Analog Devices Inc. (NASDAQ:ADI)

Inventory Turnover

The inventory turnover ratio exhibited moderate fluctuations over the observed period. Initially around 3.18, the ratio declined to approximately 2.33 by the end of 2021, indicating slower inventory movement. It then improved notably in early 2022, reaching 3.82, followed by a gradual decline to around 2.56 by late 2025. This pattern suggests varying inventory management efficiency, with a tendency towards slower inventory turnover in later years.

Receivables Turnover

This ratio showed an overall upward trend. Starting at 7.08 in early 2021, it dipped temporarily in late 2021 but increased significantly afterward, peaking at 10.42 in mid-2024 before moderating to around 7.67 by late 2025. The rising trend implies improved collection effectiveness over the period, although some volatility is present.

Payables Turnover

The payables turnover displayed considerable variation. It began at 8.66 and decreased through 2021, then rose sharply to 10.91 in early 2024. Following this peak, it fluctuated but generally showed a slight downward slope towards 7.81 by late 2025. These changes reflect shifts in payment timing and supplier credit management practices.

Working Capital Turnover

This ratio showed extreme volatility. It reached an unusually high peak of 49.24 in May 2021, followed by a steep decline to 2.81 in late 2021. Subsequently, it stabilized to a range between 2.63 and 10.4, generally trending downward after mid-2023 to values around the lower end of this range by 2025. The early spike suggests an irregular event or reclassification affecting working capital efficiency, with later periods showing more normalized but declining turnover.

Average Inventory Processing Period

The average days to process inventory showed a rising trend from 115 days in early 2021 to a high of 157 days by late 2021, indicative of inventory holding lengthening during that time. Thereafter, the period shortened again to approximately 96 days in mid-2022 before gradually increasing once more to around 142 days by late 2025. This cyclical pattern points to fluctuations in inventory management and possibly demand variability.

Average Receivable Collection Period

This measure demonstrated a decreasing trend overall, from 52 days in early 2021 to lows near 35 days in early 2024, suggesting more efficient receivables management. However, the period increased again towards the end of the observed timeline, reaching close to 55 days by late 2025, signaling potential challenges in collections in recent quarters.

Operating Cycle

The operating cycle saw significant variation, ranging from a low of 153 days in mid-2022 to a peak of 230 days in late 2021. After this peak, it generally fluctuated between roughly 160 and 190 days, ending slightly below 190 days by late 2025. These fluctuations indicate changes in overall business operating efficiency and cash flow timing.

Average Payables Payment Period

The average time taken to pay suppliers was somewhat variable, starting at 42 days and increasing to a peak of 58 days in late 2021. Following this, it decreased moderately to lows around 33 days in early 2024 before rising again towards the end of the period to nearly 47 days. This suggests alteration in payment policies or supplier terms over time.

Cash Conversion Cycle

The cash conversion cycle, reflecting the net time cash is tied up in operations, mirrored patterns seen in the operating and inventory cycles. It increased sharply to 172 days by late 2021, then decreased to a range around 110-140 days through 2022 and early 2023. Subsequently, it lengthened again toward approximately 150 days by 2025. This indicates periods of cash flow tightening alternating with improved working capital efficiency.

Cost of Sales

The cost of sales shows a fluctuating but generally decreasing trend after a peak in October 2021. Initially, the value rises steadily from approximately 513 million USD in January 2021 to a peak exceeding 1.2 billion USD by October 2021. Following this peak, the cost of sales declines over subsequent quarters, reaching a lower range roughly between 970 million USD and 1.1 billion USD from early 2023 through November 2025. This suggests a period of cost containment or operational adjustments after a high-cost phase in 2021.

Inventories

Inventories demonstrate a consistent increasing trend throughout the entire period. Starting at approximately 619 million USD in January 2021, inventory levels gradually rise, surpassing 1.5 billion USD by early 2023 and continuing to grow steadily thereafter. By November 2025, inventories reach about 1.66 billion USD. This upward movement indicates accumulation of stock or possibly increased production capacity to meet anticipated demand.

Inventory Turnover Ratio

The inventory turnover ratio experiences notable fluctuations with an initial decline, followed by periods of partial recovery and a gradual downward trend towards the end of the period. Initially around 3.18–3.16 in early 2021, the ratio drops sharply to 2.33 by October 2021, coinciding with the peak in cost of sales. Subsequently, turnover improves somewhat, rising to a range of approximately 3.66 to 3.82 during early to mid-2022, before declining again to about 2.56 by November 2025. This downward trend suggests a slowing turnover rate, reflecting that inventory is being sold less frequently relative to the stock held, potentially indicating overstocking or slower sales growth in later periods.

Overall Financial Pattern

The combined analysis reveals a scenario where cost of sales peaked and then decreased notably, while inventories steadily increased, resulting in a declining inventory turnover ratio overall. This pattern points toward growing inventory investment amid controlled or decreasing costs of goods sold, which may warrant attention to inventory management and sales efficiency going forward.

Revenue Trends

Revenue displays a general upward trajectory from early 2021 through late 2022, rising sharply from approximately 1.56 billion USD to a peak near 3.25 billion USD by October 2022. Following this peak, revenue declines notably over the next year, bottoming out near 2.16 billion USD in May 2024. Subsequently, a recovery phase is observed with revenue climbing again to about 3.08 billion USD by November 2025. This pattern indicates a cycle of strong growth, a significant contraction, and a subsequent rebound in sales volumes or pricing.

Accounts Receivable Dynamics

Accounts receivable amounts generally increase from early 2021 through late 2022, moving from approximately 827 million USD to a high near 1.80 billion USD. This rise mirrors revenue growth but at a faster pace during the mid-2021 to late 2022 period, suggesting extended collection periods or increased credit sales. After October 2022, receivables decline sharply, reaching just over 1 billion USD by May 2024, indicating tighter credit management or accelerated collections. Receivables then rise moderately again toward the end of the period but remain below peak levels.

Receivables Turnover Ratio Analysis

The receivables turnover ratio initially decreases significantly from above 7.0 times in early 2021 to a low of about 5.0 times in late 2021, implying that receivables were collected more slowly despite rising sales. From late 2021 through mid-2024, this ratio shows a steady improvement, peaking above 10.4 times in May 2024, suggesting more efficient collections or stricter credit conditions during the revenue downturn. In the final periods, the turnover ratio declines again to a range around 6.7 to 7.7 times, corresponding with the partial recovery in revenue and receivables.

Overall Insights

The data reveals a period of substantial revenue growth followed by a marked contraction and eventual recovery. The accounts receivable balance and turnover ratios closely correlate with these revenue movements, reflecting changes in credit policies, customer payment behavior, or operational efficiency in collections. Periods of higher receivables balance combined with lower turnover ratios indicate slower collections relative to sales, whereas improved turnover rates with declining receivables suggest enhanced cash management. The trends imply adaptive management in response to shifting market conditions affecting sales and working capital.

The analysis of the cost of sales, accounts payable, and payables turnover ratios over the reported periods reveals several notable trends and fluctuations that provide insight into the company's operational efficiency and payment practices.

Cost of Sales

The cost of sales exhibited an overall fluctuating trend with some periods of increase followed by declines. Initially, the cost of sales increased steadily from approximately 513 million to over 1.2 billion USD by October 2021. Following this peak, it dropped to around 1 billion USD in mid-2022 and then remained relatively stable with slight decreases and increases until the most recent period in November 2025, where it approached 1.13 billion USD. The early spike and subsequent stabilization could indicate seasonality or the impact of operational adjustments during the periods analyzed.

Accounts Payable

Accounts payable amounts showed significant variation as well. Starting at about 227 million USD in early 2021, accounts payable rose notably to reach approximately 582 million USD by late 2022. Subsequently, there was a decline to near 368 million USD in early 2025 followed by a recovery back up to over 543 million USD by the end of the dataset. These fluctuations suggest changes in supplier terms, payment policies, or purchasing patterns that influence how payables accumulate and are managed over time.

Payables Turnover Ratio

The payables turnover ratio, representing the frequency of payment cycles, showed a considerable degree of volatility. The ratio started relatively high at about 8.66 in early 2021, dropped to a low of 6.3 around late 2021, and then fluctuated in the range of 7.6 to 10.9 through the subsequent periods. Notable peaks were observed near late 2023 and early 2025, indicating faster turnover of payables during those times. The general trend points to varying payment speeds, with some indication of accelerated payments after periods of slower turnover. The downward shift in ratio towards the end of the data suggests a possible trend towards slower payment cycles in the most recent quarters.

In summary, the company experienced significant fluctuations in both cost of sales and accounts payable, reflecting dynamic operational and procurement conditions. Meanwhile, the payables turnover ratio's variability highlights changes in the timing of cash outflows related to payables. Together, these movements paint a picture of active management of payables paired with the impact of sales cost variations over time.

Working Capital

The working capital exhibits significant volatility over the analyzed periods. Initially, it starts at approximately $948 million and fluctuates notably, reaching a peak near $2.6 billion by the fourth quarter of 2021. Subsequently, it maintains a range mostly between $1.2 billion and $2.8 billion for several quarters, with some downward trends observed around early 2023 where it decreases to roughly $1.18 billion. From mid-2023 onwards, a general upward trend is visible, with working capital increasing again and reaching its highest observed value of nearly $3.95 billion in the third quarter of 2025. However, the last quarter of the observed period shows a slight decrease to approximately $3.86 billion.

Revenue

Revenue shows a consistent upward trajectory throughout most of the timeline, starting at around $1.56 billion and increasing steadily to surpass $3.2 billion by the fourth quarter of 2021. Despite a slight decline observed starting in early 2023 with revenues decreasing to about $2.15 billion by the second quarter of 2024, the company manages to reverse this trend shortly thereafter. Revenue rebounds with moderate growth, reaching approximately $3.08 billion by the fourth quarter of 2025. This pattern suggests some cyclicality or external factors impacting sales around 2023-2024, followed by recovery and growth.

Working Capital Turnover Ratio

This ratio demonstrates high volatility and a complex pattern. Initially, the ratio is moderately low at 6.18, then spikes dramatically to 49.24 in the second quarter of 2021, followed by a drop to lower single digits for much of the subsequent periods. Between late 2021 and early 2023, the ratio fluctuates mostly between 2.63 and 10.4, with noticeable peaks and troughs indicating variability in how efficiently working capital is used to generate sales. The ratio generally trends downward towards the end of the timeline, stabilizing around 2.6 to 2.85, which may suggest a decrease in the company’s efficiency in generating revenue relative to its working capital or an expansion in working capital that outpaces revenue growth.

Overall Insights

The financial data reveals that the company has experienced significant fluctuations in working capital alongside a generally increasing revenue trend with some mid-period declines. The working capital turnover ratio's volatility signals variable operational efficiency, which may relate to changing working capital management strategies or market conditions. The recent rebound in both working capital and revenue toward the end of the period suggests recovery and potential growth stabilization. The declining turnover ratio in later quarters could warrant further analysis to understand underlying causes and assess whether working capital is being optimally utilized.

Inventory Turnover

The inventory turnover ratio exhibits variability over the analyzed periods. Initially, it stays relatively stable around 3.16 from early 2021 through mid-2021, then declines sharply to 2.33 by the end of October 2021. Following this drop, a notable recovery occurs during early 2022, with the ratio peaking near 3.82 by July 2022. However, after this peak, a gradual downward trend is observed, with the turnover ratio steadily decreasing to approximately 2.56 by the end of 2025. This overall pattern indicates an initial stability, mid-term improvement, then a consistent decline in the efficiency of inventory utilization.

Average Inventory Processing Period

The average inventory processing period, measured in days, is inversely related to the inventory turnover ratio. It remains steady around 115 days until late 2021, when it abruptly increases to 157 days, reflecting slower inventory processing during that quarter. Subsequently, the period shortens significantly in early 2022, reaching a low near 96 days by mid-2022. Afterward, a gradual lengthening trend emerges, with the period increasing from approximately 114 days at the end of 2022 to 142 days at the start of 2025. This indicates a slowing pace in inventory turnover over time following the mid-2022 improvement.

Insights and Trends

The data reveals a cyclical yet overall declining trend in inventory efficiency over the five-year horizon. A notable disruption occurs in late 2021, with inventory turnover deteriorating sharply and the processing period extending markedly. This is followed by a recovery phase through mid-2022, suggesting an operational adjustment or market improvement. However, the subsequent gradual decline in turnover ratio and increase in processing days from late 2022 onward indicate growing challenges in inventory management or demand fluctuations, potentially affecting working capital and operational efficiency.

Receivables Turnover

The receivables turnover ratio exhibited notable fluctuations over the periods observed. Initially, it increased from 7.08 to a peak of 7.9 before dropping sharply to 5.02 and 5.16. This drop suggests a temporary decline in efficiency of receivables collection. Subsequently, a recovery phase is evident, with the ratio rising steadily to 10.42 by May 2024, indicating improved efficiency and faster collection of receivables. However, after this peak, a decline followed, with the ratio decreasing to 6.69 by November 2025. The pattern demonstrates cyclical variations but overall suggests periods of both improved and diminished collection efficiency.

Average Receivable Collection Period

The average receivable collection period, measured in days, moved inversely to the receivables turnover ratio as expected. Initially, it decreased from 52 days to 46 days, indicating a quicker collection process. This period then increased sharply to 73 and 71 days, signaling slower collections. Over subsequent quarters, the collection period steadily shortened again, reaching a low of 35 days by May 2024, reflecting enhanced effectiveness in managing receivables. Following this improvement, the days required to collect receivables extended again, up to 55 days by November 2025, illustrating some deterioration in collection speed. The overall data reveals cyclical trends in collection efficiency, correlating closely with the changes observed in the receivables turnover.

The analysis of the financial periods reveals several notable trends in the operational efficiency metrics over the observed quarters.

Average Inventory Processing Period

This metric displayed initial stability around 115-116 days until mid-2021, followed by a sharp increase to 157 days in the last quarter of 2021. Subsequently, the period sharply declined below 100 days early in 2022 but then showed a gradual upward trend from 96 days to approximately 142 days by late 2025. This suggests fluctuating inventory management efficiency, with recent periods indicating a lengthening inventory turnover cycle.

Average Receivable Collection Period

The receivable collection period exhibited variability with a high of 73 days in the third quarter of 2021, followed by a general downward trend to a low of 35 days in the spring of 2024. After this low point, the period increased again reaching mid-50s days towards late 2025. This pattern implies improving collections efficiency progressing through early 2024, with a slight reversal toward longer collection times in the most recent periods.

Operating Cycle

The operating cycle trend mirrors the general movement of the inventory and receivables periods. Starting around 167 days in early 2021, it peaked at 230 days in late 2021, demonstrating a substantial lengthening. This was followed by a sharp decline to around 157 days by mid-2022, then a steady increase upward, reaching near 196 days by late 2025. This indicates variations in the overall time to convert inventory and receivables into cash, with a tendency toward elongation in the latter years examined.

Overall, the data suggests that operational efficiency was challenged during late 2021 but saw some improvement into mid-2022. However, subsequent periods indicate a general trend towards longer inventory processing and operating cycles, while receivables collection improved temporarily before regressing. These dynamics may warrant attention to inventory management and credit policies to enhance cash conversion cycles going forward.

Payables Turnover Trend

The payables turnover ratio displayed notable fluctuations across the observed periods. Initially, it started at 8.66 and declined to a low of 6.3 by October 30, 2021. Post this decline, the ratio experienced recovery and peaks, reaching a high of 10.91 in February 3, 2024. Subsequently, it showed some downward movement, ending near 7.81 by November 1, 2025. Overall, the trend indicates variability in supplier payment efficiency, with periodic improvements followed by slowdowns.

Average Payables Payment Period

The average payables payment period inversely oscillated relative to the payables turnover ratio, consistent with their conceptual linkage. The period started moderately at 42 days and increased, peaking at 58 days in October 30, 2021. After this peak, it generally shortened, reaching a minimum of 33 days in February 3, 2024. Thereafter, it underwent some lengthening again, finishing at 47 days by November 1, 2025. This pattern suggests that the company varied its payment practices over time, at points extending payment periods and at others accelerating payments to suppliers.

Relationship Between Ratios

An inverse relationship between payables turnover and average payables payment period is evident throughout the data. Periods of lower payables turnover correspond with longer payment periods and vice versa. This reflects typical operational dynamics where slower payment turnover aligns with extended credit from suppliers, impacting cash flow timing.

Operational Implication

The observed variability in payables turnover and payment periods suggests active management of payables potentially in response to liquidity needs or strategic supplier arrangements. Periods of high turnover and shorter payment periods may indicate efforts to strengthen supplier relationships or take advantage of payment discounts, while extended periods possibly reflect liquidity conservation or renegotiated credit terms.

Summary

In summary, the financial data demonstrate fluctuating payables management practices, oscillating between accelerated payments and extended credit utilization. These changes likely correspond to evolving operational or financial strategies impacting working capital cycles.

Inventory Processing Period

The average inventory processing period exhibits notable volatility over the observed quarters. Starting at 115 days, it generally remains stable near this level through mid-2021 but spikes sharply to 157 days in October 2021. Subsequently, the period shortens significantly in early 2022 to approximately 96-100 days, suggesting improved inventory management. However, from late 2022 onwards, there is a gradual upward trend in days, reaching 142 days by late 2025. This indicates a lengthening inventory turnover cycle in recent quarters.

Receivable Collection Period

The average receivable collection period demonstrates fluctuations with an overall downward trend followed by some recovery. Initial quarters show a decrease from 52 days to a low around 44 days by late 2023, indicating improved efficiency in collecting receivables. However, starting in early 2024, the period shows variability and a gradual increase toward 55 days by the end of the period in 2025, which may suggest some decline in collection efficiency or changes in credit terms.

Payables Payment Period

The payables payment period fluctuates moderately, beginning around 42 days and rising to peaks near 58 days by late 2021. Afterward, it generally declines into 2023, hitting lows in the low 30s, implying quicker payments to suppliers. From mid-2024 onward, the period rises again, reaching levels near 47 days by late 2025. This pattern suggests a cyclical approach to supplier payment timing, possibly reflecting cash management strategies.

Cash Conversion Cycle

The cash conversion cycle (CCC) reveals significant variability and a generally increasing trend over time. Initially near 125 days, it peaks at 172 days in October 2021, corresponding with the spike in inventory processing period. Following a decline to around 110-116 days in early 2022, the CCC again trends upward, stabilizing between 135 and 153 days from late 2022 through 2025. The rising CCC suggests a lengthening time span between cash outflows and inflows, which may impact working capital management and liquidity.

Summary

The financial operating cycles for the company display notable fluctuations with some trends indicating changes in operational efficiency. The increase in inventory processing days and the cash conversion cycle over time points to slower turnover and longer working capital cycles. While receivable collection periods initially improve, recent data show a reversal. Payables payment periods vary but suggest a deliberate management of supplier credit terms. Together, these trends highlight important shifts in the company’s cash flow management and working capital dynamics that should be closely monitored to optimize liquidity and operational performance.