Analog Devices Inc. (NASDAQ:ADI)

Inventory Turnover

The inventory turnover ratio shows moderate fluctuations throughout the periods with a peak around early 2022, reaching a high of approximately 3.82. Subsequently, there is a gradual decline observed, reaching values around 2.59 by the latest period. This suggests a slight decrease in the efficiency of inventory management over time.

Receivables Turnover

The receivables turnover ratio exhibits some volatility, with a relatively high point near mid-2024 around 10.42, following a low point approximately 5.02 in early 2022. The ratio improves significantly after this trough but declines again toward the end of the dataset, indicating irregularities in the company’s efficiency in collecting receivables.

Payables Turnover

Payables turnover demonstrates variability, ranging mostly between 7 and 10.9. There is a notable upward spike around early 2024, peaking near 10.91, followed by a moderate decline. This suggests occasional shifts in the company's approach to managing payables, potentially leveraging credit terms more aggressively at times.

Working Capital Turnover

Working capital turnover shows substantial fluctuations, with extremely high values observed sporadically (e.g., 49.24 near mid-2020) and very low values around early 2022 and beyond, dropping to approximately 2.63. This irregular pattern reflects significant changes in working capital efficiency, possibly influenced by shifts in operational scale or capital structure.

Average Inventory Processing Period

The average inventory processing period generally remains stable within a range of approximately 113 to 117 days before experiencing a pronounced increase to 157 days at early 2022, followed by a gradual rise to around 141 days by the latest period. This trend may indicate slower inventory movement and less efficient stock turnover.

Average Receivable Collection Period

This period varies considerably, rising from about 39 days early on to a peak near 73 days in early 2022, then gradually declining back to roughly 35 days in mid-2024 before increasing again toward the end. These changes imply fluctuations in how quickly receivables are converted into cash, with some periods of slower collection impacting liquidity.

Operating Cycle

The operating cycle generally increases over time from around 152 days to a peak near 230 days in early 2022. Following this peak, the cycle reduces slightly but remains elevated above its initial levels, indicating an overall lengthening of the time taken from inventory acquisition to cash collection.

Average Payables Payment Period

This metric shows variability without a clear trend, fluctuating between 33 and 58 days. Peaks of longer payment periods are observed intermittently, suggesting changes in the company's ability to extend payables or negotiate terms with suppliers.

Cash Conversion Cycle

The cash conversion cycle rises from about 110 days initially to a maximum near 172 days around early 2022, followed by persistent elevated levels around 130-150 days thereafter. This prolonged cycle indicates that the company is taking longer to turn its investments in inventory and receivables back into cash, which may affect liquidity.

Cost of Sales

The cost of sales exhibits a fluctuating but generally increasing trend over the entire period. Initially, there is a decrease from approximately 501 million USD in early 2019 to around 455 million USD in early 2020. Following this decline, the cost continually rises, reaching a peak above 1.28 billion USD in late 2021. After this peak, the cost of sales slightly decreases and stabilizes around the range of 1 billion to 1.13 billion USD through 2023 and into 2024, with minor fluctuations. This pattern suggests periods of both contraction and expansion in production or sales activities, with a notable increase in scale during the latter half of 2020 and early 2021.

Inventories

Inventories demonstrate a generally upward trend over time, indicating accumulation of stock or slower inventory turnover. Starting just below 600 million USD in early 2019, inventory levels rise steadily through 2019 and 2020, peaking dramatically at over 1.2 billion USD in late 2021. After this significant spike, inventory values decrease somewhat but then resume an upward trajectory, reaching approximately 1.6 billion USD by mid-2025. This escalation aligns with higher cost of sales in certain periods but may also reflect strategic stockpiling or slower inventory movement in later years.

Inventory Turnover Ratio

The inventory turnover ratio is only available from mid-2019 onward and displays notable variability. Initially, it stays around 3.2 to 3.3, suggesting a moderate rate of converting inventories to sales. The ratio drops significantly to 2.33 in late 2021, coinciding with the peak in inventory values. Subsequently, it recovers to near 3.8 in early 2022, indicating faster inventory movement, before declining steadily to around 2.6 by mid-2025. The decreasing trend in inventory turnover in the most recent periods reflects a slowdown in how quickly inventory is sold or used, potentially indicating increasing inventory levels relative to sales or a buildup of less liquid stock.

Overall Insights

The data shows that while cost of sales and inventories generally increase over time, inventory turnover fluctuates, trending downward in recent years. The peak in both cost of sales and inventories around late 2021 suggests a phase of rapid growth or inventory buildup, followed by adjustments where inventory turnover efficiency declines. The trends may imply challenges in inventory management or changes in market demand dynamics, necessitating closer monitoring of stock levels relative to sales to optimize operational efficiency.

The financial data exhibits several notable trends regarding revenue, accounts receivable, and receivables turnover over the observed periods.

Revenue

Revenue shows an overall upward trend from February 2019 through August 2025 with several fluctuations. Initially, revenue declined from approximately 1,541,101 thousand USD in early 2019 to about 1,303,565 thousand USD by early 2020. However, a strong recovery followed, with revenue peaking significantly at around 3,249,630 thousand USD by early 2023. Following this peak, a gradual decline occurs, with revenue tapering off to approximately 2,880,348 thousand USD by August 2025. The pattern suggests periods of growth punctuated by intermittent contractions, possibly reflective of market conditions, product cycles, or other external factors.

Accounts Receivable

Accounts receivable followed a somewhat similar trajectory but with more pronounced volatility. Starting near 713,730 thousand USD in early 2019, the balance decreased to around 584,366 thousand USD in early 2020. A marked increase occurred thereafter, particularly from late 2020 through early 2023, with receivables peaking at approximately 1,809,462 thousand USD. This was followed by a downward adjustment through 2024, reaching about 1,192,442 thousand USD, before rising again towards mid-2025. The substantial increase in receivables concurrent with rising revenue indicates an expansion of credit sales or relaxed collection policies during the growth phase. The later reduction may reflect tighter credit management or improved collections.

Receivables Turnover Ratio

The receivables turnover ratio, which measures how efficiently the company collects its receivables, fluctuates significantly across the periods. Early data are missing, but from early 2020 onward, the ratio declines from 9.43 to a low point of approximately 5.02 by early 2022. Subsequently, the ratio increases again, peaking near 10.42 in mid-2024, followed by a slight decrease toward 6.69 in mid to late 2025. Lower ratios in 2021 and 2022 align with the increased accounts receivable balances, indicating slower collections during this period. The rebound in turnover suggests improved collection efficiency in subsequent periods, although a moderate decline occurs again near the end of the dataset.

Cost of Sales

The cost of sales showed some fluctuations over the periods analyzed. Initially, it decreased from approximately 501 million USD in early 2019 to around 455 million USD by early 2020. Following this decline, it experienced a general upward trend, peaking at roughly 1.28 billion USD by early 2022. Thereafter, the cost of sales showed volatility, with periods of decline and recovery, but maintaining levels above one billion USD in most quarters. The latest data points to a moderate increase, ending just above 1.09 billion USD by mid-2025, suggesting variability but an overall higher cost base compared to early periods.

Accounts Payable

Accounts payable figures demonstrated a generally rising trend across the dataset. Starting at approximately 223 million USD in early 2019, they remained relatively stable with minor fluctuations until early 2021, after which there was a significant jump to over 443 million USD in late 2021. From that point forward, accounts payable increased further, reaching levels above 580 million USD in early 2023. Some volatility is noted subsequently, with declines and rebounds, but the overall trend remains upward, culminating near 490 million USD by mid-2025. This suggests increased supplier financing or delayed payments over time.

Payables Turnover Ratio

The payables turnover ratio, which reflects the efficiency in managing payables, varied considerably across quarters. Early data is partially unavailable; however, where available, the ratio ranged mostly between 6.3 and 10.9. The highest ratios were observed around early to mid-2024, suggesting faster payment cycles in these periods. In contrast, dips around late 2021 and early 2022 indicate slower turnover of accounts payable. Overall, the turnover ratio demonstrates cyclicality, implying periods of both quicker and slower payment practices, possibly reflecting changing credit terms or cash flow management strategies.

Overall Observations

The financial data suggests that the company experienced growth in its operational scale, as inferred from increasing cost of sales and accounts payable over the analyzed quarters. The marked rise in accounts payable alongside fluctuations in the turnover ratio points to varied management of liabilities with potential strategic adjustments in supplier payment practices. The fluctuations in cost levels and payables could also reflect external factors affecting procurement and production costs. The company's payables turnover ratio variability indicates responsiveness in managing working capital, balancing between optimizing cash flow and maintaining supplier relationships.

Working Capital

The working capital exhibits substantial volatility over the observed periods. It starts at approximately 1.14 billion USD in the first quarter and declines sharply in subsequent quarters, reaching a low point of about 140 million USD. Following this trough, working capital increases notably, peaking at over 2.6 billion USD around early 2022. After this peak, there is a general downward trend with fluctuations, declining once again to a lower level close to 1.18 billion USD by late 2023. Subsequently, it grows steadily, reaching nearly 3.95 billion USD by mid-2025.

Revenue

Revenue demonstrates a pattern of moderate fluctuations with an overall rising trend. Initially, revenue is near 1.54 billion USD and dips slightly over the next few quarters to a low around 1.3 billion USD in early 2020. Thereafter, it recovers and grows consistently, peaking at approximately 3.25 billion USD by early 2023. Toward the later periods, revenue experiences some decline and leveling off, hovering between 2.4 and 2.9 billion USD from late 2023 through mid-2025.

Working Capital Turnover Ratio

The working capital turnover ratio data is sparse for the initial periods but reveals high volatility in subsequent data points. There are exceptionally high values such as approximately 40.91 and 49.24 observed intermittently, indicating periods where revenue was generated efficiently relative to working capital. However, the ratio generally shows a declining trend over time from these peak values, stabilizing around a range between 2.6 and 6.4 in recent quarters, suggesting a reduced efficiency in utilizing working capital to generate revenue compared to earlier peaks.

Overall Trends and Insights

The data reflects significant variability in both working capital and efficiency of its usage over time. The sharp rise and fall in working capital suggest varying liquidity or operational changes, potentially reflecting investment activities or shifts in short-term asset and liability management. Revenue growth up to early 2023 indicates expansion phases, followed by some stabilization or mild contraction. The decreasing working capital turnover ratio points towards challenges in maintaining earlier efficiency levels in converting working capital into sales, or possibly changes in operational strategy or market conditions affecting turnover rates.

Inventory turnover trend

The inventory turnover ratio demonstrates variability across the observed periods, beginning at 3.24 in the early data points and generally fluctuating between approximately 2.59 and 3.82. Notably, there is a peak observed around the periods corresponding to early 2022, with values of 3.66 and 3.78 followed by a moderate decline. From late 2022 onward, the turnover ratio shows a gradual downward trend, declining from levels near 3.2 to approximately 2.59 by mid-2025. This indicates a slowing in the rate at which inventory is sold and replaced over time.

Average inventory processing period trend

The average inventory processing period, expressed in days, inversely correlates with the turnover ratio trends. Starting near 113 days in the earlier periods, the processing duration experiences significant fluctuations. A remarkable increase is evident in early 2022, rising to 157 days, which coincides with the peak in inventory turnover ratio. Following this peak, the processing period decreases to around 96-100 days, before progressively lengthening once again from late 2022 onward, reaching approximately 141 days by mid-2025. This elongation signals that inventory remains in stock longer before being sold.

Relationship between inventory turnover and processing period

The data exhibit a clear inverse relationship between inventory turnover and average inventory processing period, consistent with standard inventory management principles. Periods of high turnover correspond with short processing durations, while declining turnover aligns with extended timeframes for inventory processing. The late 2021 to early 2022 period marks a shift where turnover peaked and processing time dropped sharply, suggesting improved inventory efficiency temporarily, followed by a reversal indicating a gradual reduction in such efficiency over subsequent quarters.

Overall interpretations

The observed trends suggest that inventory management efficiency has experienced variability, with notable improvement around early 2022, followed by a steady decline through mid-2025. The gradual increase in days inventory remains on hand could potentially impact liquidity and operational efficiency unless countered by other factors not presented here. Monitoring these metrics moving forward would be essential to identify underlying causes and to implement corrective actions where necessary.

The receivables turnover ratio demonstrates a varying trend over the reported periods, initially declining from a high value of 9.85 to a low of 5.02, followed by a gradual recovery reaching a peak of 10.42 before declining again towards the end. This ratio, which measures the number of times receivables are collected during a period, indicates fluctuations in the efficiency of the company's credit and collection policies.

Correspondingly, the average receivable collection period, representing the average number of days taken to collect receivables, exhibits an inverse relationship to the turnover ratio as expected. It begins at a relatively low period of 37 days, peaks at 73 days, reflecting slower collections, then improves to a minimum of 35 days, and slightly worsens again toward the latter periods.

Receivables Turnover Ratio

Shows a decline in efficiency in receivables collection from early 2019 through late 2020, dipping significantly below 7 at several points.

From late 2020 through mid-2024, there is a noticeable improvement, peaking above 10, indicating enhanced collection processes.

Following this peak, a decline trend is registered again, with values tapering down to around 6.69 by mid-2025.

Average Receivable Collection Period

Increases markedly during the period corresponding to the decrease in turnover ratio, reaching a high of 73 days, illustrating slower cash inflow.

Subsequently, collection periods shorten considerably, hitting a low of 35 days, mirroring improved collection efficiency.

In the most recent periods, the average collection duration increases again to approximately 55 days, signaling some deterioration in collection speed.

Overall, the data demonstrates cyclical variations with periods of both weakening and strengthening in receivables management. The inverse correlation between turnover ratio and collection days remains consistent, reflecting standard financial behavior. The recent trends show a slight weakening in receivables collection efficiency compared to the peak performance periods, warranting attention to credit policies and collection efforts moving forward.

Average Inventory Processing Period

The average inventory processing period showed stability around 111 to 117 days from early 2020 through late 2021. However, beginning in early 2022, a notable increase is observed, reaching a peak of 157 days in January 2022. Following this peak, the period declined sharply to around 96-100 days by mid-2022, indicating an improvement in inventory turnover. Afterward, the period gradually increased again, reaching approximately 141 days by August 2025. This suggests fluctuating efficiency in inventory management with periods of both improvement and elongation over the reported timeframe.

Average Receivable Collection Period

The receivable collection period experienced an overall upward trend from early 2020 to early 2022, increasing from 37 days to a high of 73 days in January 2022. This indicates slower collection of receivables, potentially impacting liquidity during this period. Following this peak, the period gradually decreased to a range near 35-46 days in mid to late 2023, showing enhancement in collection efficiency. However, the period again showed a slight increase through 2024 and 2025, reaching 55 days in August 2025. These fluctuations point to varying credit and collection policies or changes in customer payment behavior over time.

Operating Cycle

The operating cycle, which combines inventory processing and receivable collection periods, exhibits a trend consistent with the underlying components. From early 2020, it rose steadily from 148 days to a significant peak of 230 days in January 2022, reflecting extended working capital tied up in inventory and receivables. After this peak, the cycle shortened considerably to about 153 days by mid-2022, indicating improved operational efficiency. Nevertheless, from late 2022 onward, it trended upwards again, reaching around 196 days by August 2025. This suggests a cyclical pattern in operational effectiveness with periodic expansions and contractions in the duration of converting resources into cash.

The financial data reveals notable fluctuations in the payables turnover ratio and the average payables payment period over the observed periods.

Payables Turnover Ratio

Starting from a value of 8.78, the ratio exhibits some variability across quarters. It rises to a local peak of 9.83, followed by a gradual decline to around 6.3, the lowest observed in the dataset. Subsequent quarters show a recovery and fluctuations within a range of approximately 6.3 to 10.91. The highest ratio occurs in the period ending February 3, 2024, at 10.91, suggesting a period where payables were turned over more rapidly. The ratio generally oscillates around the higher end of the 7 to 10 range in more recent periods, indicating variability in payment practices or supplier terms.

Average Payables Payment Period (Days)

This metric inversely correlates with the payables turnover ratio. Initially, the average payment period decreases from 42 days to a minimum of 37 days, indicating quicker payments early on. Subsequently, it extends to a maximum of 58 days in the November 2021 quarter, signaling slower payment practices during that time. Post this peak, the payment period decreases again, fluctuating between 33 and 48 days in the later quarters. The shortest average payment days, 33, occur in the quarter ending February 3, 2024, coinciding with the highest payables turnover ratio, underscoring accelerated payment cycles.

Insights

The inverse relationship between the payables turnover ratio and the average payment period is consistent with expectations: higher turnover ratios correspond to shorter payment periods and vice versa. The data indicates periods of both tightened and eased payment schedules, which may reflect changes in cash management strategies, supplier negotiations, or operational cycles. The peak in average payment days followed by a reduction suggests a temporary extension of payable cycles, which was later corrected or adjusted to improve liquidity or supplier relations.

Inventory Processing Period

The average inventory processing period displays fluctuations over the reported quarters, initially ranging around 111 to 117 days between early 2020 and late 2021. A marked increase is observed in early 2022, reaching 157 days, followed by a reduction in the subsequent quarters down to the mid-90s. However, starting from early 2023, the period again exhibits an upward trend, stabilizing around 130 to 140 days toward mid-2025.

Receivable Collection Period

The average receivable collection period shows higher variability. It increased from the upper 30s to a peak of 73 days in early 2022, indicating slower collections. Subsequently, it improved steadily to the mid-40s during 2023 and early 2024, but again showed some volatility, rising above 50 days toward mid-2025. Overall, the collection period reveals intermittent slowing and recovery phases.

Payables Payment Period

The payables payment period initially trended downward from 42 days to 37 days in mid-2020, then increased sharply to nearly 58 days by late 2021. Thereafter, it fluctuated between 40 and 47 days through 2023. From late 2023 onward, the payment period declined, reaching a low of 33 days and showing moderate increases back toward 44 days in mid-2025. This suggests a varying strategy in managing payables over the periods.

Cash Conversion Cycle

The cash conversion cycle increased overall during the observed timeframe. It began near 110 days in early 2020, peaked at 172 days in early 2022, indicating a prolonged cash flow conversion, and then decreased to around 110 days in late 2022. From 2023, the cycle gradually increased again, stabilizing between 130 and 150 days through mid-2025. This pattern reflects lengthening working capital requirements and possible operational or market influences impacting the company’s cash flow dynamics.