Broadcom Inc. (NASDAQ:AVGO)

Inventory Turnover

The inventory turnover ratio fluctuated over the six-year period. It started at a high of 10.34 in 2020, declined steadily to a low of 5.77 in 2022, and then recovered sharply to 10.83 in 2024 before slightly decreasing to 9.07 in 2025. This indicates variations in inventory management efficiency, with notable improvements in recent years after a mid-period decline.

Receivables Turnover

The receivables turnover ratio showed an upward trend from 10.4 in 2020 to a peak of 13.25 in 2021. Following this, it gradually declined to 8.94 by 2025. This suggests that receivables were collected faster initially but the collection pace slowed down in the later years.

Payables Turnover

The payables turnover ratio decreased from 12.41 in 2020 to 9.77 in 2021, followed by fluctuations and a substantial rise to 13.2 in 2025. The higher payables turnover towards the end indicates quicker payments to suppliers compared to earlier years.

Working Capital Turnover

This ratio experienced significant variability, starting at 4.32 in 2020, dropping to around 2.66-2.9 during 2021-2023, surging dramatically to 17.8 in 2024, and then falling back to 4.89 in 2025. The spike in 2024 suggests an unusually high efficiency in utilizing working capital during that year, which was not sustained subsequently.

Average Inventory Processing Period

The inventory processing period increased from 35 days in 2020 to 63 days in 2022, indicating slower inventory turnover. It remained relatively stable in 2023, then improved noticeably to 34 days in 2024 before increasing slightly to 40 days in 2025.

Average Receivable Collection Period

The receivable collection period decreased from 35 days in 2020 to 28 days in 2021, then experienced minor increases and decreases, reaching 41 days in 2025. This trend points to initial improvements in collection efficiency followed by a gradual decline in subsequent years.

Operating Cycle

The operating cycle lengthened from 70 days in 2020 to a peak of 96 days in 2022, indicating a longer duration for converting resources into cash. It shortened significantly to 65 days in 2024, suggesting improved operational efficiency, but increased again to 81 days in 2025.

Average Payables Payment Period

The payables payment period rose from 29 days in 2020 to 40 days in 2023, reflecting a slower payment to suppliers during this time. It decreased thereafter to 28 days by 2025, indicating a faster payment cycle in the most recent year.

Cash Conversion Cycle

The cash conversion cycle followed an inconsistent path, starting at 41 days in 2020, declining to 36 days in 2021, then rising significantly to 63 days in 2022. It decreased again to 33 days in 2024 before increasing to 53 days in 2025. These fluctuations reflect changes in overall liquidity management and the timing of cash flows through operations.

Cost of Revenue

The cost of revenue experienced a moderate increase from approximately 10,372 million US dollars in late 2020 to about 11,129 million in late 2023. A significant rise is observed in the subsequent year, reaching 19,065 million, before continuing to increase to approximately 20,593 million by late 2025. This suggests a substantial growth in expenses related to production or procurement in the most recent years.

Inventory

Inventory levels show a generally upward trend, starting at 1,003 million US dollars in 2020 and increasing to 1,898 million by late 2023. There is a slight dip to 1,760 million in the following year, but then inventory rises significantly to 2,270 million by 2025. This pattern implies rising stock levels, which could reflect increased production or accumulation of goods.

Inventory Turnover Ratio

The inventory turnover ratio declined from 10.34 in 2020 to a low of around 5.77-5.86 during 2022 and 2023, indicating slower movement of inventory or longer holding periods during these years. However, this ratio then substantially recovers to 10.83 in 2024, suggesting improved efficiency in inventory usage or faster sales. A slight decline follows to 9.07 in 2025, still indicative of relatively efficient inventory management compared to earlier years.

Net Revenue

The net revenue demonstrates a consistent upward trend over the observed periods. Starting at approximately 23.9 billion US dollars, the amount increased year-over-year, reaching a peak of nearly 63.9 billion US dollars in the latest period. This significant growth indicates robust sales expansion, especially notable after the 2023 period where the revenue jump is particularly substantial.

Trade Accounts Receivable, Net

The trade accounts receivable, net, also generally increased across the years. Beginning at around 2.3 billion US dollars, this value rose steadily with some acceleration in later years, reaching about 7.1 billion US dollars by the most current period. This upward trend in receivables aligns with growing sales, but the proportionate growth rate appears higher in recent years.

Receivables Turnover Ratio

The receivables turnover ratio exhibits variability over the covered periods without a clear, consistent direction. It initially improved from 10.4 to a high of approximately 13.25, indicating more efficient collection of receivables. Subsequently, the ratio shows a downward trend, declining to around 8.94 in the latest period. This decrease suggests a potential slowdown in the collection process or an extension of credit terms, which may result from increased receivables or changes in customer payment behavior.

Overall Analysis

The company's net revenue growth is robust, reflecting strong market demand or successful business strategies. However, the rapid increase in trade accounts receivable alongside a declining receivables turnover ratio in recent periods warrants attention. It indicates that while sales are growing, the efficiency in collecting outstanding receivables is decreasing. This could affect cash flow and require monitoring to maintain healthy liquidity and operational performance.

Cost of Revenue

The cost of revenue exhibits a consistent upward trend over the periods analyzed. Starting at 10,372 million US dollars, it increased marginally to 11,129 million by late 2023, followed by a more substantial rise reaching 19,065 million in the following year and further advancing to 20,593 million in the final period. This indicates an overall significant growth in the cost structure associated with generating revenue.

Accounts Payable

Accounts payable shows fluctuating movements with a general rising pattern. Initially increasing from 836 million to a peak of 1,210 million in late 2023, it increased further to 1,662 million in the subsequent year before slightly decreasing to 1,560 million. These changes reflect variability in short-term obligations, with a notable increase towards the later years.

Payables Turnover Ratio

The payables turnover ratio demonstrates variability without a consistent direction during the periods. It declined from 12.41 to 9.77 by late 2021, then improved to 11.13 in 2022, followed by a fall to 9.2 in 2023. Subsequently, it rose again to 11.47 and further to 13.2, indicating fluctuating efficiency in managing payables and supplier payments. The higher ratio in the latest period suggests improved management or faster turnover of payables.

Working Capital

The working capital showed an increasing trend from 5,524 million USD in 2020 to 13,442 million USD in 2023, indicating an improvement in the company's short-term financial health. However, there was a significant drop in 2024 to 2,898 million USD before sharply rising again to 13,059 million USD in 2025. This fluctuation in 2024 suggests a potential one-time event or operational challenge impacting current assets or liabilities during that period.

Net Revenue

Net revenue experienced sustained growth over the six-year span, increasing steadily from 23,888 million USD in 2020 to 63,887 million USD in 2025. Notably, the growth accelerated between 2023 and 2024, where revenue jumped from 35,819 million USD to 51,574 million USD, highlighting a period of rapid expansion before continuing upward in 2025.

Working Capital Turnover

The working capital turnover ratio decreased from 4.32 in 2020 to 2.66 in 2021, remained relatively stable through 2023, and then spiked dramatically to 17.8 in 2024, followed by a reduction to 4.89 in 2025. The abnormally high ratio in 2024 aligns with the sharp decline in working capital that year, reflecting greater revenue efficiency against a reduced base of working capital. In other years, the ratio suggests a more moderate revenue generation relative to available working capital.

The financial data reveals notable fluctuations in the inventory management metrics over the observed periods. Specifically, the inventory turnover ratio and the average inventory processing period demonstrate inverse patterns, consistent with standard inventory dynamics.

Inventory Turnover Ratio

The ratio exhibited a declining trend from 10.34 in 2020 to its lowest point of 5.77 in 2022, indicating a reduction in the frequency of inventory sales and replenishment cycles. This decrease suggests either accumulation of inventory or slower sales during these years. Subsequently, there was a modest recovery to 5.86 in 2023, followed by a significant increase to 10.83 in 2024, implying an improvement in inventory management efficiency or an increase in sales velocity. The ratio slightly decreased again to 9.07 in 2025 but remained at a relatively high level compared to the mid-period lows.

Average Inventory Processing Period (Days)

The average days inventory remained correspond inversely to the turnover ratio. Starting at 35 days in 2020, it rose steadily to peak at 63 days in 2022, indicating longer holding periods for inventory and potentially slower movement of goods. After a slight reduction to 62 days in 2023, the processing period sharply decreased to 34 days in 2024, signifying a return to faster inventory turnover. The period increased somewhat to 40 days in 2025 but stayed closer to the more efficient levels seen earlier in the data series.

Overall, the period from 2021 to 2023 reflects challenges in inventory movement, with prolonged holding times and decreased turnover efficiency. However, a marked improvement occurred in 2024, suggesting successful operational adjustments or market conditions favoring faster inventory cycles. The slight moderation in 2025 implies some stabilization, though the company maintains relatively effective inventory management compared to the mid-term downturn.

Receivables Turnover

The receivables turnover ratio displays notable fluctuations over the six-year period. It initially increased from 10.4 in 2020 to a peak of 13.25 in 2021, indicating an improvement in the efficiency of collecting receivables that year. However, the ratio declined to 11.22 in 2022 and stabilized slightly around 11.36 in 2023 and 11.68 in 2024. A significant decrease to 8.94 in 2025 suggests a marked decline in the company's effectiveness at collecting receivables at the end of the period.

Average Receivable Collection Period

The average number of days required to collect receivables generally decreased from 35 days in 2020 to a low of 28 days in 2021, reflecting faster collection times concurrent with the higher turnover ratio in that year. Between 2022 and 2024, the collection period remained relatively stable, fluctuating narrowly between 31 and 33 days. In 2025, there is a substantial increase to 41 days, indicating a slower collection process, which aligns with the corresponding decrease in the receivables turnover ratio in the same year.

Overall Analysis

The data demonstrates an initial improvement in receivables management in 2021, followed by a period of relative stability before a significant decline in collection efficiency in 2025. The inverse relationship between the receivables turnover ratio and the average collection period is evident, as improvements in turnover coincide with shorter collection periods and vice versa. The deterioration seen in the final year suggests potential challenges in credit management or changes in customer payment behavior that may require attention.

Average Inventory Processing Period

The average inventory processing period demonstrated initial growth, increasing from 35 days in 2020 to a peak of 63 days in 2022. This was followed by a slight decline to 62 days in 2023 and a more pronounced reduction to 34 days in 2024. The period then modestly increased to 40 days in 2025. This trend suggests fluctuations in inventory turnover efficiency, with a peak indicating slower processing around 2022 and a subsequent effort to improve inventory handling speed in later years.

Average Receivable Collection Period

The average receivable collection period initially decreased from 35 days in 2020 to 28 days in 2021, indicating improved collection efficiency. It then increased moderately to 33 days in 2022 and remained relatively stable around 31-32 days through 2023 and 2024. In 2025, there was a noticeable increase to 41 days, suggesting a potential challenge or slowdown in the receivables collection process during the most recent year.

Operating Cycle

The operating cycle, representing the total time taken for inventory processing and receivables collection, increased from 70 days in 2020 to a peak of 96 days in 2022. It slightly decreased to 94 days in 2023 and then significantly dropped to 65 days in 2024, indicating improved operational efficiency. In 2025, the cycle lengthened again to 81 days, pointing to some renewed inefficiencies or changes in working capital management.

Payables Turnover

The payables turnover ratio exhibits some fluctuations over the observed periods. It decreased from 12.41 in 2020 to 9.77 in 2021, indicating a slower rate of payment to suppliers during that time. Subsequently, the ratio rebounded to 11.13 in 2022 but declined again to 9.20 in 2023, reflecting a variable payment pattern. In the later two years, there is a notable increase, with the ratio rising to 11.47 in 2024 and further to 13.20 in 2025. This upward trend in the most recent years suggests an improvement in the efficiency of settling payables.

Average Payables Payment Period

The average payables payment period demonstrates an inverse relationship to the payables turnover ratio, as expected. It initially increased from 29 days in 2020 to a peak of 40 days in 2023, implying a lengthening of the payment cycle. Following this peak, the period shortens significantly in the final years, dropping to 32 days in 2024 and further to 28 days in 2025. This decrease in days aligns with the improvement observed in the payables turnover ratio, indicating faster payments to creditors in recent periods.

Insights

The data reveals a cyclical pattern in the company's management of payables, alternating between slower and faster payment approaches. The more recent trend towards a higher payables turnover and shorter payment periods likely reflects an operational shift aimed at enhancing vendor relationships or optimizing working capital. This improvement in payment efficiency can also have a positive impact on credit terms and the company’s overall liquidity profile.

Average Inventory Processing Period

The average inventory processing period exhibits notable fluctuations over the years. Starting at 35 days, it increased significantly to 63 days by 2022, indicating a slower inventory turnover during that period. Following this peak, there was a considerable reduction to 34 days in 2024, suggesting improvements in inventory management. The period then rose slightly to 40 days in 2025, indicating a modest slowdown but still remaining below the earlier peak.

Average Receivable Collection Period

This metric shows a generally stable pattern with moderate variations. Beginning at 35 days, it decreased to 28 days in 2021, which implies enhanced efficiency in collecting receivables. Subsequently, it experienced a gradual increase to 33 days in 2022 and stabilized around 31-32 days over the next two years before rising to 41 days in 2025, potentially reflecting a lengthening in credit collection terms or slower customer payments.

Average Payables Payment Period

The average payables payment period fluctuates within a narrow range from 29 to 40 days. It increased from 29 days in 2020 to a peak of 40 days in 2023, suggesting an extension in the time taken to pay suppliers. However, the figure then shortened to 32 days in 2024 and further to 28 days in 2025, implying a quicker settlement cycle in recent periods.

Cash Conversion Cycle

The cash conversion cycle displays considerable variability, starting at 41 days in 2020. It decreased to 36 days in 2021, then surged to a high of 63 days in 2022, indicating a lengthening of the overall working capital cycle and potentially reduced liquidity efficiency at that time. After declining to 33 days in 2024, it rose again to 53 days in 2025, suggesting a renewed extension in the timeframe required to convert investments in inventory and other resources into cash.