Analog Devices Inc. (NASDAQ:ADI)

Inventory Turnover

The inventory turnover ratio exhibited fluctuations over the observed periods, peaking at 3.82 in July 2022 before generally declining thereafter. Starting from 3.28, the ratio decreased slightly in the following quarters, with a notable drop to 2.33 in October 2021. The ratio stabilizes around 2.6 to 2.8 in the last several quarters, indicating a slowing in inventory turnover speed.

Receivables Turnover

This ratio displayed more pronounced variability. It started at 9.85 and gradually declined to a low of 5.02 in October 2021, followed by recovery to a short-term peak of 10.42 in May 2024. However, the last periods showed a downward trend again, ending near 6.69. This suggests varying efficiency in collecting receivables, with periods of slower collection especially in late 2021 and recent quarters.

Payables Turnover

The payables turnover ratio varied moderately, initially around 9.12, followed by a dip to 6.3 in October 2021. Subsequently, the ratio reached a high peak of 10.91 in February 2024, indicating accelerated payment to suppliers during that time. The later periods denote a slight decrease but overall fluctuations suggest changing payment policies or supplier terms.

Working Capital Turnover

The working capital turnover showed extreme volatility. After starting at 40.91, there was a sharp decline reaching lows around 2.6-3.4 in the most recent periods. Peaks such as 49.24 in May 2021 and 21.89 by July 2021 highlight temporary improvements. The general downward trend in the last quarters may indicate less efficient use of working capital relative to sales.

Average Inventory Processing Period

The inventory processing period fluctuated, rising from 111 days to a peak of 157 days in October 2021, suggesting slower inventory movement at that point. Following that, there was a gradual decline to approximately 96-100 days in mid-2022, then a steady increase resumed, reaching 141 days by August 2025. The extended periods in recent quarters imply a lengthening of the inventory holding period.

Average Receivable Collection Period

This period increased from 37 days to 73 days at its highest point in October 2021, reflecting slower receivable collections during that timeframe. It improved notably afterward, dropping to as low as 35 days in May 2024 before rising again to 55 days by August 2025. Overall, the data reveal cycles of both tightening and loosening credit collection policies.

Operating Cycle

The operating cycle extended considerably, from 148 days initially to a peak of 230 days in October 2021, followed by a decline to approximately 150-170 days in the subsequent periods. Renewed increases in later quarters show the cycle lengthening again, approaching nearly 196 days by August 2025. This reflects the combined effect of changes in inventory and receivable periods.

Average Payables Payment Period

The average payables payment period displayed moderate variation, starting at 40 days, increasing to 58 days in October 2021, then gradually decreasing to the mid-30s by early 2024 before fluctuating again around low 40s near the end of the timeframe. This suggests adjustments in payment timing to suppliers, likely influenced by cash flow management.

Cash Conversion Cycle

The cash conversion cycle lengthened from around 108 days to a peak of 172 days in October 2021, indicating more cash tied up in working capital components during that time. It decreased somewhat thereafter but remained elevated compared to the initial periods, fluctuating between 110 and 153 days in later quarters. This pattern indicates a generally increased duration between cash outflows and inflows, pointing to lower liquidity efficiency.

Cost of Sales

The cost of sales generally showed a rising trend over the periods observed, increasing from 455,423 thousand US dollars at the start to a peak of 1,282,296 thousand US dollars in January 2022. Following this peak, there was a notable reduction in cost of sales, dropping to a low near 979,004 thousand US dollars by August 2024. From that point onward, a moderate increase was observed, ending at 1,090,600 thousand US dollars in August 2025. The data indicate fluctuations with a sharp increase followed by a retrenchment and then a gradual recovery.

Inventories

Inventories increased significantly from 588,503 thousand US dollars initially to a high of 1,709,313 thousand US dollars by July 2023. After reaching this level, inventories declined somewhat but remained elevated relative to the initial periods, maintaining values over 1.4 million thousand US dollars across subsequent quarters. This overall upward trajectory suggests accumulation of inventory over time with some recent stabilization and slight decrease.

Inventory Turnover Ratio

The inventory turnover ratio started at 3.28 and experienced a gradual decline to a trough of 2.33 in October 2021, coinciding with the period of sharp increases in cost of sales and inventories. Subsequently, the ratio rebounded to approximately 3.82 by July 2022, indicating improved efficiency in inventory management or higher sales velocity relative to inventory. After that peak, the turnover ratio declined again steadily to 2.59 by August 2025, suggesting a slowing turnover rate. The ratio's fluctuations appear inversely related to inventory accumulation, reflecting shifting balance between sales and inventory levels.

Overall Insights

The observed data highlight a period of expansion in inventory holdings accompanied by a transitional phase in cost of sales, marked by a substantial rise and partial retrenchment. The inventory turnover ratio’s variability reveals phases of both higher and lower inventory efficiency, with recent data pointing to a decline in inventory turnover speed. These trends may imply changing operational or market conditions affecting inventory management and sales patterns over the analyzed timeframe.

Revenue Trends

Revenue exhibits a general upward trend from early 2020 through early 2023, increasing from approximately $1.3 billion to over $3.2 billion. The most notable surge occurs between mid-2021 and early 2022, where revenue jumps sharply from around $1.76 billion to about $3.25 billion. After this peak, revenue declines steadily, reaching roughly $2.7 billion by early 2024 and later fluctuating between $2.4 billion and $2.9 billion through mid-2025. This pattern suggests a period of rapid growth followed by a phase of contraction and stabilization.

Accounts Receivable Dynamics

Accounts receivable closely follows revenue trends in magnitude but shows differing relative changes over time. Initially, receivables increase modestly from approximately $584 million in early 2020 to around $823 million by mid-2021. Thereafter, a significant rise occurs, peaking at about $1.8 billion in late 2022. From this peak, receivables generally decline, mirroring the revenue pattern but with some fluctuations, decreasing to around $1.46 billion by early 2024 before rising again towards $1.55 billion in mid-2025. The large spike in receivables during 2021-2022 suggests a buildup in outstanding customer balances during the revenue surge.

Receivables Turnover Ratio Analysis

The receivables turnover ratio exhibits a downward trend from nearly 10 in early 2020 to a low of about 5 by late 2021, indicating slower collection of accounts receivable relative to sales during the period of highest revenue growth. Following this trough, the ratio improves, increasing to approximately 9.67 by early 2024, suggesting enhanced efficiency in receivables collection. Toward mid-2025, the turnover ratio declines again to around 6.69, potentially reflecting either slower collections or higher receivable balances relative to sales in that period.

Overall Insights

The data reflects a period of rapid expansion in revenue accompanied by a substantial increase in accounts receivable, which impacted the efficiency of receivables collection as evidenced by the reduced turnover ratio. Subsequently, as revenue contraction occurred, collection efficiency improved. However, the later decrease in turnover ratio towards mid-2025 might indicate some renewed challenges in receivables management or a strategic extension of credit terms. Monitoring of accounts receivable relative to revenue and turnover metrics is advisable to optimize cash flow and working capital management going forward.

Cost of Sales

The cost of sales shows a general increasing trend from early 2020 to early 2022, peaking in the first quarter of 2022. From February 1, 2020, the amount rose steadily from approximately 455 million USD to over 1.28 billion USD by January 29, 2022. Following this peak, a notable decline occurs, with costs decreasing through 2023 and early 2024, reaching levels near 979 million USD by August 3, 2024. However, in the latter part of 2024 into mid-2025, the cost of sales again begins to increase, approaching around 1.09 billion USD by August 2, 2025.

Accounts Payable

Accounts payable fluctuates considerably across the periods. Initially, the payables decrease slightly from about 212 million USD in February 2020 to near 194 million USD in May 2020, then experience fluctuations with a tendency to increase sharply by late 2021, reaching a high of approximately 582 million USD by October 29, 2022. In 2023, accounts payable decrease moderately to around 493 million USD by October 28, 2023, before declining further in early 2024 and fluctuating thereafter. The figures vary between approximately 368 million USD and 490 million USD during 2024 and mid-2025, indicating some volatility but no sustained strong trend up or down.

Payables Turnover Ratio

The payables turnover ratio exhibits considerable variation over the analyzed timeframe. Initially high at 9.12 in February 2020, it peaks slightly in May 2020 at 9.83 before decreasing steadily to a low point around 6.3 in October 2021, indicating slower payments relative to purchases. Subsequently, the ratio recovers, climbing again to a notable peak of 10.91 in February 2024, suggesting a period of quicker turnover or more efficient payment processing. Following this peak, the ratio declines again toward the later periods of the data, settling near 8.43 by August 2025.

Summary and Insights

The overall financial data reveal cyclical patterns in cost of sales and payables management. The initial increase in cost of sales through early 2022 may reflect growth or increased operational scale, followed by a contraction phase in 2023 and early 2024, and a renewed increase into mid-2025. Accounts payable movements appear somewhat disconnected from cost of sales trends, indicating potential variability in payment terms or supplier negotiations. The payables turnover ratio's fluctuations suggest periods of both extended payment terms and tightened cash management. Higher turnover ratios correspond with quicker payments and possibly improved liquidity management. The variations in these metrics may imply strategic adjustments in working capital management aligned with changes in operational volume and market conditions.

Working Capital

The working capital exhibits significant fluctuations over the period analyzed. Initially, it starts at a moderate level and then shows a marked increase by late 2021, reaching peak values around October 2021 and January 2022. Following this peak, a gradual decline is observed, with periodic variations, before it again climbs sharply towards the most recent periods, culminating in the highest recorded level at August 2025. This pattern suggests periods of aggressive asset investment or changes in short-term liquidity management interspersed with phases of consolidation or asset reduction.

Revenue

Revenue displays a general upward trend from the beginning of the timeline through early 2023. Peak revenue is recorded around the start of 2023, followed by a noticeable decline during 2023 and into early 2024. From mid-2024 onward, revenue demonstrates recovery and growth, nearing previous high levels by late 2025. The revenue trajectory indicates the presence of cyclical factors or market conditions affecting sales, with periods of both expansion and contraction.

Working Capital Turnover

The working capital turnover ratio shows a volatile movement over the analyzed quarters. The ratio starts exceptionally high initially, then declines sharply through 2020, reflecting a decreasing efficiency in generating revenue from working capital during this period. A brief spike occurs in early 2021, followed by another considerable drop mid-2021, reaching one of the lowest points around late 2021. Subsequently, the ratio improves periodically but exhibits an overall downward trend toward late 2025. This suggests diminishing efficiency in converting working capital into revenue over time, possibly linked to the increase in working capital or the variable revenue levels observed.

Combined Observations

The interplay between working capital, revenue, and working capital turnover indicates complex operational dynamics. While revenue peaks early and mid-periods coincide with high working capital levels, the efficiency ratio declines, implying that increased working capital is not consistently translating into proportionate revenue gains. This could point to operational challenges, changes in inventory or receivable management, or external factors influencing capital use efficiency. The recent trend shows an increase in working capital with delayed revenue recovery, which may warrant further scrutiny into asset management and capital allocation strategies.

The analysis of the quarterly data shows notable trends in inventory management over the examined periods.

Inventory Turnover Ratio

The inventory turnover ratio initially remained relatively stable around a level slightly above 3 from early 2020 until mid-2021, with small fluctuations between 3.12 and 3.28. However, there is a sharp decline observed in the quarter ending October 2021, dropping to approximately 2.33. Following this low point, the ratio rebounded in early 2022 to around 3.7 but thereafter showed a gradual and consistent decline throughout 2022 and into 2025. By August 2025, the turnover ratio decreased further to around 2.59. This overall downward trend in recent quarters suggests a slowing frequency of inventory being sold and replaced.

Average Inventory Processing Period (Days)

The average inventory processing period correspondingly demonstrates a fluctuating but generally inverse relationship with the inventory turnover ratio. From February 2020 through mid-2021, it remained fairly steady between 111 and 116 days. A significant increase is evident in the quarter ending October 2021, where the period extended sharply to 157 days, coinciding with the sharp drop in turnover ratio. Subsequently, the period shortened sharply in early 2022 to a low of 96-97 days, aligning with the recovery in turnover ratio. However, from early 2022 onward, there is a persistent upward trend in the processing period, lengthening steadily to a high of 141 days by August 2025. This indicates that inventory is spending more time in stock before being sold.

Overall, the data reflects a period of increased inventory efficiency disruption around late 2021, with a recovery shortly thereafter. However, since 2022, the trend leans toward slower inventory movement and longer holding periods, implying potential challenges in inventory management or changing market conditions impacting sales velocity and inventory replenishment cycles.

Receivables Turnover

The receivables turnover ratio showed a declining trend from early 2020 to late 2021, falling from 9.85 to a low of 5.02. This indicates a reduced efficiency in collecting receivables during this period. Starting in early 2022, the ratio gradually improved, reaching a peak of 10.42 by May 2024. However, after this peak, the ratio declined again, ending at 6.69 by August 2025. This fluctuation suggests periods of both improved and diminished effectiveness in receivables management across the timeline.

Average Receivable Collection Period

The average collection period in days increased from 37 days in early 2020 to a peak of 73 days in October 2021, demonstrating a lengthening time to collect receivables, consistent with the declining turnover ratio. Following this peak, the collection period shortened substantially to around 35 days by mid-2024, indicating enhanced efficiency in receivables collection. In the final periods, however, the average days increased again, reaching 55 days by August 2025, signaling a slowdown in collection speed.

Overall Insights

The inverse relationship between receivables turnover and average collection period is evident throughout the periods analyzed. Initial declining turnover and increasing collection days suggest challenges in cash collection, potentially impacting liquidity. The mid-period improvement reflects better credit management or collection processes, enhancing cash flow efficiency. The subsequent deterioration towards the end of the timeline signals renewed difficulties or changes in credit terms or customer payment behavior. Continuous monitoring and targeted strategies may be necessary to stabilize and improve receivables management.

Average Inventory Processing Period

The average inventory processing period exhibited relative stability initially, fluctuating slightly between 111 and 117 days from early 2020 through mid-2021. A notable spike occurred in October 2021, with the period rising sharply to 157 days, indicating a substantial slowdown in inventory turnover. Subsequently, the period decreased to around 96-100 days through mid-2022 but then trended upward consistently, reaching 141 days by August 2025. This later upward trend suggests increasing inventory holding times over recent quarters.

Average Receivable Collection Period

The average receivable collection period gradually increased from 37 days in early 2020 to a peak of 73 days in October 2021, reflecting slower customer payments during this interval. After this peak, the period generally declined to a low of 35 days by early 2024, implying improved efficiency in receivables collection. However, a moderate increase was observed later, reaching 55 days by August 2025, indicating some recent loosening in collection speeds.

Operating Cycle

The operating cycle mirrored the behavior seen in its components, with a stable range between 148 and 167 days throughout the first part of the period under review. A significant surge to 230 days in October 2021 was evident, largely driven by increased inventory processing and collection periods. Following this peak, the operating cycle declined to around 153-157 days in mid-2022 but then resumed an upward trajectory, reaching nearly 196 days by August 2025. Overall, the data indicates a lengthening operating cycle in recent quarters, suggesting increasing working capital requirements and potential efficiency challenges.

Payables Turnover Ratio

The payables turnover ratio exhibits noticeable fluctuations over the observed periods. Initially, there is a slight upward trend reaching a peak value of 9.83, followed by a gradual decline to a low of 6.3 in late 2021. After this trough, the ratio demonstrates recovery and a general upward trend, hitting a higher peak of 10.91 in early 2024 before experiencing some volatility and ending at 8.43 by mid-2025. This pattern suggests variability in the frequency of payments to suppliers, with periods of faster and slower payment cycles.

Average Payables Payment Period

The average payables payment period, measured in days, illustrates an inverse movement relative to the payables turnover ratio. It begins at 40 days, declining to 37 days and then lengthening to a higher peak of 58 days toward the end of 2021. Following this peak, the payment period shortens significantly to a minimum of 33 days in early 2024, indicating more prompt payment. Toward the end of the dataset, the period slightly extends again to 43 days. This oscillation reflects changing payment behavior, alternating between delayed payments during certain periods and expedited settlements during others.

Relationship and Insights

The payables turnover ratio and the average payment period naturally move in opposition, as expected from their definitional relationship. The peaks in the payment period correspond with troughs in the turnover ratio, indicating that when the company takes longer to pay its suppliers, the turnover ratio decreases. Conversely, shorter payment periods coincide with higher turnover ratios, representing faster payment cycles. The volatility in these metrics suggests variability in the company's cash management or supplier payment policies over time, possibly influenced by operational cash flow needs or strategic payment terms adjustments.

Inventory Processing Period

The average inventory processing period exhibited relative stability between February 2020 and July 2021, fluctuating around 111 to 117 days. A notable spike occurred in October 2021, reaching 157 days, followed by a sharp decline to 100 days by January 2022. Subsequently, the period trended upward with intermittent fluctuations, reaching 141 days by August 2025. This indicates increased variability and lengthening of inventory holding times in the later periods.

Receivable Collection Period

The average receivable collection period showed an overall increasing trend from 37 days in early 2020 to a peak of 73 days in October 2021. Following this peak, it declined steadily to a low of 35 days by early 2024. Afterward, the collection period began to rise again, ending at 55 days in August 2025. This pattern suggests challenges in receivables management around late 2021 with subsequent improvements, but some easing in collection efficiency towards the end of the data range.

Payables Payment Period

The payables payment period demonstrated moderate fluctuations throughout the observed timeframe. It began near 40 days, increased to a peak of 58 days in October 2021, then declined to 33 days by early 2024 before slightly increasing again to 43 days by August 2025. These variations suggest adjustments in payment practices, possibly reflecting cash management strategies shifting between extending and shortening payment terms.

Cash Conversion Cycle

The cash conversion cycle displayed a pattern closely correlated with the trends in the inventory, receivables, and payables periods. Starting around 108 days in early 2020, the cycle extended to a high of 172 days in October 2021, driven largely by the concurrent spikes in the inventory and receivables periods. Afterwards, it decreased to approximately 110 days by mid-2022, then gradually climbed again, reaching 153 days by August 2025. This oscillation in the cash conversion cycle indicates fluctuating liquidity timing and working capital efficiency over the period analyzed.