or expansion in market operations over time, despite periodic fluctuations.

Trade Receivables, Net

The net trade receivables also show a generally increasing pattern throughout the period. Beginning at around 4,423 million US dollars, receivables tend to rise consistently, reaching peaks above 8,000 million US dollars in mid-2025. This increase suggests a growing volume of credit sales or extended payment terms over time. The growth in trade receivables aligns with the expansion in product sales, reflecting the company's increased sales on credit.

Receivables Turnover Ratio

The receivables turnover ratio shows a declining trend from an initial value of approximately 5.41 in early 2021 to lower values around 3.7 to 4.7 in later periods. This ratio declines steadily through 2021 and 2022, reaching its lowest point near 3.7 in late 2022. It recovers slightly afterward, fluctuating between 3.85 and 4.72 across 2024 and 2025, yet it remains below the early period levels. The decreasing turnover ratio indicates that receivables are being collected more slowly, which may imply either more lenient credit terms, extended payment periods to customers, or challenges in collections.

Overall, the data suggests expanding sales and corresponding growth in trade receivables, accompanied by a gradual reduction in the efficiency of receivables collection as reflected by the turnover ratio. While revenue growth is evident and robust towards the later periods, the company may need to monitor and potentially improve its credit and collection policies to enhance cash flow management.

Cost of Sales

The cost of sales exhibited fluctuations over the observed periods. Initially, there was an increase from 1490 million USD in the first quarter of 2021 to a peak of 1747 million USD by the end of 2021. The following year showed some variability, with costs generally rising from 1720 million USD in early 2023 to a significant spike reaching 3310 million USD in the final quarter of 2024. Subsequently, costs decreased sharply to 3112 million USD in the first quarter of 2025 and demonstrated a gradual decline toward 3082 million USD by the third quarter of 2025.

Accounts Payable

The accounts payable figures fluctuated with an overall upward trend, especially pronounced in the later periods. Starting at 1396 million USD in early 2021, the payable amounts declined to a trough of 1171 million USD by the third quarter of 2021, followed by a notable increase to 1572 million USD by the end of 2021. In the subsequent years, accounts payable rose substantially, peaking at 3010 million USD mid-2025. These changes suggest growing short-term liabilities, particularly in the last observed periods.

Payables Turnover Ratio

Throughout the quarters, the payables turnover ratio displayed volatility without a clear linear trend. The ratio began at 4.4 in the first quarter of 2021, reaching higher values around 5.3 to 6.74 in some quarters, notably peaking at 6.74 in the fourth quarter of 2024. The ratio then declined significantly to around 4.12 and 4.29 in mid to late 2025. The fluctuations indicate variations in the company's efficiency in paying its suppliers, with periods of improved turnover followed by slower payment cycles.

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

Working Capital

Working capital figures exhibit considerable fluctuations across the quarters. For instance, initial values around 8,430 million US dollars decrease sharply to 4,514 million in the following quarter, followed by an increase to 9,538 million. Subsequent quarters continue to display volatility with values ranging between approximately 3,900 million and 31,500 million. A significant spike is visible in the first quarter of 2023 reaching above 30,000 million, after which it declines again and maintains a moderate level toward the end of the timeline.

Product Sales

Product sales have generally demonstrated a steady upward trend from the first quarter of 2021 through to the first quarter of 2025. Starting at approximately 5,592 million US dollars, sales incrementally increase with some periodic variability but maintain positive growth momentum, reaching over 9,100 million by the last quarter observed. Periods of notable acceleration can be identified in the quarters of 2023 and onward, where sales growth becomes more pronounced.

Working Capital Turnover

The working capital turnover ratio reflects efficiency in utilizing working capital to generate sales and shows considerable variation. Initial turnover ratios start around 2.84, improve significantly to a peak of 5.35 in June 2021, and then decline to a low near 0.81 in late 2023. After this trough, a recovery trend emerges, with ratios again reaching high values upwards of 8.36 by June 2025, suggesting improved operational efficiency or changes in the balance of working capital relative to sales volumes.

Overall, the data indicates substantial variability in working capital management, while product sales have exhibited consistent growth. The working capital turnover ratio’s fluctuations imply shifting operational dynamics that may warrant further investigation to understand underlying causes, such as changes in inventory management, receivables, or payable policies in relation to sales performance.

Inventory Turnover

The inventory turnover ratio demonstrated relative stability during 2021, maintaining a value around 1.5 to 1.6. However, a gradual decline was observed throughout 2022, decreasing from 1.48 in Q1 to 1.30 by the end of the year. Early 2023 saw a slight recovery with turnover rising to approximately 1.41 by Q3, but a significant drop occurred in Q4 2023 to 0.89. Following this dip, the ratio improved markedly through 2024 and into 2025, peaking at 1.92 in Q3 2025, which surpasses levels seen in prior periods.

Average Inventory Processing Period

The average inventory processing period inversely mirrors the inventory turnover trend, starting at 239 days in early 2021 and remaining fairly constant through the year before elongating progressively during 2022, reaching a peak of 281 days by Q4. A sharp increase is evident in Q4 2023, where the processing period jumps to 411 days, indicating a substantial slowdown in inventory movement. Subsequently, there is a consistent decline throughout 2024 and into 2025, reducing the days in inventory back below initial years’ levels, reaching 190 days by Q3 2025.

Summary of Trends and Insights

The data presents initial stability in inventory management performance for the company, followed by a deterioration starting in 2022, with inventory turning over less frequently and remaining in stock longer. A pronounced disruption occurs at the end of 2023, notably reflected in both metrics, suggesting potential operational or demand-related issues during this period. Recovery is evident from 2024 onwards, with inventory turnover improving and processing periods shortening, indicative of enhanced operational efficiency or improved sales demand. The progress extends into 2025, culminating in turnover higher than the earliest periods and significantly reduced inventory holding time, signifying strengthening inventory management practices over the observed time horizon.

The analysis of the company's receivables turnover ratio and average receivable collection period over the observed quarterly periods reveals notable trends in the management of accounts receivable and cash flow efficiency.

Receivables Turnover Ratio

The receivables turnover ratio exhibits a general declining trend from March 2021 through December 2023, indicating a gradual slowdown in the frequency with which the company collects its receivables. Starting at 5.41 in the first quarter of 2021, the ratio decreases steadily to a low of 3.7 by the fourth quarter of 2023. This decline suggests increasing challenges in converting credit sales into cash promptly during this period.

Following this trough, the turnover ratio shows some recovery and stabilization from 2024 onwards, fluctuating between 4.03 and 4.72 but not returning to the higher levels seen in earlier years. This partial improvement may reflect efforts to enhance collection processes or changes in credit policies, although the turnover ratio remains below the initial levels observed in 2021.

Average Receivable Collection Period

The average receivable collection period, which represents the number of days required to collect receivables, mirrors the inverse relationship with the receivables turnover ratio, displaying an increasing trend over the same timeframe. Beginning at 67 days in March 2021, the collection period lengthens steadily, reaching a peak of 99 days by December 2023.

This growth in collection days indicates that it is taking the company progressively longer to collect outstanding receivables, which may negatively impact liquidity. However, from 2024 onwards, there is a slight reduction and stabilization in the collection period, fluctuating around the mid-80s to low 90s range, which corresponds with the partial recovery observed in the turnover ratio.

Overall, the data points to a period of declining efficiency in receivables management from 2021 through 2023, followed by some stabilization and moderate improvement in 2024 and beyond. Attention to accounts receivable collections appears to have become more critical during these years, likely necessitating strategic focus to optimize cash conversion cycles and working capital management.

The data reveals notable fluctuations and trends in key financial efficiency metrics over the reported quarterly periods. These metrics include the average inventory processing period, the average receivable collection period, and the overall operating cycle, each expressed in number of days.

Average Inventory Processing Period

This period exhibits a general increasing trend from early 2021 through the end of 2022, rising from 239 days in March 2021 to a peak of 411 days in December 2023. Following this peak, there is a pronounced and sustained decline through 2024 and into early 2025, reaching 190 days by September 2025. This pattern suggests initial lengthening in inventory holding times, potentially indicating slower inventory turnover or accumulation, followed by improved inventory management or sales acceleration in the latter periods.

Average Receivable Collection Period

The collection period shows a gradual increase from 67 days in March 2021 up to a maximum of 99 days in December 2023. After this point, it decreases somewhat but remains elevated relative to early 2021, fluctuating around the mid-to-high 80s and low 90s days through 2024 and 2025. This indicates that receivables are generally being collected over longer periods compared to the start of the examined timeframe, potentially reflecting changes in credit terms, customer payment behavior, or collection efficiency.

Operating Cycle

The operating cycle, combining inventory processing and receivable collection periods, increases from approximately 306 days in March 2021 to a significant peak of 510 days in December 2023. Subsequently, it declines to around 280 days by September 2025. This trend mirrors the patterns observed in inventory and receivables, indicating an expanded cash conversion period culminating at the end of 2023, followed by improvements that shorten the cycle into 2025.

Overall, the data shows a period of deteriorating efficiency in working capital management through late 2023, characterized by increasing inventory and receivables duration that extended the operating cycle markedly. The subsequent reversal of these trends points to a focused effort on optimizing inventory levels and accelerating receivables collection, contributing to enhanced operational efficiency going forward.

Payables Turnover

The payables turnover ratio exhibits fluctuating trends across the analyzed periods. Starting at 4.4 in the first quarter of 2021, the ratio increases steadily, reaching a peak of 5.41 by Q3 2021, then declines to 4.72 by year-end. In 2022, the ratio again rises, peaking at 5.3 in Q3, with a notable dip to 4.08 at Q4. The ratio climbs sharply in early 2023, hitting 5.67 by mid-year, stabilizes around 5.3 to 5.32 in subsequent quarters, and then surges to the highest observed value of 6.74 by the end of 2024. The last quarters show a decline, dropping to 4.12 and 4.29 by late 2025. These variations suggest changes in the efficiency of payment processing or supplier terms over time.

Average Payables Payment Period

The average payment period inversely mirrors much of the movements seen in payables turnover. It begins at 83 days and decreases consistently to 67 days by Q3 2021, then rises to 90 days by Q4 2021, indicating slower payments at year-end. In 2022, the payment period shortens again, reaching a low of 60 days early in 2024, reflecting quicker settlements. However, the period fluctuates thereafter, with some quarters showing lengthening intervals, such as 89 days in Q3 2025. The mean payment duration over the periods reflects varying payment pacing, potentially influenced by operational strategies or shifts in liquidity management.

Overall Insights

The data reveals an inverse relationship between payables turnover and average payment period, as expected. Periods of higher turnover correspond with shorter payment periods, and vice versa. Fluctuations suggest dynamic management of payables, possibly responding to cash flow considerations or supplier negotiations. The peak turnover ratio towards the end of 2024 coupled with the shortest payment periods hints at an aggressive payment approach in that timeframe. The subsequent decline in turnover and increase in payment days could indicate adjustments to optimize working capital or adapt to changing market conditions.

The analysis of the quarterly financial timing metrics over the indicated period reveals notable fluctuations and trends in the management of working capital components.

Average Inventory Processing Period

The inventory processing period exhibited an overall declining trend with intermittent rises. Initially stable around 239 days, it increased gradually reaching a notable peak of 411 days in the December 2023 quarter. Subsequently, there was a sharp reduction lowering the period to 190 days by September 2025, indicating improvements in inventory turnover efficiency in the later stages of the timeline.

Average Receivable Collection Period

Receivable collection periods showed a generally rising trend from 67 days in early 2021 to higher levels near the 90-day range by 2025. The period peaked at 99 days in December 2023, which corresponds with the peak in inventory days, suggesting a period of slower cash inflow during that time. Although there was some improvement in mid-2024, the collection period remained elevated relative to the starting point.

Average Payables Payment Period

Payment periods to suppliers displayed significant volatility without a clear sustained direction. There was a decline in the first half of the timeline down to approximately 54 days in June 2025, followed by an increase to 89 days in September 2025. This suggests variations in the company's payment policies or cash management approach, potentially aimed at balancing liquidity needs versus supplier relationships.

Cash Conversion Cycle (CCC)

The cash conversion cycle, reflecting the net time between outlay and recovery of cash, broadly mirrored the inventory and receivable patterns with a substantial spike reaching 441 days in December 2023. This peak indicates a significant extension in working capital tied up. Post this peak, the CCC showed a downward trajectory, improving to 195 days by September 2025, signaling enhanced efficiency in converting investments in inventory and receivables back to cash.

Overall, the data suggest a period of strained working capital management around the end of 2023, characterized by increased inventory holding and slower receivables collection, which adversely affected the cash conversion cycle. Subsequent quarters show marked improvements in operational efficiency, especially in inventory and cash cycle management, although receivables and payables exhibited mixed results. The company appears to have adjusted its working capital strategy to reduce the cycle time and improve liquidity towards the latter part of the observed period.