Amgen Inc. (NASDAQ:AMGN)

Inventory turnover

The inventory turnover ratio exhibits relative stability from early 2020 through 2021, hovering around 1.3 to 1.6. Starting in 2023, it initially declines, reaching a low of 0.89 in Q1 2023. This significant dip is followed by a steady recovery extending through 2025, where it attains values nearing 1.9 by mid-2025. This suggests improved efficiency in inventory management over time after a disruption period.

Receivables turnover

Receivables turnover shows a gradual declining trend from 2020 through early 2023, moving from approximately 5.4 down to around 4.17. The lowest point occurs in early 2023, after which modest fluctuations are observed without sustained improvement. By mid-2025, the ratio falls further to around 3.85, indicating a lengthening in the time taken to collect receivables, which may signal collection challenges or extended credit terms.

Payables turnover

The payables turnover ratio fluctuates over the period. After an initial increase from 4.3 in early 2020 to peaks above 6.0 in several quarters of 2024 and 2025, the ratio exhibits volatility with a notable dip in mid-2025 to 4.12. The elevated peaks suggest periods where payables were settled more rapidly, while the dips indicate slower payment cycles. Overall, the trend appears variable without a clear directional pattern.

Working capital turnover

Working capital turnover shows marked volatility over the reviewed quarters. It peaks sharply in late 2020 at 5.35, declines steeply near mid-2023 to values below 1.0, and then recovers prominently in 2024 and 2025, reaching a high of 8.36 in mid-2025. This volatility implies significant fluctuations in operational efficiency related to working capital usage, with recent quarters indicating improved capacity to generate sales from working capital.

Average inventory processing period

The average inventory processing period evidences a gradual increase from around 231 days in early 2020 to a peak of 281 days by late 2022, indicating a lengthening of inventory holding time. Subsequently, a pronounced spike occurs in early 2023, up to 411 days, before a declining trend resumes through 2025, where it falls to approximately 194 days. The spike suggests a temporary buildup or slow movement of inventory that was later addressed.

Average receivable collection period

This period extends steadily from approximately 68 days in early 2020 to about 88-90 days through 2022 and 2023. A sharp rise to 99 days is observed in early 2023, followed by a moderate decline and consistent fluctuations thereafter. The values exceeding 90 days in some quarters of 2024 and 2025 highlight challenges in collecting accounts receivable promptly.

Operating cycle

The operating cycle length shows an upward trajectory from just under 300 days in early 2020 to a peak of 510 days in early 2023, reflecting an overall lengthening of the combined inventory and receivables processes. Following this peak, the cycle shortens steadily, reaching below 300 days by late 2024 and early 2025, indicative of efficiency improvements in managing operating assets and liabilities.

Average payables payment period

The average payables payment period experiences variation, declining from about 84 days in early 2020 to a low near 60 days in certain quarters of 2023 and 2024, suggesting faster payments to suppliers during these times. However, spikes to as high as 90 days occur sporadically, notably in early 2022 and mid-2025, indicating intermittent lengthening of payables.

Cash conversion cycle

The cash conversion cycle extends significantly from roughly 215 days in early 2020 to a high of 441 days in early 2023, signaling an elongated period between cash outflows and inflows. This peak is followed by a pronounced reduction to about 200 days by mid-2025, reflecting a reclaiming of cash flow efficiency and better synchronization of inventory, receivables, and payables management.

The analysis of the quarterly financial data reveals several observable trends in costs and inventory management over the reported periods.

Cost of Sales

The cost of sales exhibits a fluctuating pattern over the timeline. Initially, the values remain relatively stable around the 1500 to 1700 million US$ range from early 2020 through 2022, with some modest increases and decreases quarter to quarter. However, a significant increase is noted in the quarter ending December 2023, where the cost spikes sharply to 3112 million US$, more than doubling the previous levels. Following this surge, the costs remain elevated but show a gradual declining trend through mid-2025, dropping from 3200 million US$ in June 2024 to approximately 3011 million US$ by June 2025.

Inventories

Inventories demonstrate a consistent upward trend from early 2020 through the end of 2023. Starting at 3682 million US$ in March 2020, inventories steadily increase each quarter, reaching a peak of 9518 million US$ in December 2023. After this peak, inventory levels show a marked decline, decreasing to 6583 million US$ by June 2025. The decline in inventories after the peak suggests either improved inventory turnover, reduction in stock, or a shift in inventory management strategy.

Inventory Turnover Ratio

Inventory turnover ratios are only available from March 2020 onward. The ratios experience a moderate decline from 1.58 in March 2020 to about 1.3 in December 2022, indicating slower inventory movement during this interval. There is a slight recovery observed in the first half of 2023, with ratios climbing back to around 1.41 by December 2023. A notable drop occurs in March 2024, falling to 0.89, reflecting significantly slower turnover at this point. Subsequently, the ratio improves sharply, rising to 1.88 by June 2025. This recovery suggests enhanced efficiency in converting inventory to sales in the later periods, possibly connected to the drop in inventory levels after their peak.

In summary, the company experienced stable cost of sales and rising inventory levels for several years, culminating in a sharp increase in costs and inventory levels by late 2023. Post this peak, cost of sales remains high but trends downward, while inventories decline more significantly. The inventory turnover ratio corroborates these observations, showing slowing turnover preceding the peak, followed by an acceleration in turnover indicating improved inventory efficiency in the most recent periods.

Product Sales

Product sales exhibit a fluctuating but generally upward trend over the given periods. Initial sales start around 5,894 million USD at the end of Q1 2020, followed by modest growth and some variability toward the end of 2020. There is a noticeable dip in early 2021, yet the sales recover mid-year and fluctuate around higher values toward the end of 2021. Throughout 2022 and 2023, sales show an overall increasing trajectory with occasional declines, reaching a peak of 7,833 million USD by Q4 2023. The upward momentum continues into 2024 and early 2025, with values approaching and sometimes surpassing 8,700 million USD, indicating strengthening revenue generation despite short-term declines.

Trade Receivables, Net

Trade receivables, net, start at 5,009 million USD at the end of Q1 2020 and generally increase over the observed intervals. There is a slight decline mid-2020 followed by fluctuating growth through late 2021. From early 2022 onwards, receivables exhibit significant increases, peaking at 8,701 million USD by Q2 2025. This indicates a growing amount of credit extended to customers or longer collection periods. The trend suggests increased sales on credit, which aligns with the growth observed in product sales but also poses a potential risk in terms of cash flow and credit risk management.

Receivables Turnover

Receivables turnover ratios, available starting in Q3 2020, show a declining pattern over time. The ratio begins at 5.36 and remains relatively stable but slightly decreases through 2021, dropping from 5.41 to 4.17 from mid-2020 to late 2021. This decline continues into 2023 and 2024, reaching a low of 3.7 in Q1 2024 before partially recovering to around 4.26 and fluctuating near this level thereafter. The reduction in turnover ratio suggests that receivables are being collected more slowly over time, which may reflect more extended credit terms or collection challenges. The partial recovery towards the end suggests some improvement in receivables management, but the overall trend points to reduced efficiency in converting receivables into cash.

Overall Analysis

The data highlights a positive revenue growth trajectory, with product sales steadily increasing, especially notable in late 2023 and early 2024. However, this growth is accompanied by a rise in trade receivables and a decline in receivables turnover, indicating a lengthening of the cash conversion cycle. While growing receivables can be a consequence of increased sales, the declining turnover ratio may signal emerging risks in credit management that could impact liquidity. The company may need to focus on optimizing receivables collection processes to support continued healthy cash flow alongside revenue growth.

Cost of Sales Trend

The cost of sales exhibits fluctuation with a general upward trend over the observed period. Initially, values rise moderately from 1,513 million USD in March 2020 to around 1,718 million USD in December 2021. Following this, a notable surge occurs in December 2023 with cost reaching 3,112 million USD, which appears to be an outlier compared to prior quarters. Post this spike, cost levels stabilize somewhat, fluctuating between approximately 2,968 million USD and 3,310 million USD through mid-2025.

Accounts Payable Movement

Accounts payable figures demonstrate variability with a tendency toward increase over time. Starting at 1,338 million USD in March 2020, payables see multiple rises and falls before exhibiting substantial growth toward the later periods. Peaks are evident in volumes such as 3,010 million USD by June 2025. This represents a sharp increase compared to earlier years, suggesting growth in outstanding obligations or changes in supply chain financing practices.

Payables Turnover Ratio Analysis

The payables turnover ratio, although data is partially missing for the early periods, shows an increasing trend across the available quarters. From approximately 4.33 times in late 2020, the ratio climbs to a peak of 6.74 times in mid-2025, indicating faster payment to suppliers or potentially improved cash management. Despite some fluctuations, the overall upward trajectory implies enhanced efficiency in managing payables relative to the cost of sales.

Interrelationships and Insights

The sharp increase in cost of sales from late 2023 coincides with a corresponding rise in accounts payable, reinforcing the connection between the volume of purchases and liabilities. The simultaneous increase in payables turnover ratio suggests that despite rising payable balances, the company may be accelerating payment cycles or benefiting from improved operational efficiencies. However, the anomalous jump in costs around December 2023 warrants further investigation to understand underlying causes such as one-time charges, acquisitions, or pricing changes.

Summary

Overall, the data reflects a growth-oriented operational profile with rising costs and liabilities over time, accompanied by improving turnover ratios. These trends suggest expansion and potentially stronger supplier relationships or optimized working capital management. Monitoring the sustainability of these patterns, especially the cost surges and payable growth, will be crucial for assessing future financial health and liquidity.

Analysis of the quarterly financial data indicates several noteworthy trends in working capital, product sales, and working capital turnover ratios over the reported periods.

Working Capital

Working capital exhibited significant fluctuations throughout the reporting periods. Initially, there was a marked increase from 6,986 million US$ in March 2020 to a peak around 12,708 million US$ by September 2020. Subsequently, working capital declined steadily, reaching lower levels around 4,514 million US$ by June 2021. Thereafter, the figures oscillated, with a notable spike reaching 31,523 million US$ in September 2023, which appears to be an outlier relative to surrounding quarters. Following this spike, working capital decreased again, stabilizing in the range of approximately 3,921 to 6,258 million US$ in the latest quarters through June 2025. This pattern suggests periods of aggressive asset management or changes in current liabilities, with occasional substantial shifts in liquidity positions.

Product Sales

Product sales demonstrated moderate variability over the observed timeframe, ranging from about 5,592 million US$ to peaks exceeding 8,700 million US$. There was a general upward trend visible from 5,894 million US$ in March 2020 to peaks around 8,716 million US$ by March 2025. This upward momentum was characterized by some quarter-to-quarter fluctuations but overall suggests growth in sales volume or pricing power. The sales figures peaked in late 2024 and sustained high levels into early 2025, signaling robust market demand or successful product strategies.

Working Capital Turnover

The working capital turnover ratio, indicating efficiency in utilizing working capital to generate sales, showed considerable variation. Early ratios, reported starting in December 2020, ranged from approximately 2.52 to 5.35, reflecting differing efficiency levels across quarters. Following the working capital spike in September 2023, the turnover ratios declined sharply to values below 1.0 in the subsequent quarters, indicating potential inefficiencies or elevated working capital relative to sales during that period. However, from March 2024 onwards, the turnover ratios improved markedly, rising above 5.0 by June 2025, signaling enhanced operational efficiency and more effective use of working capital to drive sales revenue.

In summary, the financial data portrays a company experiencing dynamic changes in liquidity and asset management, balanced by generally growing product sales. Periods of increased working capital were sometimes associated with declining turnover efficiency, while improved turnover in later periods indicates more optimized working capital utilization. Continued monitoring of these metrics will be important to maintain financial health and operational performance.

Inventory Turnover

The inventory turnover ratio is available starting from the March 31, 2021 period. Initially, the ratio shows a modest decline from 1.58 to 1.30 over the first year, indicating a slowing rate at which inventory is sold and replaced. After this initial period of decline, a gradual improvement is observed, rising from 1.31 at the end of 2022 to 1.41 by September 2023. However, a notable drop to 0.89 by March 31, 2024 is followed by a steady recovery through December 31, 2025, reaching a peak ratio of 1.88. This pattern suggests fluctuations in inventory management efficiency, with a significant dip influencing the first quarter of 2024 but a strong recovery thereafter.

Average Inventory Processing Period

The average inventory processing period, expressed in days, inversely mirrors the inventory turnover ratio trends. Starting from 231 days at the end of the first quarter of 2021, the processing period exhibits a gradual increase, peaking at 281 days by the end of 2022. This lengthening of the inventory period aligns with the declining turnover during this timeframe, suggesting slower inventory movement. A reversal begins after December 2022, with days decreasing to 259 by September 2023, but then a sharp spike to 411 days is noted by March 31, 2024, indicating a significant slowdown in inventory processing. Afterwards, a consistent improvement occurs, reducing the days to 194 by mid-2025, reflecting enhanced inventory management and faster turnover.

Overall Analysis

The data illustrates a period of declining inventory efficiency through 2021 and 2022, as evidenced by falling turnover and increasing processing days. A critical disruption appears around early 2024, marked by the lowest turnover ratio and the highest processing period, signaling operational challenges or changes impacting inventory flow. Subsequently, a recovery phase is identified through 2024 and into 2025, with inventory turnover ratios rising steadily and processing periods decreasing, indicative of improved inventory control and potentially more effective sales or supply chain processes.

Receivables Turnover Ratio

The receivables turnover ratio exhibits a general declining trend over the observed periods from March 2021 through June 2025. Starting at 5.36 in March 2021, it slightly fluctuates around 5.3 to 5.4 in early quarters but begins a gradual decrease by the end of 2021, falling below 4.5 by the end of 2023. The ratio reaches its lowest point at 3.7 in March 2024, followed by a modest recovery to around 4.7 by March 2025. Overall, this indicates that the frequency of collecting receivables has decreased, suggesting slower turnover or possibly elongated credit terms.

Average Receivable Collection Period (Days)

The average receivable collection period shows an upward trend, indicating a lengthening in the time taken to collect receivables. From 68 days in March 2021, the period steadily increases each quarter, peaking at 99 days in March 2024. Thereafter, the collection period slightly decreases but remains elevated, around 86 to 95 days through mid-2025. This pattern confirms the observation from the receivables turnover ratio that receivables are being collected more slowly over time.

Combined Insights

The inverse relationship between the receivables turnover ratio and the average collection period is consistent throughout the periods analyzed. The decline in turnover alongside the increase in collection days points to a growing lag in cash inflows from receivables. This could have implications for liquidity management and working capital efficiency, warranting further analysis into credit policies or customer payment behaviors.

The analysis of the financial data reveals several notable trends in the operational efficiency metrics over the recorded periods. The three key metrics observed are the average inventory processing period, the average receivable collection period, and the overall operating cycle, each measured in number of days.

Average Inventory Processing Period

Starting from 231 days in March 2021, the average inventory processing period exhibited a generally increasing trend, reaching a peak of 281 days by December 2022. Subsequently, the metric showed some volatility but trended downward, with a significant spike to 411 days in March 2024, followed by a decline to 194 days by June 2025. This indicates fluctuating inventory management effectiveness, with a notable period of inefficiency around early 2024 and improvements thereafter.

Average Receivable Collection Period

This metric started at 68 days in March 2021 and gradually increased over time to around 88-99 days through much of 2023 and early 2024. There was a peak of 99 days in March 2024, signaling slower collection of receivables, which slightly improved afterward but remained elevated relative to early 2021. By mid-2025, the period settled between 91 and 95 days, suggesting some challenges in receivables turnover compared to earlier periods.

Operating Cycle

The operating cycle, representing the combined duration of inventory processing and receivable collection, increased steadily from 299 days in March 2021 to a high of 363 days in late 2022. A substantial spike to 510 days was observed in March 2024, aligning with the peak seen in inventory processing. After this spike, the operating cycle decreased gradually, reaching 289 days by June 2025. The fluctuation illustrates a temporary lengthening of operating activities, possibly due to slower inventory turnover and delayed receivables, followed by a recovery phase.

Overall, the data suggests a period of increasing operational inefficiencies through 2022 and early 2024, with particular strain evident in inventory management and receivable collection processes. The sharp spike in early 2024 indicates a critical point requiring attention. Subsequent improvements in these metrics indicate corrective measures or changing conditions that restored more efficient operational cycles by mid-2025.

Payables Turnover Ratio

The payables turnover ratio data is available from March 31, 2020, through June 30, 2025, with some missing earlier quarters. Starting from a ratio of 4.33 in March 2020, the ratio generally exhibits an upward trend through the observed period with fluctuations. It increases steadily from 4.33 to a peak of 6.74 in September 2024, indicating an improvement in the frequency at which payables are paid during this period. Subsequent quarters show some volatility, with a decline to 5.25 and then 4.12 by June 2025. The general pattern suggests enhanced efficiency in settling payables over the years, although there are intermittent decreases toward the end of the data series.

Average Payables Payment Period (Number of Days)

The average payables payment period, which inversely relates to the payables turnover ratio, starts from 84 days in March 2020 and experiences a declining trend over the next several quarters. This decline indicates a reduction in the time taken to pay suppliers, from 84 days down to a low of 54 days in September 2024, reinforcing the observation of improved payment efficiency. Nonetheless, there is notable volatility, with periods where the payment period increases significantly, especially toward the beginning and the very end of the series, such as reaching 90 days in March 2023 and 89 days by June 2025. These fluctuations may reflect changing payment policies or external factors impacting payment timings.

Overall Observations

The payables turnover ratio and average payment period generally demonstrate an inverse movement, consistent with their financial definitions. Improvement in payables turnover ratio over the longer term implies better management of payables or changes in working capital strategy aimed at quicker payments. However, variations in the last few quarters highlight potential operational or external challenges influencing payment behavior. The data suggests the company has managed to enhance payment efficiency over the five-year span but must address the causes of recent variability to maintain stable supplier relationships and optimize cash flow management.

Average Inventory Processing Period

The inventory processing period demonstrates an initial value around 231 days in early 2021, followed by a gradual increase reaching a peak of 281 days at the end of 2022. After this peak, the period declines notably, dropping to 194 days by mid-2025. A significant spike to 411 days is observed in early 2024, before a quick normalization. Overall, this indicator shows volatility with a general downward trend towards the end of the observed period, suggesting improved inventory turnover efficiency after a period of prolonged inventory holding.

Average Receivable Collection Period

The receivable collection period begins near 68 days in early 2021 and exhibits a steady upward trend, reaching a high of 99 days in early 2024. Following this peak, the period declines slightly but remains elevated in the mid to high 80s and 90s range through 2025. This trend indicates a lengthening of the time taken to collect receivables, which could impact cash flow.

Average Payables Payment Period

The payables payment period starts at approximately 84 days in early 2021, then generally trends downward with some fluctuations, hitting lows in the mid-60s to low 70s during 2021 and 2022. There is a marked drop to 60 days in early 2024, with some variability thereafter, including a rise to 89 days by mid-2025. This pattern reflects changes in payment policies or terms with suppliers and possibly cash management strategies, with occasional extensions followed by shorter payment cycles.

Cash Conversion Cycle

The cash conversion cycle shows a gradual increase from 215 days in early 2021 to a peak of 290 days at the end of 2022. A pronounced spike to 441 days occurs in early 2024, mirroring the inventory processing period increase, before falling back to more moderate levels around 200 days by mid-2025. This cycle indicates how long cash is tied up in the operating cycle, with the spike suggesting temporary inefficiencies or disruptions that lengthened this time substantially before recovery.