Analog Devices Inc. (NASDAQ:ADI)

The short-term operating activity ratios exhibit varied trends over the observed period. Generally, a degree of increased volatility is apparent in the more recent quarters, particularly from early 2023 onwards, compared to the relative stability seen in 2021. Several ratios demonstrate a declining trend in the latter portion of the period, while others show fluctuations without a clear directional pattern.

Inventory Turnover

Inventory turnover remained relatively stable around 3.15-3.20 for the first seven quarters. A noticeable decline began in late 2022, falling to a low of 2.47 in early 2026. This suggests a slowing in the rate at which inventory is sold, potentially indicating building inventory levels or decreasing sales velocity.

Receivables Turnover

Receivables turnover initially decreased from 7.08 to 5.02, then increased significantly, peaking at 9.67. Following this peak, the ratio generally trended downwards, ending at 8.64. This pattern suggests an initial slowdown in collecting receivables, followed by improved collection efficiency, and then a subsequent easing of that efficiency.

Payables Turnover

Payables turnover fluctuated throughout the period. It initially decreased, then increased to 9.01, before declining again. The most recent values suggest a stabilization around 7.81-10.91. This indicates varying degrees of efficiency in managing payments to suppliers.

Working Capital Turnover

Working capital turnover demonstrates the most significant volatility. A substantial spike occurred in May 2021, followed by a sharp decline and subsequent fluctuations. The ratio generally decreased from 10.40 to 2.85 over the final observed period, suggesting a less efficient utilization of working capital.

Average Inventory Processing Period

The average inventory processing period generally increased over the observed timeframe. Starting at 115 days, it rose to 148 days, mirroring the decline in inventory turnover. This indicates that inventory is taking longer to be converted into sales.

Average Receivable Collection Period

The average receivable collection period initially decreased, reaching a low of 35 days, before increasing again to 42 days. This corresponds with the fluctuations in receivables turnover, indicating changes in the speed of collecting payments from customers.

Operating Cycle

The operating cycle generally increased over the period, from 167 days to 190 days, reflecting the combined effect of changes in inventory processing and receivable collection periods. The most significant increase occurred in late 2022 and early 2023.

Average Payables Payment Period

The average payables payment period fluctuated, with a general trend towards stabilization in the most recent quarters. It decreased to a low of 33 days before increasing to 46 days. This suggests some variability in payment terms with suppliers.

Cash Conversion Cycle

The cash conversion cycle generally increased from 125 days to 144 days, indicating a longer time between paying for inventory and receiving cash from sales. This trend aligns with the increases observed in both the operating cycle and the average inventory processing period.

In summary, the observed trends suggest a potential slowdown in operational efficiency in the later periods, characterized by increasing inventory processing times, a lengthening cash conversion cycle, and fluctuating turnover ratios. The volatility observed in the more recent quarters warrants further investigation to determine the underlying causes and potential implications.

The inventory turnover ratio exhibits fluctuations over the observed period, generally trending downwards from early 2021 through late 2025. Initial values demonstrate relative stability, followed by a period of increase, and then a more pronounced decline.

Initial Period (Jan 30, 2021 – Oct 30, 2021)

The inventory turnover ratio begins at 3.18 and remains relatively consistent through October 30, 2021, fluctuating between 3.16 and 3.18. This suggests a stable rate at which inventory is being sold and replenished during this timeframe.

Increase (Jan 29, 2022 – Jul 30, 2022)

A notable increase is observed from January 29, 2022, peaking at 3.82 in July 2022. This indicates a faster rate of inventory conversion, potentially driven by increased sales or more efficient inventory management practices. The ratio increased from 3.66 to 3.82 over this period.

Decline (Oct 29, 2022 – Nov 1, 2025)

Following the peak in July 2022, the inventory turnover ratio experiences a consistent decline. It falls from 3.20 in October 2022 to 2.56 in November 2025. This downward trend suggests a slowing in the rate of inventory sales relative to inventory levels. The decline is not linear, with some periods of stabilization, but the overall direction is clearly downward.

Recent Period (Jan 31, 2026)

The most recent data point, January 31, 2026, shows a ratio of 2.47, continuing the declining trend. This represents the lowest value observed throughout the entire period, indicating a potentially significant slowdown in inventory activity.

The cost of sales generally increased over the period, but not consistently with the changes in inventory levels, which likely contributes to the observed turnover trends. The increasing inventory levels coupled with a slowing turnover rate may warrant further investigation into potential issues with demand forecasting, inventory obsolescence, or supply chain inefficiencies.

The receivables turnover ratio exhibits fluctuations over the observed period, generally indicating changes in the efficiency with which the company converts its receivables into cash. An initial period of relative stability is followed by a notable decline, then a recovery, and finally a period of moderation.

Initial Period (Jan 30, 2021 – Jul 31, 2021)

The receivables turnover ratio demonstrates a slight increasing trend, moving from 7.08 to 7.90. This suggests a modestly improving efficiency in collecting receivables during this timeframe. Revenue also increased during this period.

Significant Decline (Oct 30, 2021 – Jan 29, 2022)

A substantial decrease in the receivables turnover ratio is observed, falling from 7.90 to 5.16. This coincides with a significant increase in accounts receivable, indicating a lengthening of the collection period. Revenue increased substantially in the October 30, 2021 period, which may have contributed to the increase in receivables.

Recovery and Peak (Apr 30, 2022 – Oct 29, 2022)

The ratio recovers, rising to 6.67 by October 29, 2022. This improvement suggests a return to more efficient receivables management. Revenue continued to increase during this period, but at a slower rate than the prior period.

Fluctuation and Moderation (Jan 28, 2023 – Nov 1, 2025)

The ratio experiences further increases, peaking at 9.67 in January 28, 2023, before fluctuating between approximately 6.69 and 8.64. This period demonstrates a higher level of variability. Revenue generally decreased during this period, but remained relatively stable.

Recent Trend (Jan 31, 2026)

The most recent value indicates a receivables turnover ratio of 8.64. This suggests that the company continues to efficiently manage its receivables, although the ratio is slightly lower than the peak observed earlier in the period.

Overall, the receivables turnover ratio demonstrates a dynamic pattern, influenced by both changes in revenue and the effectiveness of the company’s credit and collection policies. The fluctuations observed warrant continued monitoring to ensure optimal working capital management.

The accounts payable turnover ratio exhibits fluctuations over the observed period, generally ranging between 7.25 and 10.91. An initial decline is noted from January 2021 through October 2021, followed by a period of relative stability and then an increase into early 2023. Subsequent quarters show a slight downward trend, with some volatility, before stabilizing again in late 2024 and early 2025. The most recent periods indicate a slight decrease in the ratio.

Overall Trend

The ratio does not demonstrate a consistent long-term trend. Instead, it oscillates, suggesting changes in the company’s payment practices or the timing of purchases relative to cost of sales. The period from January 2021 to October 2021 shows a clear decrease, while the period from January 2022 to January 2023 shows an increase. The latter half of the observed period is characterized by more moderate fluctuations.

Short-Term Fluctuations

A significant drop in the payables turnover is observed between January 2021 (8.66) and October 2021 (6.30). This could indicate a deliberate strategy to extend payment terms to suppliers, or a slowdown in processing invoices. Conversely, the increase from October 2021 to January 2022 (6.30 to 8.17) suggests a return to faster payment cycles. A peak is reached in January 2023 (10.91), followed by a decline through November 2025 (7.81).

Recent Performance

The most recent four quarters (February 2025 through November 2025) show a relatively narrow range, between 7.81 and 8.43. This suggests a degree of stabilization in the company’s payment behavior. However, the slight decrease from August 2025 (8.43) to November 2025 (7.81) warrants monitoring to determine if this represents the beginning of a new trend.

Relationship to Cost of Sales

While the payables turnover ratio fluctuates, it generally moves inversely with cost of sales. Periods of higher cost of sales do not consistently correlate with higher payables turnover, and vice versa. This suggests that the company’s payment practices are not solely driven by the volume of purchases, but are also influenced by other factors such as supplier negotiations and cash flow management.

The working capital turnover ratio exhibits considerable fluctuation over the observed period. Initially, the ratio demonstrates a substantial increase from January 2021 to May 2021, followed by a decline and subsequent stabilization before experiencing another period of volatility. A general downward trend appears to emerge in the later portion of the analyzed timeframe.

Initial Period (Jan 30, 2021 - Oct 30, 2021)

The working capital turnover ratio begins at 6.18 and surges to a peak of 49.24 by May 1, 2021. This significant increase suggests a highly efficient utilization of working capital in generating revenue during that period. However, the ratio then declines sharply to 2.81 by October 30, 2021, indicating a reduced efficiency in converting working capital into sales. This initial period is characterized by substantial variability.

Stabilization and Subsequent Fluctuation (Jan 29, 2022 - Oct 29, 2022)

From January 2022 through October 2022, the ratio stabilizes somewhat, fluctuating between 3.50 and 4.94. This suggests a more consistent, though not exceptionally high, level of working capital efficiency. The values during this period remain relatively contained compared to the earlier surge and subsequent drop.

Recent Trend (Jan 28, 2023 - Nov 1, 2025)

Beginning in January 2023, the ratio experiences renewed volatility. It rises to a high of 10.40 in July 2023, before decreasing to 2.63 in August 2025. This period demonstrates a clear downward trend, with the ratio generally declining from a peak of 6.13 in January 2023 to 2.63 in August 2025. The most recent observation, November 1, 2025, shows a slight increase to 2.85, but remains low compared to earlier periods.

Correlation with Revenue

While a direct correlation isn't explicitly calculated here, observing the revenue alongside the turnover ratio suggests a complex relationship. Revenue generally increased through July 2023, but the working capital turnover did not consistently follow. The decline in turnover during the latter part of the period, despite relatively stable revenue, suggests potential inefficiencies in working capital management or a shift in operational strategies.

Overall, the working capital turnover ratio demonstrates a pattern of significant fluctuations, with a notable downward trend emerging in the most recent observations. Further investigation into the underlying factors driving these changes, such as inventory management, accounts receivable collection periods, and accounts payable payment terms, would be necessary to provide a more comprehensive understanding of the company’s working capital efficiency.

The average inventory processing period exhibited considerable fluctuation over the observed timeframe. Initially, the period remained relatively stable, then increased significantly before declining and stabilizing at a new, higher level. A detailed examination of the trends reveals key insights into the company’s inventory management efficiency.

Initial Stability and Subsequent Increase (Jan 30, 2021 – Oct 30, 2021)

From January 30, 2021, through October 30, 2021, the average inventory processing period remained within a narrow range of 115 to 116 days, with a notable increase to 157 days in the October 30, 2021, period. This spike represents a substantial lengthening of the time required to convert inventory into sales, potentially indicating issues with demand forecasting, production planning, or sales execution during that quarter.

Decline and Stabilization at a Higher Level (Jan 29, 2022 – Nov 2, 2024)

Following the peak in October 2021, the average inventory processing period decreased to 100 days by January 29, 2022, and continued to decline to a low of 96 days by July 30, 2022. However, this downward trend was short-lived. The period began to increase again, reaching 131 days by November 2, 2024. This suggests that while initial corrective actions may have improved inventory turnover, underlying factors continued to exert upward pressure on processing times.

Continued Increase and Recent Trends (Feb 1, 2025 – Nov 1, 2025)

The period continued its ascent, reaching 142 days by November 1, 2025. This sustained increase indicates a persistent challenge in managing inventory efficiently. The most recent periods, January 31, 2026, show a further increase to 148 days, suggesting that the factors contributing to longer processing times are ongoing and potentially intensifying.

Overall Trend

The overall trend demonstrates a shift from a relatively efficient inventory processing period to a significantly longer one. While there were periods of improvement, the company has consistently experienced a lengthening of the time it takes to process inventory, culminating in the highest observed period of 148 days. This trend warrants further investigation to identify the root causes and implement effective mitigation strategies.

The observed fluctuations and the overall increasing trend in the average inventory processing period suggest potential inefficiencies in the supply chain, changes in product mix, or shifts in market demand. Continued monitoring of this metric is crucial for maintaining optimal inventory levels and minimizing associated costs.

The average receivable collection period demonstrates considerable fluctuation over the observed timeframe. Initially, a decreasing trend is apparent, followed by a period of increase, and then a return to decreasing values, with recent periods showing renewed variability.

Initial Decreasing Trend (Jan 30, 2021 – Oct 30, 2021)

The average receivable collection period began at 52 days and generally decreased to 46 days by July 31, 2021. This suggests an improvement in the efficiency of collecting receivables during this period. However, a notable increase to 73 days was observed by October 30, 2021, reversing the prior trend.

Period of Stabilization and Decline (Jan 29, 2022 – Apr 29, 2023)

Following the peak of 73 days, the collection period stabilized around the low 70s for the first half of 2022, then decreased to 46 days by April 29, 2023. This indicates a return to more efficient collection practices, although the period remained somewhat elevated compared to the initial values observed in 2021.

Recent Fluctuations (Jul 29, 2023 – Nov 1, 2025)

From July 29, 2023, the collection period exhibited increased volatility. It decreased to a low of 35 days by May 4, 2024, before rising again to 52 days by November 2, 2024. This pattern continued into 2025, with values fluctuating between 47 and 55 days. The most recent observation, November 1, 2025, shows a collection period of 48 days.

Long-Term Perspective

Considering the entire period, the average receivable collection period has generally trended downwards, but with significant short-term variations. The most recent periods suggest a potential stabilization around the 48-52 day range, although further observation is needed to confirm this. The initial decrease from 52 to 46 days represents a roughly 13% improvement in collection efficiency, but this improvement has not been consistently maintained.

The fluctuations observed in the average receivable collection period warrant further investigation to determine the underlying causes. These could include changes in credit policies, customer payment behavior, or the mix of sales terms offered.

The operating cycle of the company exhibits fluctuations over the analyzed period, spanning from January 30, 2021, to November 1, 2025, with projections to January 31, 2026. The cycle, representing the time it takes to convert raw materials into cash from sales, demonstrates periods of relative stability interspersed with notable increases.

Overall Trend

The operating cycle generally trends upward over the observation period. Starting at 167 days in January 2021, it experiences volatility but concludes at 190 days in November 2025, with a projection of 190 days for January 2026. This suggests a lengthening in the time required to complete the operating cycle.

Inventory Processing Period

The average inventory processing period shows considerable variability. It begins at 115 days and increases to a peak of 157 days in October 2021. Subsequently, it decreases to a low of 96 days in July 2022 before rising again, reaching 148 days in January 2026. This suggests inconsistencies in inventory management efficiency.

Receivable Collection Period

The average receivable collection period demonstrates a generally decreasing trend, particularly from 2021 to mid-2023. Starting at 52 days, it declines to a minimum of 35 days in April 2023. However, it subsequently increases, reaching 55 days in August 2025, and stabilizes at 48 days in November 2025, with a projection of 42 days for January 2026. This indicates an initial improvement in collecting receivables, followed by a recent lengthening in the collection timeframe.

Interplay of Components

The operating cycle’s fluctuations are influenced by both the inventory processing and receivable collection periods. The significant increase in the operating cycle observed in late 2021 and early 2022 is largely attributable to a substantial rise in the inventory processing period. While the receivable collection period generally decreased during this time, it was insufficient to offset the impact of the longer inventory cycle. More recently, increases in both the inventory processing and receivable collection periods contribute to the upward trend in the overall operating cycle.

The observed trends suggest a need for ongoing monitoring of both inventory management and credit policies. Further investigation into the factors driving the lengthening inventory processing period and the recent increase in the receivable collection period may be warranted to identify potential areas for improvement in operational efficiency.

The average payables payment period exhibited fluctuations over the observed period, generally ranging between 33 and 58 days. An initial increase is noted from 42 days in January 2021 to 50 days in May 2021, followed by a slight decrease to 47 days in July 2021, and a subsequent rise to 58 days by October 2021. This suggests a lengthening of the time taken to settle obligations to suppliers during the first three quarters of 2021, peaking in the fourth quarter.

Overall Trend (2021-2024)

From January 2022 through October 2022, the average payables payment period generally decreased, reaching a low of 33 days in January 2023. This indicates improved efficiency in managing supplier payments. However, the period then fluctuated between 37 and 47 days through the remainder of 2023 and into early 2024.

A notable decrease to 33 days was observed in January 2023, representing the shortest payment period within the analyzed timeframe. Following this, the period experienced a moderate increase, stabilizing around 37-44 days for much of 2024. A slight increase is observed in the later quarters of 2024, reaching 47 days in November 2024.

Recent Fluctuations (2024-2026)

The period remained relatively stable at 46 days in January 2026. The most recent measurements indicate a slight increase to 47 days in November 2025, followed by a decrease to 46 days in January 2026. These fluctuations suggest potential shifts in supplier relationships or internal payment processing strategies, but the changes are not substantial.

The observed variations in the average payables payment period may be influenced by factors such as supplier credit terms, the company’s cash flow management practices, and strategic decisions regarding working capital. The recent trend suggests a generally stable payment period, with minor adjustments occurring throughout the analyzed timeframe.

The short-term operating activity, as measured by the cash conversion cycle and its components, exhibits fluctuating patterns over the observed period. Generally, the cycle length increased over the analyzed timeframe, though with considerable quarterly variation. A detailed examination of the individual components reveals the drivers behind these changes.

Average Inventory Processing Period

The average time to process inventory generally increased from approximately 115 days in early 2021 to a range of 135-148 days in late 2024 and early 2026. There was a notable dip to 100 days in early 2022, followed by a gradual climb. The most recent values suggest a sustained increase in the time required to convert inventory into finished goods and make them available for sale. This could indicate challenges in supply chain management, production inefficiencies, or a shift in inventory strategy.

Average Receivable Collection Period

The average number of days to collect receivables demonstrated more volatility. It began around 52 days in early 2021, decreased to a low of 44 days in late 2023, and then fluctuated between 42 and 55 days. While generally trending downwards initially, the period has shown recent increases, suggesting potential challenges in collecting payments from customers or changes in credit terms. The recent fluctuations warrant further investigation.

Average Payables Payment Period

The average time taken to pay suppliers remained relatively stable, generally fluctuating between 33 and 58 days. A decrease was observed in early 2024, dropping to 33 days, before returning to the 37-48 day range. This suggests consistent management of supplier relationships and payment terms. The period did not exhibit the same degree of fluctuation as the inventory and receivables components.

Cash Conversion Cycle

The cash conversion cycle, representing the time between paying for inventory and receiving cash from sales, increased from 125 days in early 2021 to 144 days in early 2026. A significant peak of 172 days was observed in late 2021. The overall upward trend suggests a lengthening of the time capital is tied up in the operating cycle. This increase is primarily driven by the rising inventory processing period, partially offset by fluctuations in the receivable collection period. The recent increase in the cycle length could indicate a need to optimize working capital management.

In summary, the observed trends suggest a growing need to focus on inventory management to reduce processing times. While receivable collection has been relatively efficient, recent fluctuations require monitoring. The consistent management of payables provides a degree of stability, but the overall lengthening of the cash conversion cycle warrants attention to improve operational efficiency and free up working capital.