Analysis of Short-term (Operating) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Short-term Activity Ratios (Summary)
Biogen Inc., short-term (operating) activity ratios
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Inventory Turnover
- The inventory turnover ratio initially increased from 1.81 in 2017 to a peak of 2.43 in 2019, indicating improved efficiency in managing inventory. However, from 2019 onwards, there was a decline to 1.56 by the end of 2021, suggesting a slowdown in inventory movement or accumulation of stock.
- Receivables Turnover
- The receivables turnover ratio showed some fluctuations but remained relatively stable between 5.56 and 6.05 over the five-year period. This suggests consistent efficiency in collecting receivables with minor variations.
- Payables Turnover
- The payables turnover ratio increased from 4.12 in 2017 to 4.9 in 2018 but then declined to 3.58 by 2021. This pattern indicates a slowing pace in paying suppliers in recent years, potentially reflecting extended payment terms or liquidity management strategies.
- Working Capital Turnover
- Working capital turnover improved significantly from 2.3 in 2017 to a high of 3.4 in 2020, reflecting more efficient use of working capital to generate sales. However, this efficiency decreased in 2021 to 2.49, indicating a reduced effectiveness in converting working capital into revenue.
- Average Inventory Processing Period
- The average inventory processing period decreased from 202 days in 2017 to 150 days in 2019, reinforcing the improvement in inventory turnover during that time. From 2019 onwards, however, it rose sharply to 234 days by 2021, which aligns with the noted decrease in inventory turnover and suggests slower inventory movement.
- Average Receivable Collection Period
- The average receivable collection period ranged narrowly between 60 and 66 days, indicating consistent credit and collection policies with no significant change in how long it takes to collect receivables.
- Operating Cycle
- The operating cycle decreased substantially from 265 days in 2017 to 210 days in 2019, showing improved operational efficiency. This trend reversed in subsequent years, increasing to 298 days by 2021, highlighting an extension in the overall time taken to convert inventory and receivables into cash.
- Average Payables Payment Period
- The average payables payment period shortened from 89 days in 2017 to 74 days in 2018 but then lengthened to 102 days by 2021, signaling a shift toward longer payment terms or delayed payments to suppliers.
- Cash Conversion Cycle
- The cash conversion cycle initially decreased from 176 days in 2017 to 111 days in 2019, reflecting improved efficiency in managing cash flows. However, it then rose again to 196 days by 2021, suggesting a deterioration in the company’s cash flow conversion efficiency, influenced by longer inventory processing and payables payment periods.
Turnover Ratios
Average No. Days
Inventory Turnover
Biogen Inc., inventory turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cost of sales, excluding amortization and impairment of acquired intangible assets | 2,109,700) | 1,805,200) | 1,955,400) | 1,816,300) | 1,630,000) | |
| Inventory | 1,351,500) | 1,068,600) | 804,200) | 929,900) | 902,700) | |
| Short-term Activity Ratio | ||||||
| Inventory turnover1 | 1.56 | 1.69 | 2.43 | 1.95 | 1.81 | |
| Benchmarks | ||||||
| Inventory Turnover, Competitors2 | ||||||
| AbbVie Inc. | 5.58 | 4.65 | — | — | — | |
| Amgen Inc. | 1.58 | 1.58 | — | — | — | |
| Bristol-Myers Squibb Co. | 4.74 | 5.68 | — | — | — | |
| Danaher Corp. | 4.16 | 4.28 | — | — | — | |
| Eli Lilly & Co. | 1.88 | 1.38 | — | — | — | |
| Gilead Sciences Inc. | 4.08 | 2.72 | — | — | — | |
| Johnson & Johnson | 2.87 | 3.04 | — | — | — | |
| Merck & Co. Inc. | 2.29 | 2.45 | — | — | — | |
| Pfizer Inc. | 3.40 | 1.08 | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 1.25 | 0.58 | — | — | — | |
| Thermo Fisher Scientific Inc. | 3.88 | 4.02 | — | — | — | |
| Vertex Pharmaceuticals Inc. | 2.56 | 2.62 | — | — | — | |
| Inventory Turnover, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 3.11 | 2.63 | — | — | — | |
| Inventory Turnover, Industry | ||||||
| Health Care | 9.17 | 8.17 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Inventory turnover = Cost of sales, excluding amortization and impairment of acquired intangible assets ÷ Inventory
= 2,109,700 ÷ 1,351,500 = 1.56
2 Click competitor name to see calculations.
- Cost of sales, excluding amortization and impairment of acquired intangible assets
- Over the five-year period, the cost of sales exhibited a generally increasing trend. Starting at 1,630,000 US$ thousands in 2017, it rose steadily to 1,956,400 US$ thousands by 2019. A decline was observed in 2020 to 1,805,200 US$ thousands, followed by a rebound and the highest recorded value in 2021 at 2,109,700 US$ thousands. This pattern suggests some volatility around 2020 but overall growth in production or sales costs.
- Inventory
- Inventory levels fluctuated across the period but trended upwards overall. Beginning at 902,700 US$ thousands in 2017, inventory slightly increased to 929,900 US$ thousands in 2018 before dropping to 804,200 US$ thousands in 2019. Subsequently, a noticeable increase occurred in 2020 and 2021, with inventory reaching 1,068,600 and then 1,351,500 US$ thousands, respectively. This rise in inventory may point to higher stock accumulation or changes in inventory management practices in the most recent years.
- Inventory turnover
- Inventory turnover showed variability with an overall declining trend after 2019. The turnover ratio increased from 1.81 in 2017 to a peak of 2.43 in 2019, indicating improved efficiency in inventory usage or sales relative to inventory held. However, this ratio decreased sharply to 1.69 in 2020 and further to 1.56 in 2021. This decline suggests a slowdown in inventory movement or possibly increased inventory levels relative to sales in these years.
- Summary
- The data reveal an increasing cost of sales with some disruption in 2020, aligning with a general rise in inventory levels, particularly in the latter years. The inventory turnover ratio's peak in 2019 followed by a decline suggests that while inventory grew, the efficiency in using or selling inventory lessened after that year. Together, these trends may indicate changing operational conditions, possibly affected by external factors influencing sales, production, or supply chain efficiency.
Receivables Turnover
Biogen Inc., receivables turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Product, net | 8,846,900) | 10,692,200) | 11,379,800) | 10,886,800) | 10,354,700) | |
| Accounts receivable, net | 1,549,400) | 1,913,800) | 1,880,500) | 1,958,500) | 1,787,000) | |
| Short-term Activity Ratio | ||||||
| Receivables turnover1 | 5.71 | 5.59 | 6.05 | 5.56 | 5.79 | |
| Benchmarks | ||||||
| Receivables Turnover, Competitors2 | ||||||
| AbbVie Inc. | 5.63 | 5.19 | — | — | — | |
| Amgen Inc. | 4.96 | 5.36 | — | — | — | |
| Bristol-Myers Squibb Co. | 5.65 | 5.72 | — | — | — | |
| Danaher Corp. | 6.36 | 5.51 | — | — | — | |
| Eli Lilly & Co. | 4.24 | 4.18 | — | — | — | |
| Gilead Sciences Inc. | 6.01 | 4.98 | — | — | — | |
| Johnson & Johnson | 6.14 | 6.08 | — | — | — | |
| Merck & Co. Inc. | 5.28 | 6.11 | — | — | — | |
| Pfizer Inc. | 7.16 | 5.38 | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 2.66 | 2.07 | — | — | — | |
| Thermo Fisher Scientific Inc. | 4.92 | 5.61 | — | — | — | |
| Vertex Pharmaceuticals Inc. | 6.66 | 7.01 | — | — | — | |
| Receivables Turnover, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 5.54 | 5.34 | — | — | — | |
| Receivables Turnover, Industry | ||||||
| Health Care | 8.65 | 8.64 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Receivables turnover = Product, net ÷ Accounts receivable, net
= 8,846,900 ÷ 1,549,400 = 5.71
2 Click competitor name to see calculations.
- Net Product Revenue
- The net product revenue showed a generally increasing trend from 2017 to 2019, rising from approximately $10.35 billion to $11.38 billion. However, there was a decline in 2020 to around $10.69 billion, followed by a more significant drop in 2021 to approximately $8.85 billion. This indicates a peak revenue period in 2019 with subsequent decreases over the last two years observed, which could suggest challenges in sales or market conditions affecting the company.
- Accounts Receivable, Net
- The net accounts receivable increased steadily from about $1.79 billion in 2017 to a peak of roughly $1.96 billion in 2018. After that, it declined slightly in 2019 to approximately $1.88 billion and remained relatively stable in 2020 at around $1.91 billion. In 2021, there was a noticeable decline to approximately $1.55 billion. The fluctuation can indicate changes in credit policies, collection efficiency, or sales credit terms impacting the company's receivables management.
- Receivables Turnover Ratio
- The receivables turnover ratio fluctuated between 5.56 and 6.05 over the five-year period. It started at 5.79 in 2017, decreased slightly to 5.56 in 2018, then increased to 6.05 in 2019, indicating a more efficient collection of receivables in that year. The ratio then decreased to 5.59 in 2020 but slightly improved to 5.71 in 2021. These variations show oscillations in how quickly the company collects receivables but suggest a relatively stable efficiency overall, without drastic deteriorations or improvements.
Payables Turnover
Biogen Inc., payables turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cost of sales, excluding amortization and impairment of acquired intangible assets | 2,109,700) | 1,805,200) | 1,955,400) | 1,816,300) | 1,630,000) | |
| Accounts payable | 589,200) | 454,900) | 530,800) | 370,500) | 395,500) | |
| Short-term Activity Ratio | ||||||
| Payables turnover1 | 3.58 | 3.97 | 3.68 | 4.90 | 4.12 | |
| Benchmarks | ||||||
| Payables Turnover, Competitors2 | ||||||
| AbbVie Inc. | 6.05 | 6.76 | — | — | — | |
| Amgen Inc. | 4.72 | 4.33 | — | — | — | |
| Bristol-Myers Squibb Co. | 3.37 | 4.34 | — | — | — | |
| Danaher Corp. | 4.48 | 4.79 | — | — | — | |
| Eli Lilly & Co. | 4.38 | 3.41 | — | — | — | |
| Gilead Sciences Inc. | 9.36 | 5.42 | — | — | — | |
| Johnson & Johnson | 2.70 | 2.99 | — | — | — | |
| Merck & Co. Inc. | 2.96 | 3.37 | — | — | — | |
| Pfizer Inc. | 5.53 | 2.02 | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 4.32 | 2.36 | — | — | — | |
| Thermo Fisher Scientific Inc. | 6.83 | 7.45 | — | — | — | |
| Vertex Pharmaceuticals Inc. | 4.64 | 4.75 | — | — | — | |
| Payables Turnover, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 4.23 | 3.86 | — | — | — | |
| Payables Turnover, Industry | ||||||
| Health Care | 7.61 | 7.48 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Payables turnover = Cost of sales, excluding amortization and impairment of acquired intangible assets ÷ Accounts payable
= 2,109,700 ÷ 589,200 = 3.58
2 Click competitor name to see calculations.
- Cost of Sales, Excluding Amortization and Impairment of Acquired Intangible Assets
- There is a general upward trend in the cost of sales over the five-year period. Starting at $1,630,000 thousand in 2017, the cost increased steadily to $1,955,400 thousand by 2019. A slight reduction is observed in 2020, with the cost decreasing to $1,805,200 thousand, followed by a notable rise to $2,109,700 thousand in 2021, marking the highest point in the period.
- Accounts Payable
- Accounts payable displayed fluctuating behavior with an overall increasing tendency. Beginning at $395,500 thousand in 2017, it slightly declined in 2018, then significantly increased in 2019 to $530,800 thousand. A reduction occurred in 2020 to $454,900 thousand, but the balance rose considerably again to $589,200 thousand in 2021, the highest in the series.
- Payables Turnover Ratio
- The payables turnover ratio presents variability without a consistent trend. The ratio increased from 4.12 in 2017 to 4.9 in 2018, indicating faster payment to suppliers. However, it dropped sharply to 3.68 in 2019, then slightly recovered to 3.97 in 2020, and decreased again to 3.58 in 2021. This suggests a general slowdown in the payment cycle toward the end of the period, implying longer days payable outstanding.
Working Capital Turnover
Biogen Inc., working capital turnover calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current assets | 7,856,500) | 6,887,100) | 8,381,800) | 7,640,900) | 7,873,300) | |
| Less: Current liabilities | 4,298,200) | 3,742,200) | 4,863,800) | 3,295,200) | 3,368,200) | |
| Working capital | 3,558,300) | 3,144,900) | 3,518,000) | 4,345,700) | 4,505,100) | |
| Product, net | 8,846,900) | 10,692,200) | 11,379,800) | 10,886,800) | 10,354,700) | |
| Short-term Activity Ratio | ||||||
| Working capital turnover1 | 2.49 | 3.40 | 3.23 | 2.51 | 2.30 | |
| Benchmarks | ||||||
| Working Capital Turnover, Competitors2 | ||||||
| AbbVie Inc. | — | — | — | — | — | |
| Amgen Inc. | 3.37 | 2.55 | — | — | — | |
| Bristol-Myers Squibb Co. | 3.95 | 3.72 | — | — | — | |
| Danaher Corp. | 8.40 | 3.48 | — | — | — | |
| Eli Lilly & Co. | 8.33 | 4.93 | — | — | — | |
| Gilead Sciences Inc. | 8.54 | 5.30 | — | — | — | |
| Johnson & Johnson | 5.95 | 9.44 | — | — | — | |
| Merck & Co. Inc. | 7.62 | 109.83 | — | — | — | |
| Pfizer Inc. | 4.83 | 4.67 | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 1.59 | 1.20 | — | — | — | |
| Thermo Fisher Scientific Inc. | 5.87 | 2.76 | — | — | — | |
| Vertex Pharmaceuticals Inc. | 1.02 | 0.99 | — | — | — | |
| Working Capital Turnover, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 5.87 | 5.34 | — | — | — | |
| Working Capital Turnover, Industry | ||||||
| Health Care | 11.93 | 11.78 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Working capital turnover = Product, net ÷ Working capital
= 8,846,900 ÷ 3,558,300 = 2.49
2 Click competitor name to see calculations.
- Working Capital
- Working capital demonstrated a declining trend from 2017 through 2020, decreasing from approximately 4.51 billion US dollars to 3.14 billion US dollars. In 2021, there was a moderate recovery to around 3.56 billion US dollars, though the value remained below the initial figure in 2017.
- Product, Net Revenue
- Net product revenue increased steadily from 2017 to 2019, rising from roughly 10.35 billion US dollars to nearly 11.38 billion US dollars. However, the revenue declined in 2020 and further dropped significantly in 2021, ending at approximately 8.85 billion US dollars, indicating a notable contraction in product sales during the last two years.
- Working Capital Turnover
- The working capital turnover ratio improved consistently from 2.3 in 2017 to a peak of 3.4 in 2020, suggesting increased efficiency in utilizing working capital to generate sales. Nonetheless, this ratio decreased to 2.49 in 2021, reflecting a reduction in operational efficiency relative to the previous year.
- Overall Analysis
- The data indicates a period of efficiency improvement and growth in product revenue up to 2019. The subsequent years, especially 2020 and 2021, reveal challenges as evidenced by reduced net product revenue and declining working capital turnover. While working capital saw its lowest levels in 2020, a slight rebound occurred in 2021. These trends suggest the company faced operational and sales pressures in recent years, impacting both liquidity and revenue-generating capacity.
Average Inventory Processing Period
Biogen Inc., average inventory processing period calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Inventory turnover | 1.56 | 1.69 | 2.43 | 1.95 | 1.81 | |
| Short-term Activity Ratio (no. days) | ||||||
| Average inventory processing period1 | 234 | 216 | 150 | 187 | 202 | |
| Benchmarks (no. days) | ||||||
| Average Inventory Processing Period, Competitors2 | ||||||
| AbbVie Inc. | 65 | 79 | — | — | — | |
| Amgen Inc. | 231 | 231 | — | — | — | |
| Bristol-Myers Squibb Co. | 77 | 64 | — | — | — | |
| Danaher Corp. | 88 | 85 | — | — | — | |
| Eli Lilly & Co. | 194 | 265 | — | — | — | |
| Gilead Sciences Inc. | 89 | 134 | — | — | — | |
| Johnson & Johnson | 127 | 120 | — | — | — | |
| Merck & Co. Inc. | 159 | 149 | — | — | — | |
| Pfizer Inc. | 107 | 338 | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 292 | 625 | — | — | — | |
| Thermo Fisher Scientific Inc. | 94 | 91 | — | — | — | |
| Vertex Pharmaceuticals Inc. | 143 | 139 | — | — | — | |
| Average Inventory Processing Period, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 117 | 139 | — | — | — | |
| Average Inventory Processing Period, Industry | ||||||
| Health Care | 40 | 45 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 1.56 = 234
2 Click competitor name to see calculations.
- Inventory Turnover
- The inventory turnover ratio exhibits a fluctuating trend over the five-year period. Beginning at 1.81 in 2017, it increased to reach a peak of 2.43 in 2019, indicating improved efficiency in inventory management during this period. However, in subsequent years, the ratio declined to 1.69 in 2020 and further to 1.56 in 2021, suggesting a reduction in the frequency with which inventory was sold and replaced.
- Average Inventory Processing Period
- The average inventory processing period shows an inverse pattern relative to inventory turnover, which is consistent with expectations. Starting at 202 days in 2017, the period shortened to 187 days in 2018 and further reduced significantly to 150 days in 2019, reflecting quicker inventory turnover. Nonetheless, the processing period extended again in the following years, increasing sharply to 216 days in 2020 and further to 234 days in 2021, indicating a slowdown in inventory movement and longer holding times.
- Overall Insight
- Both metrics reveal an initial improvement in inventory management efficiency up to 2019, followed by a marked decline in subsequent years. This reversal may point to operational challenges or changes in demand affecting inventory dynamics. The longer processing periods in 2020 and 2021 coupled with lower turnover ratios suggest less effective inventory utilization during the later years examined.
Average Receivable Collection Period
Biogen Inc., average receivable collection period calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Receivables turnover | 5.71 | 5.59 | 6.05 | 5.56 | 5.79 | |
| Short-term Activity Ratio (no. days) | ||||||
| Average receivable collection period1 | 64 | 65 | 60 | 66 | 63 | |
| Benchmarks (no. days) | ||||||
| Average Receivable Collection Period, Competitors2 | ||||||
| AbbVie Inc. | 65 | 70 | — | — | — | |
| Amgen Inc. | 74 | 68 | — | — | — | |
| Bristol-Myers Squibb Co. | 65 | 64 | — | — | — | |
| Danaher Corp. | 57 | 66 | — | — | — | |
| Eli Lilly & Co. | 86 | 87 | — | — | — | |
| Gilead Sciences Inc. | 61 | 73 | — | — | — | |
| Johnson & Johnson | 59 | 60 | — | — | — | |
| Merck & Co. Inc. | 69 | 60 | — | — | — | |
| Pfizer Inc. | 51 | 68 | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 137 | 177 | — | — | — | |
| Thermo Fisher Scientific Inc. | 74 | 65 | — | — | — | |
| Vertex Pharmaceuticals Inc. | 55 | 52 | — | — | — | |
| Average Receivable Collection Period, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 66 | 68 | — | — | — | |
| Average Receivable Collection Period, Industry | ||||||
| Health Care | 42 | 42 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 5.71 = 64
2 Click competitor name to see calculations.
- Receivables Turnover
- The receivables turnover ratio exhibits moderate fluctuations over the observed period. It started at 5.79 in 2017, slightly declined to 5.56 in 2018, then increased to a peak of 6.05 in 2019. Subsequently, it experienced a decrease to 5.59 in 2020, followed by a minor recovery to 5.71 in 2021. Overall, the ratio shows a tendency to hover around the mid-5 to low-6 range, indicating that the frequency of collecting receivables has remained relatively consistent with only moderate variability.
- Average Receivable Collection Period
- The average receivable collection period, measured in days, reflects an inverse pattern relative to the receivables turnover. It started at 63 days in 2017, increased slightly to 66 days in 2018, then decreased to 60 days in 2019, indicating improved collection efficiency that year. However, the period lengthened again to 65 days in 2020 and marginally decreased to 64 days in 2021. These changes suggest some volatility in the efficiency of receivables collection, with a tendency to remain close to an average of about two months.
- Summary
- The data indicate moderately stable receivables management over the five-year span. While the receivables turnover ratio and average collection period exhibit some year-to-year variations, no drastic shifts are observed. These trends suggest consistent credit and collection policies with only minor adjustments influencing the speed of accounts receivable conversion into cash.
Operating Cycle
Biogen Inc., operating cycle calculation, comparison to benchmarks
No. days
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Average inventory processing period | 234 | 216 | 150 | 187 | 202 | |
| Average receivable collection period | 64 | 65 | 60 | 66 | 63 | |
| Short-term Activity Ratio | ||||||
| Operating cycle1 | 298 | 281 | 210 | 253 | 265 | |
| Benchmarks | ||||||
| Operating Cycle, Competitors2 | ||||||
| AbbVie Inc. | 130 | 149 | — | — | — | |
| Amgen Inc. | 305 | 299 | — | — | — | |
| Bristol-Myers Squibb Co. | 142 | 128 | — | — | — | |
| Danaher Corp. | 145 | 151 | — | — | — | |
| Eli Lilly & Co. | 280 | 352 | — | — | — | |
| Gilead Sciences Inc. | 150 | 207 | — | — | — | |
| Johnson & Johnson | 186 | 180 | — | — | — | |
| Merck & Co. Inc. | 228 | 209 | — | — | — | |
| Pfizer Inc. | 158 | 406 | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 429 | 802 | — | — | — | |
| Thermo Fisher Scientific Inc. | 168 | 156 | — | — | — | |
| Vertex Pharmaceuticals Inc. | 198 | 191 | — | — | — | |
| Operating Cycle, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 183 | 207 | — | — | — | |
| Operating Cycle, Industry | ||||||
| Health Care | 82 | 87 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= 234 + 64 = 298
2 Click competitor name to see calculations.
- Average Inventory Processing Period
- The average inventory processing period exhibits a fluctuating trend over the five-year span. It decreased from 202 days at the end of 2017 to 150 days by the end of 2019, indicating an improvement in inventory turnover during this period. However, this trend reverses starting in 2020, with the period increasing to 216 days and further to 234 days by the end of 2021. This rise suggests a slowdown in inventory movement or potential challenges in managing inventory efficiently in the latter years.
- Average Receivable Collection Period
- The average receivable collection period remains relatively stable throughout the timeframe, varying narrowly between 60 and 66 days. There is a slight increase from 63 days in 2017 to 66 days in 2018, followed by a modest decline to 60 days in 2019, then a small increase again to 65 days in 2020 and a marginal decrease to 64 days in 2021. Overall, this stability indicates consistent credit and collection policies without significant operational disruptions.
- Operating Cycle
- The operating cycle mirrors the trends observed in the inventory processing period, reflecting an overall decrease from 265 days in 2017 to 210 days in 2019, demonstrating improved operating efficiency during these years. Subsequently, the operating cycle extends to 281 days in 2020 and further to 298 days in 2021, indicating an elongation of the total time taken to convert inventory and receivables into cash. This suggests that despite steady receivable collection times, prolonged inventory processing is driving a less efficient operating cycle in recent years.
Average Payables Payment Period
Biogen Inc., average payables payment period calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Payables turnover | 3.58 | 3.97 | 3.68 | 4.90 | 4.12 | |
| Short-term Activity Ratio (no. days) | ||||||
| Average payables payment period1 | 102 | 92 | 99 | 74 | 89 | |
| Benchmarks (no. days) | ||||||
| Average Payables Payment Period, Competitors2 | ||||||
| AbbVie Inc. | 60 | 54 | — | — | — | |
| Amgen Inc. | 77 | 84 | — | — | — | |
| Bristol-Myers Squibb Co. | 108 | 84 | — | — | — | |
| Danaher Corp. | 82 | 76 | — | — | — | |
| Eli Lilly & Co. | 83 | 107 | — | — | — | |
| Gilead Sciences Inc. | 39 | 67 | — | — | — | |
| Johnson & Johnson | 135 | 122 | — | — | — | |
| Merck & Co. Inc. | 123 | 108 | — | — | — | |
| Pfizer Inc. | 66 | 181 | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 84 | 155 | — | — | — | |
| Thermo Fisher Scientific Inc. | 53 | 49 | — | — | — | |
| Vertex Pharmaceuticals Inc. | 79 | 77 | — | — | — | |
| Average Payables Payment Period, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 86 | 95 | — | — | — | |
| Average Payables Payment Period, Industry | ||||||
| Health Care | 48 | 49 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 3.58 = 102
2 Click competitor name to see calculations.
- Payables Turnover
- The payables turnover ratio exhibited fluctuations over the analyzed period. It increased from 4.12 in 2017 to a peak of 4.9 in 2018, indicating a higher frequency of settling payables during that year. However, the ratio declined to 3.68 in 2019, followed by a modest recovery to 3.97 in 2020, before decreasing again to 3.58 in 2021. This pattern suggests variability in the company's payment practices, with a tendency toward slower turnover in the latter years compared to the peak in 2018.
- Average Payables Payment Period
- The average payables payment period, expressed in days, showed an inverse trend relative to the payables turnover. It decreased significantly from 89 days in 2017 to 74 days in 2018, reflecting a quicker payment cycle. Subsequently, the payment period expanded to 99 days in 2019, then slightly shortened to 92 days in 2020, and finally lengthened further to 102 days in 2021. This increase in days payable outstanding in the latter years indicates a trend of extended payment terms or slower payment processes.
- Overall Analysis
- Overall, the data indicates a shift toward longer payment periods and reduced payables turnover following 2018. After initially improving efficiency in payables management, the company appears to adopt more extended payment cycles from 2019 onward. This could reflect changes in working capital management strategy, possible cash flow constraints, or altered supplier negotiations. The opposite movements in the two metrics confirm this interpretation, as they are inherently inversely related.
Cash Conversion Cycle
Biogen Inc., cash conversion cycle calculation, comparison to benchmarks
No. days
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data | ||||||
| Average inventory processing period | 234 | 216 | 150 | 187 | 202 | |
| Average receivable collection period | 64 | 65 | 60 | 66 | 63 | |
| Average payables payment period | 102 | 92 | 99 | 74 | 89 | |
| Short-term Activity Ratio | ||||||
| Cash conversion cycle1 | 196 | 189 | 111 | 179 | 176 | |
| Benchmarks | ||||||
| Cash Conversion Cycle, Competitors2 | ||||||
| AbbVie Inc. | 70 | 95 | — | — | — | |
| Amgen Inc. | 228 | 215 | — | — | — | |
| Bristol-Myers Squibb Co. | 34 | 44 | — | — | — | |
| Danaher Corp. | 63 | 75 | — | — | — | |
| Eli Lilly & Co. | 197 | 245 | — | — | — | |
| Gilead Sciences Inc. | 111 | 140 | — | — | — | |
| Johnson & Johnson | 51 | 58 | — | — | — | |
| Merck & Co. Inc. | 105 | 101 | — | — | — | |
| Pfizer Inc. | 92 | 225 | — | — | — | |
| Regeneron Pharmaceuticals Inc. | 345 | 647 | — | — | — | |
| Thermo Fisher Scientific Inc. | 115 | 107 | — | — | — | |
| Vertex Pharmaceuticals Inc. | 119 | 114 | — | — | — | |
| Cash Conversion Cycle, Sector | ||||||
| Pharmaceuticals, Biotechnology & Life Sciences | 97 | 112 | — | — | — | |
| Cash Conversion Cycle, Industry | ||||||
| Health Care | 34 | 38 | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 234 + 64 – 102 = 196
2 Click competitor name to see calculations.
- Average Inventory Processing Period
- The average inventory processing period exhibited fluctuations over the analyzed years. It decreased from 202 days in 2017 to a low of 150 days in 2019, indicating improved inventory turnover during this interval. However, from 2019 onwards, the period increased again, reaching 234 days by the end of 2021, suggesting a slower inventory movement in recent years.
- Average Receivable Collection Period
- The average receivable collection period remained relatively stable throughout the period. It started at 63 days in 2017, increased slightly to 66 days in 2018, then declined to 60 days in 2019. Subsequently, it rose again to 65 days in 2020 before marginally decreasing to 64 days in 2021. Overall, this indicates consistent receivable management without significant improvements or deteriorations.
- Average Payables Payment Period
- The average payables payment period showed some variation with a general upward trend in later years. It decreased from 89 days in 2017 to 74 days in 2018, then increased substantially to 99 days in 2019. This was followed by a slight decrease to 92 days in 2020 and an increase to 102 days in 2021. This pattern reflects fluctuating but generally extended payment terms with suppliers over time.
- Cash Conversion Cycle
- The cash conversion cycle experienced notable changes across the examined timeframe. It remained fairly stable around 176 to 179 days in 2017 and 2018, then sharply decreased to 111 days in 2019, likely driven by the reduced inventory processing period. However, it increased again to 189 days in 2020 and further to 196 days in 2021, corresponding with the rise in inventory and payables periods. This suggests increasing capital tied up in the operational cycle in recent years.