Broadcom Inc. (NASDAQ:AVGO)

Inventory Turnover

The inventory turnover ratio exhibited a declining trend from early 2021, decreasing from 11.01 to a low of 5.77 by late 2022. Subsequently, it showed a notable recovery, rising sharply to 10.83 in late 2024 before slightly declining to around 9.07 by the end of 2025. This pattern indicates an initial decrease in efficiency of inventory management, followed by a significant improvement in the later periods.

Receivables Turnover

The receivables turnover ratio showed fluctuations throughout the period. Starting at 9.78 in early 2021, it peaked above 13 in late 2021 and early 2023 but then declined to the 7.75-8.94 range by mid-to-late 2024 and 2025. The trend suggests variability in the collection efficiency, with some periods of improved receivables management followed by decreases in turnover rates.

Payables Turnover

Payables turnover displayed considerable volatility. After rising from 11.67 in early 2021 to 15.27 in mid-2022, it generally remained in the 9-14 range thereafter, peaking at 14.92 in mid-2025. This indicates periods of quicker payments to suppliers alternating with slower payment intervals, reflecting changes in short-term liquidity management or supplier terms.

Working Capital Turnover

The working capital turnover ratio remained relatively stable, fluctuating between 2.66 and 3.8 until early 2024, when it experienced extraordinary spikes, reaching an extreme of 681.61 in early 2025. Such drastic increases likely result from significant changes in working capital components or a temporary imbalance between sales and capital employed. After this spike, the ratio normalized but remained elevated compared to earlier years.

Average Inventory Processing Period

The average inventory processing period steadily increased from 33 days in early 2021 to around 63 days by late 2022, indicating slower inventory turnover during that timeframe. From early 2023 onward, the period shortened progressively to about 34 days in late 2024, before slightly increasing again to 40 days by the end of 2025, mirroring the inventory turnover trend.

Average Receivable Collection Period

Receivable collection periods ranged mostly between 28 and 41 days. There was a notable increase to 47 days in early 2024, suggesting slower collections during that period, but this was followed by a decline back towards the low to mid-30 day range subsequently. Overall, the pattern suggests some temporary weakening in receivables management followed by recovery.

Operating Cycle

The operating cycle showed a gradual lengthening from approximately 70 days in early 2021 to a peak of 102 days in early 2024, indicating increased time from inventory acquisition to cash collection. After that, it shortened significantly to 65 days in late 2024 before rising again toward 81 days by the end of 2025. These fluctuations reflect changes in both inventory and receivable management efficiency.

Average Payables Payment Period

The payables payment period fluctuated within a range from 24 to 43 days without a clear long-term upward or downward trend. Peaks around early to mid-2024 suggest a temporary extension of payment terms or delayed payments, while the lower values indicate periods of faster payments to suppliers.

Cash Conversion Cycle

The cash conversion cycle generally ranged between 33 and 69 days. It increased from 39 days in early 2021 to a peak of 69 days in mid-2022, reflecting longer cash flow cycles, before decreasing to around 33 days in late 2024. However, the cycle lengthened again towards the end of the analyzed period to approximately 53 days. This shows variability in the cash flow timing relating to inventory, receivables, and payables management.

Cost of Revenue

The cost of revenue exhibited a generally increasing trend over the periods analyzed. Starting at $2,703 million in early 2021, it experienced fluctuations but showed a marked upward trajectory from early 2024 onwards, peaking at $5,766 million in late 2025. This upward movement particularly accelerated from early 2024, indicating rising expenses associated with generating revenue.

Inventory

Inventory levels gradually increased through the periods, rising from $952 million at the beginning of 2021 to a high near $2,270 million by late 2025. The growth was steady with some minor fluctuation, reflecting an expansion in stock held by the company over the years. Notably, inventory increased substantially more slowly or even decreased slightly in some quarters within 2024 and early 2025, indicating potential efforts to manage or optimize stock levels.

Inventory Turnover Ratio

The inventory turnover ratio showed a declining trend initially, starting from 11.01 in early 2021 and falling steadily to a low near 5.77 in late 2022. This decline suggests that inventory was turning over less frequently, implying slower sales or increased stock accumulation during that time frame. However, beginning in early 2024, a reversal is evident, with turnover ratios improving significantly to exceed 10 by late 2024 before slightly declining again but remaining above 9 through 2025. This improvement may indicate enhanced efficiency in inventory management or an acceleration in sales velocity after the earlier period of slower turnover.

Overall Insights

The cost of revenue and inventory levels both display an overall upward trend, which may be consistent with business growth or increased production and stock requirements. The inventory turnover ratio's initial decline followed by a substantial recovery implies that the company initially faced challenges in managing inventory efficiently but later adopted measures to improve turnover and optimize inventory levels. The recent higher turnover ratios coupled with increased costs might reflect scaling operations with improved operational efficiency.

Net Revenue Trends

Net revenue demonstrated a consistent growth trajectory over the observed periods, starting from approximately $6,655 million and rising to $18,015 million by the final quarter. There is a notable acceleration in the revenue increase beginning around early 2024, where quarterly revenue jumps from approximately $9,295 million to $11,961 million and continues this upward trend through to the last reporting date. This indicates a substantial increase in business activity or market demand during this timeframe.

Trade Accounts Receivable, Net

The trade accounts receivable generally reflect a growth pattern, though with more volatility than revenue. Starting at roughly $2,524 million, this figure declines initially to around $2,071 million by late 2021, then increases significantly peaking above $7,100 million near the end of the observation period. The jump after early 2024 is sharp, with receivables increasing from around $3,154 million to a peak near $7,145 million by the last quarter. This could suggest extended credit terms or increasing sales on credit, which aligns with the growth in net revenue but also could present cash flow implications.

Receivables Turnover Ratio

The receivables turnover ratio exhibits fluctuations across the periods, indicating changes in the efficiency of collections. Initially, the ratio improves from 9.78 up to a peak of 13.25 by late 2021, signifying faster collection of receivables. However, from early 2022 onwards this ratio tends to decline with intermittent rises, falling to its lowest values near 7.75 to 7.82 around early 2024. This decline corresponds with the surge in receivables, suggesting a slower turnover which may imply increasing credit risk or relaxed credit policies. Following this low, the ratio partially recovers to around 11.68 but drops again in the latter periods to values near 8.94 by the final quarter, indicating ongoing challenges in maintaining strong receivables management relative to revenue.

Overall Analysis

The financial data reflects robust revenue growth alongside increasing trade receivables, suggesting enhanced sales but also rising credit exposure. The declining and volatile receivables turnover ratio hints at a potential weakening in collections efficiency, which may require attention to credit policies or collection processes to prevent negative impacts on liquidity. The divergence between revenue growth and turnover efficiency highlights a trade-off between expanding sales and managing credit risk effectively over the observed period.

Cost of Revenue

The cost of revenue showed moderate fluctuations from early 2021 through early 2023. Initially, values hovered around the mid-2000 million range, with minor increases and decreases. Starting in early 2024, there was a marked and sustained increase, with amounts rising sharply from approximately 4,586 million to over 5,766 million by late 2025. This suggests a significant escalation in the direct costs associated with revenue generation over the latter periods, indicating either increased sales volume, higher input costs, or changes in cost structure.

Accounts Payable

Accounts payable exhibited variability across the periods. Early values ranged mostly between 700 and 1,100 million, with occasional dips and spikes. Notably, a pronounced upward trend emerged starting in early 2024, with payables climbing from around 1,496 million to as high as 1,905 million in mid-2025, followed by some decline but remaining elevated compared to earlier periods. This points to increased short-term obligations to suppliers or creditors, aligning with growing operational scales or extended payment terms during the later timeframe.

Payables Turnover Ratio

The payables turnover ratio displayed a fluctuating pattern throughout the entire period. Initially, the ratio was generally between approximately 9.8 and 12.6, indicating moderately rapid payment to suppliers. There was a spike to 15.27 in mid-2022, suggesting faster payment cycles, before declining to the 9–12 range approaching 2023. Following early 2024, the ratio decreased further to values around 8.56 to 9.62, implying slower payment. Subsequently, turnover increased again to levels around 13.2 to 14.92 by mid-to-late 2025, signaling accelerated payment or changes in credit terms during this final phase.

Overall Trends and Insights

The data indicates an overall expansion in cost of revenue and accounts payable over the examined period, particularly pronounced starting in early 2024. This suggests substantial growth in operational activities or cost pressures. The fluctuating payables turnover ratio points to varying payment practices or supplier terms, with periods of both faster and slower payment. The interplay of rising costs and changing turnover ratios may reflect strategic adjustments in working capital management in response to business conditions during these years.

The financial data reflects notable trends in working capital, net revenue, and working capital turnover over the examined periods.

Working Capital

Working capital shows fluctuations with an initial rising trend from early 2021 through late 2022, reaching a peak in October 2022 at approximately 13.4 billion US dollars. Following this peak, there is a sharp decline starting in early 2024, dropping significantly to as low as 726 million at one point, before recovering moderately towards the end of the timeline in late 2025, ending at around 13.1 billion USD. This pattern indicates periods of both strong liquidity and considerable contractions in available capital.

Net Revenue

Net revenue demonstrates a consistent upward trajectory throughout the entire period. Starting near 6.7 billion USD in early 2021, it grows steadily, surpassing 9 billion USD by late 2023, and continues increasing to approximately 18 billion USD by the end of 2025. This consistent increase highlights robust sales growth and expanding business operations.

Working Capital Turnover

The working capital turnover ratio displays high volatility. Initially, it remains relatively stable, fluctuating between 2.66 and 3.8 during 2021 and 2022, reflecting moderate efficiency in using working capital to generate revenue. However, starting in early 2024, the ratio spikes dramatically, reaching extremes such as 64.48 and 681.61, indicating unusual swings in working capital relative to sales. These spikes correspond with the periods of sharp declines in working capital, suggesting that despite low liquidity, the company maintained or grew its sales volume rapidly. Towards the end of the period, the ratio declines back to more moderate levels around 4.89, signaling a normalization of working capital utilization.

Overall, the data illustrates a company experiencing strong revenue growth alongside significant variability in liquidity management. The sudden fluctuations in working capital and turnover ratios in 2024 may warrant further investigation to understand underlying factors such as changes in operational efficiency, investment activities, or financing decisions.

Inventory Turnover Trend

The inventory turnover ratio exhibits a clear downward trend from January 2021 through late 2022, decreasing from 11.01 to a low of 5.77 by October 2022. This decline indicates that inventory was being sold and replaced less frequently over this period. Beginning in early 2023, the ratio shows a steady recovery and improvement, rising again to 10.83 by November 2024, before slightly tapering off to 9.07 by November 2025. The overall pattern suggests initial weakening in inventory efficiency followed by significant improvement and stabilization in turnover rates.

Average Inventory Processing Period Trend

The average inventory processing period, expressed in days, moves inversely to the turnover ratio. It increases steadily from 33 days in January 2021 to a peak of 63 days by October 2022, indicating longer holding periods for inventory. From early 2023 onward, the period declines consistently, dropping to 34 days by November 2024, and then stabilizes around 38 to 40 days through to November 2025. This pattern reinforces the interpretation of an initial buildup of inventory or slower sales, followed by enhanced inventory management and faster processing times.

Relationship Between Metrics

The inverse movement of the inventory turnover ratio and the average inventory processing period is consistent with their expected relationship. As inventory turnover decreases, the number of days inventory is held rises, reflecting less efficient inventory management or demand slowdowns. Conversely, the recovery in turnover and the reduction in processing days from 2023 onwards suggest effective measures taken to optimize inventory levels and improve sales velocity.

Overall Insights

The data indicate a period of declining inventory efficiency during 2021 and 2022, potentially reflecting operational challenges or market conditions leading to slower sales. However, from 2023 onwards, there is a marked improvement in inventory management efficiency, returning close to or exceeding early 2021 levels. This suggests a positive turnaround in operational performance and responsiveness in inventory control processes.

The analysis of the receivables turnover ratio over the examined quarters reveals a fluctuating yet somewhat cyclical pattern. Initially, the ratio shows an increasing trend from 9.78 to a peak of 13.25, indicating improved efficiency in collecting receivables during the first year. Following this peak, the ratio declines sharply to 9.73 and then oscillates moderately around an 11-range value before exhibiting another downturn to values between 7.75 and 8.94 towards the later periods. This indicates variability in the company's effectiveness in managing its receivables, with some periods reflecting slower collections.

Correspondingly, the average receivable collection period, which is inversely related to the turnover ratio, exhibits a mirror trend. It starts at 37 days and gradually improves to 28 days at the early peak efficiency point. Subsequently, there is a notable increase to as high as 47 days, indicating a slower collection phase. This metric then fluctuates around 30 to 40 days in later quarters. The increase in collection days suggests a lengthening of the time the company takes to convert receivables into cash during certain periods.

Receivables Turnover Ratio

Initial upward trend suggesting efficient receivables management early on.

Sharp decline and fluctuations thereafter indicating periods of reduced collection efficiency.

Lowest values toward the end of the timeframe suggest potential challenges in accounts receivable management.

Average Receivable Collection Period

Initial improvement with collection days decreasing, aligning with increased turnover.

Subsequent rise to 47 days; signals slower cash conversion from receivables.

Fluctuations in later quarters reflect variabilities in collection practices or customer payment behaviors.

Overall, the data indicates that while the company experienced phases of strong receivable turnover efficiency, these were not sustained consistently. The periods of increased average collection days and decreased turnover ratios suggest potential risks related to cash flow timing and credit management. Monitoring these metrics closely would be prudent to identify underlying causes and mitigate extended payment delays.

The analysis of the operating cycle components over the observed periods reveals several notable trends concerning inventory management and receivable collection efficiency. These indicators collectively influence the overall operating cycle duration.

Average Inventory Processing Period

The average inventory processing period displayed an initial upward trend, increasing from 33 days to a peak of 63 days between early 2021 and late 2022. Following this peak, there was a marked improvement, with the period decreasing progressively to 34 days by early 2025. The data suggests a significant improvement in inventory turnover efficiency in the latter periods after a phase of prolonged inventory holding.

Average Receivable Collection Period

The receivable collection period exhibited fluctuations throughout the timespan. Starting from 37 days in early 2021, it decreased to a low of 28 days by October 2021, indicating enhanced collection efficiency. However, subsequent periods showed volatility, rising to as high as 47 days in early 2024 before decreasing again to the low 30s in mid-2024, then gradually trending upward to 41 days by late 2025. This pattern reflects some inconsistency in credit control and collection practices.

Operating Cycle

The operating cycle mirrored these component trends. Initially stable at about 70-73 days in early 2021, the cycle extended significantly to a peak of 102 days by early 2024, correlating with lengthening inventory and receivables periods. Afterward, the operating cycle shortened markedly to 65 days by early 2025, primarily driven by the reduced inventory processing period. Toward the final periods, it edged back up to 81 days, influenced by the gradual increase in receivable collection duration.

Overall, the data indicates that inventory management was the primary driver of operating cycle fluctuations, with a substantial reduction in days held after late 2022 contributing to a more efficient cycle. In contrast, receivable collection periods showed less consistent improvement, introducing some volatility to the cycle, especially in the later periods. The company’s ability to shorten the operating cycle during certain intervals suggests efforts to optimize working capital, although sustained improvement in receivables management may be an area for further focus.

Payables Turnover Ratio Trends

The payables turnover ratio exhibited notable fluctuations over the analyzed periods. Initially, the ratio hovered around 11 to 12 from early 2021 through mid-2021, indicating relatively stable payment activity during those quarters. A decline is observed towards late 2021, reaching a low near 9.77 to 9.8, suggesting a slowdown in the frequency of payables turnover. A significant spike occurred in mid-2022, with the ratio increasing sharply to 15.27, pointing to a faster payment cycle or increased efficiency in managing payables. The ratio then experienced volatile movements, ranging between approximately 9.2 and 14.92 from late 2022 through 2025. The general pattern indicates periods of accelerated and decelerated payables turnover, reflecting variable working capital management strategies or external factors influencing payment timing.

Average Payables Payment Period

The average payables payment period, expressed as the number of days to settle payables, showed a pattern inversely related to the payables turnover ratio. Early in 2021, the payment period was around 31 days, decreasing slightly to 29 days but increasing again to 37 days by the end of the year and into early 2022. This suggests a lengthening of the period taken to pay suppliers during that timeframe. Notably, there is a sharp decrease to 24 days mid-2022, coinciding with the peak in the payables turnover ratio, indicating quicker payments. Subsequently, the period fluctuated between 24 and 43 days over the following quarters, with peaks around 40 to 43 days suggesting slower payments. Towards the later periods, the average payment period tends to stabilize closer to the mid-20s to mid-30s range, reflecting a moderate pace in settling payables.

Overall Observations

The two complementary metrics reveal a dynamic approach to payables management over the examined timeframe. Periods of reduced payment days correspond to increased payables turnover ratios, indicating improved liquidity or strategic acceleration of payments. Conversely, prolonged payment periods align with lower turnover ratios, which may point to efforts to conserve cash or negotiate extended payment terms with suppliers. The lack of a clear linear trend suggests that payables management decisions are responsive to changing operational needs or market conditions rather than following a steady trajectory.

The analysis of the quarterly financial data reveals several notable trends in the company's working capital management over the observed periods.

Average Inventory Processing Period

The average inventory processing period exhibits a general upward trend from early 2021, starting at 33 days and rising steadily to a peak around late 2022 at 63 days. Following this peak, there is a clear reduction throughout 2024, down to 34 days by November 2024. However, the period slightly increases again towards 2025, stabilizing around 40 days. This pattern indicates initial challenges or strategic choices leading to longer inventory holding times, followed by a significant improvement in inventory turnover efficiency in 2024, though with some stabilization afterward.

Average Receivable Collection Period

Receivables collection periods fluctuate moderately over time, beginning at 37 days in early 2021 and decreasing to around 28 days by the end of 2021. Through 2022 and early 2023, the collection period remains fairly stable between 30 and 34 days. There is a sudden and notable increase to 47 days in early and mid-2024, which suggests a slower collection cycle during these quarters. Subsequently, the period decreases again into late 2024 and early 2025 but shows an upward trend toward the end of the data, reaching 41 days. This indicates variability in collecting receivables, with specific quarters potentially facing collection delays.

Average Payables Payment Period

The payables payment period shows some variability but less pronounced than receivables. Starting around 31 days in early 2021, it declines briefly and then rises to about 37 days by early 2022. A sharp decrease to 24 days occurs mid-2022, followed by fluctuations ranging from 27 to 43 days through 2023 and 2024. Overall, the payment period does not follow a consistent trend but reflects adjustments in supplier payment timing, possibly influenced by liquidity management or negotiation outcomes. The periods toward late 2024 and 2025 settle around the mid-20s to high-30s range.

Cash Conversion Cycle

The cash conversion cycle (CCC) begins at 39 days in early 2021 and oscillates with an upward trajectory peaking near 69 days in mid-2022, signaling a longer duration between cash outflow and inflow during this period. After the peak, the CCC declines throughout 2023 and early 2024, reaching a low of 33 days by November 2024. However, similar to inventory trends, the CCC shows a reversal to higher values in 2025, ending around 53 days. These fluctuations in CCC reflect the combined effects of inventory, receivables, and payables management, indicating periods of higher working capital investment followed by attempts at optimization and improved liquidity management.