Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
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- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Liquidity Ratios
- Operating Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Return on Assets (ROA) since 2005
- Debt to Equity since 2005
- Total Asset Turnover since 2005
- Price to Earnings (P/E) since 2005
- Analysis of Debt
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Short-term Activity Ratios (Summary)
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
- Inventory Turnover
- The inventory turnover ratio gradually declined from 0.98 in 2014 to 0.85 in 2017, indicating a slower inventory turnover process. However, there was a notable rebound to 1.28 in 2018, suggesting improved efficiency in managing inventory during that year.
- Receivables Turnover
- The receivables turnover ratio showed relative stability with slight fluctuations, moving from 6.48 in 2014 to 7.39 in 2018. This upward trend implies a marginal improvement in the company's ability to collect receivables over the period.
- Payables Turnover
- The payables turnover ratio steadily decreased from 1.95 in 2014 to 1.4 in 2018, reflecting a tendency to take longer to pay suppliers as the years progressed.
- Working Capital Turnover
- There was an overall increase in working capital turnover, rising from 1.00 in 2014 to 3.05 in 2018, with some fluctuation in between. This significant rise by 2018 indicates enhanced efficiency in using working capital to generate sales.
- Average Inventory Processing Period
- The average inventory processing period lengthened from 372 days in 2014 to 428 days in 2017, suggesting inventory was held longer. This trend reversed sharply in 2018 to 285 days, which corresponds to the increased inventory turnover seen in the same year.
- Average Receivable Collection Period
- The collection period slightly increased from 56 days in 2014 to 57 days in 2015, then generally decreased to 49 days in 2018. This decrease confirms enhanced efficiency in collecting receivables over time.
- Operating Cycle
- The operating cycle extended from 428 days in 2014 to a peak of 482 days in 2017 before contracting substantially to 334 days in 2018. This shorter cycle in the last year indicates improvements in overall operational efficiency.
- Average Payables Payment Period
- The average payables payment period lengthened steadily from 187 days in 2014 to 260 days in 2018, consistent with the declining payables turnover ratio and suggesting the company managed to extend its payment terms.
- Cash Conversion Cycle
- The cash conversion cycle decreased from 241 days in 2014 to a low of 74 days in 2018 after some fluctuations. This significant reduction implies improved liquidity and a more efficient cash flow cycle in the most recent year analyzed.
Turnover Ratios
Average No. Days
Inventory Turnover
Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Cost of goods sold, excluding amortization of acquired intangible assets | ||||||
Inventory | ||||||
Short-term Activity Ratio | ||||||
Inventory turnover1 | ||||||
Benchmarks | ||||||
Inventory Turnover, Competitors2 | ||||||
AbbVie Inc. | ||||||
Amgen Inc. | ||||||
Bristol-Myers Squibb Co. | ||||||
Danaher Corp. | ||||||
Eli Lilly & Co. | ||||||
Gilead Sciences Inc. | ||||||
Johnson & Johnson | ||||||
Merck & Co. Inc. | ||||||
Pfizer Inc. | ||||||
Regeneron Pharmaceuticals Inc. | ||||||
Thermo Fisher Scientific Inc. | ||||||
Vertex Pharmaceuticals Inc. |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Inventory turnover = Cost of goods sold, excluding amortization of acquired intangible assets ÷ Inventory
= ÷ =
2 Click competitor name to see calculations.
- Cost of Goods Sold
- The cost of goods sold, excluding amortization of acquired intangible assets, shows a consistent upward trend over the five-year period. It increased from 386 million US dollars in 2014 to 587 million US dollars in 2018. This reflects a growth of approximately 52% over the period, indicating increased production costs or higher sales volumes.
- Inventory Levels
- Inventory levels initially increased year over year from 393 million US dollars in 2014 to a peak of 541 million US dollars in 2017. However, in 2018, inventory decreased notably to 458 million US dollars, suggesting a change in inventory management or sales strategy.
- Inventory Turnover
- Inventory turnover showed a declining trend from 0.98 in 2014 to 0.85 in 2017, indicating that inventory was being sold less frequently over that period. However, in 2018, there was a marked improvement to 1.28, the highest ratio in the five years presented. This suggests enhanced efficiency in inventory management or stronger sales relative to inventory levels during that year.
Receivables Turnover
Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Net product sales | ||||||
Accounts receivable, net of allowances | ||||||
Short-term Activity Ratio | ||||||
Receivables turnover1 | ||||||
Benchmarks | ||||||
Receivables Turnover, Competitors2 | ||||||
AbbVie Inc. | ||||||
Amgen Inc. | ||||||
Bristol-Myers Squibb Co. | ||||||
Danaher Corp. | ||||||
Eli Lilly & Co. | ||||||
Gilead Sciences Inc. | ||||||
Johnson & Johnson | ||||||
Merck & Co. Inc. | ||||||
Pfizer Inc. | ||||||
Regeneron Pharmaceuticals Inc. | ||||||
Thermo Fisher Scientific Inc. | ||||||
Vertex Pharmaceuticals Inc. |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Receivables turnover = Net product sales ÷ Accounts receivable, net of allowances
= ÷ =
2 Click competitor name to see calculations.
- Net product sales
- Net product sales demonstrated a consistent upward trend over the five-year period. Starting at 7,564 million US dollars in 2014, sales increased annually to reach 15,265 million US dollars in 2018. This reflects a strong growth trajectory with an increase of more than 100% from the initial to the final year, indicating expanding market demand or enhanced product offerings.
- Accounts receivable, net of allowances
- Accounts receivable also exhibited a gradual increase from 1,167 million US dollars in 2014 to 2,066 million US dollars in 2018. This rise corresponds with the growth in net product sales, suggesting that the company experienced increased credit sales or extended credit terms. The growth in receivables was steady but did not outpace sales growth disproportionately.
- Receivables turnover
- The receivables turnover ratio, which measures the effectiveness of credit and collection policies, remained relatively stable throughout the period. It started at 6.48 in 2014, with minor fluctuations, and ended slightly higher at 7.39 in 2018. This improvement implies a modest enhancement in collection efficiency, reflecting better management of receivables relative to sales.
Payables Turnover
Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Cost of goods sold, excluding amortization of acquired intangible assets | ||||||
Accounts payable | ||||||
Short-term Activity Ratio | ||||||
Payables turnover1 | ||||||
Benchmarks | ||||||
Payables Turnover, Competitors2 | ||||||
AbbVie Inc. | ||||||
Amgen Inc. | ||||||
Bristol-Myers Squibb Co. | ||||||
Danaher Corp. | ||||||
Eli Lilly & Co. | ||||||
Gilead Sciences Inc. | ||||||
Johnson & Johnson | ||||||
Merck & Co. Inc. | ||||||
Pfizer Inc. | ||||||
Regeneron Pharmaceuticals Inc. | ||||||
Thermo Fisher Scientific Inc. | ||||||
Vertex Pharmaceuticals Inc. |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Payables turnover = Cost of goods sold, excluding amortization of acquired intangible assets ÷ Accounts payable
= ÷ =
2 Click competitor name to see calculations.
The financial data exhibits several notable trends over the five-year period ending in 2018. The cost of goods sold, excluding amortization of acquired intangible assets, shows a steady upward trajectory. Beginning at 386 million US dollars in 2014, this figure increased each year, reaching 587 million US dollars by the end of 2018. This indicates a consistent rise in production or procurement costs associated with goods sold.
Accounts payable also demonstrate a growing pattern during the same timeframe. Starting from 198 million US dollars in 2014, the payable balance grew moderately each year, culminating at 418 million US dollars in 2018. This growth suggests an increasing reliance on supplier credit or extended payment terms, potentially aligned with the rising cost of goods sold.
In contrast, the payables turnover ratio, which measures how quickly the company pays off its suppliers, displayed a declining trend. It decreased from 1.95 in 2014 to 1.4 in 2018, indicating a slowing rate of payments relative to accounts payable. The lower turnover ratio may reflect lengthening payment cycles or slower cash outflows towards suppliers over time.
- Cost of Goods Sold
- Consistent year-over-year increase, rising from 386 million to 587 million US dollars from 2014 to 2018.
- Accounts Payable
- Gradual increase from 198 million to 418 million US dollars during the period, signalling growing outstanding payables.
- Payables Turnover Ratio
- Declined steadily from 1.95 to 1.4, reflecting slower payment cycles or extended credit terms.
Overall, the data points to expanding operations with higher costs of goods sold and larger outstanding payables. However, the declining payables turnover ratio may require scrutiny, as it suggests the company is taking longer to settle its obligations, which could impact supplier relationships or liquidity management.
Working Capital Turnover
Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||
Current assets | ||||||
Less: Current liabilities | ||||||
Working capital | ||||||
Net product sales | ||||||
Short-term Activity Ratio | ||||||
Working capital turnover1 | ||||||
Benchmarks | ||||||
Working Capital Turnover, Competitors2 | ||||||
AbbVie Inc. | ||||||
Amgen Inc. | ||||||
Bristol-Myers Squibb Co. | ||||||
Danaher Corp. | ||||||
Eli Lilly & Co. | ||||||
Gilead Sciences Inc. | ||||||
Johnson & Johnson | ||||||
Merck & Co. Inc. | ||||||
Pfizer Inc. | ||||||
Regeneron Pharmaceuticals Inc. | ||||||
Thermo Fisher Scientific Inc. | ||||||
Vertex Pharmaceuticals Inc. |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Working capital turnover = Net product sales ÷ Working capital
= ÷ =
2 Click competitor name to see calculations.
The financial data reveals notable trends in working capital, net product sales, and working capital turnover over the five-year period from 2014 to 2018.
- Working Capital
- Working capital displayed fluctuations, beginning at US$7,600 million in 2014 and slightly decreasing to US$7,432 million in 2015. It then experienced an increase to US$7,908 million in 2016 and a substantial rise to US$11,905 million in 2017. However, there was a significant decline to US$5,010 million in 2018, marking the lowest point in the period analyzed. This volatility suggests changes in the company's short-term asset and liability management across these years.
- Net Product Sales
- Net product sales showed a consistent upward trajectory throughout the period. Starting at US$7,564 million in 2014, sales increased steadily each year, reaching US$15,265 million by 2018. This represents a strong growth trend in revenue generation, with total sales approximately doubling over the five years, indicating successful sales expansion and market demand.
- Working Capital Turnover
- The working capital turnover ratio exhibited a generally increasing trend, beginning at 1.00 in 2014. It rose to 1.23 in 2015 and further to 1.41 in 2016, suggesting improving efficiency in using working capital to generate sales. However, in 2017, the ratio dropped to 1.09, indicating a relative decrease in efficiency despite the increase in sales. In 2018, the ratio surged to 3.05, the highest in the period, which may reflect a substantial reduction in working capital combined with continued sales growth, suggesting a marked improvement in asset utilization or possibly tighter working capital management.
Overall, the data indicates strong and steady revenue growth accompanied by variability in working capital levels and fluctuating efficiency in its utilization. The sharp decline in working capital in 2018, accompanied by a surge in turnover ratio, points to a strategic alteration in asset management or liquidity position that warrants further investigation for sustainability and operational impact.
Average Inventory Processing Period
Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Inventory turnover | ||||||
Short-term Activity Ratio (no. days) | ||||||
Average inventory processing period1 | ||||||
Benchmarks (no. days) | ||||||
Average Inventory Processing Period, Competitors2 | ||||||
AbbVie Inc. | ||||||
Amgen Inc. | ||||||
Bristol-Myers Squibb Co. | ||||||
Danaher Corp. | ||||||
Eli Lilly & Co. | ||||||
Gilead Sciences Inc. | ||||||
Johnson & Johnson | ||||||
Merck & Co. Inc. | ||||||
Pfizer Inc. | ||||||
Regeneron Pharmaceuticals Inc. | ||||||
Thermo Fisher Scientific Inc. | ||||||
Vertex Pharmaceuticals Inc. |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ =
2 Click competitor name to see calculations.
- Inventory Turnover
- The inventory turnover ratio shows a general decline from 0.98 in 2014 to 0.85 in 2017, indicating a decrease in the frequency of inventory being sold and replaced during that period. In 2018, there is a notable increase to 1.28, suggesting an improvement in inventory management or sales efficiency compared to previous years.
- Average Inventory Processing Period
- The average inventory processing period, measured in days, shows an opposing trend to inventory turnover. It increased steadily from 372 days in 2014 to 428 days in 2017, implying a lengthening of the time inventory remains before sale or use. In 2018, this period significantly decreased to 285 days, which aligns with the improvement in inventory turnover ratio observed in the same year.
- Overall Observations
- The trends indicate a deterioration in inventory management efficiency from 2014 through 2017, as evidenced by the declining inventory turnover and increasing processing period. The reversal of these trends in 2018, with a higher turnover ratio and shorter processing period, points to operational improvements that likely enhanced inventory utilization and reduced holding times during that year.
Average Receivable Collection Period
Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Receivables turnover | ||||||
Short-term Activity Ratio (no. days) | ||||||
Average receivable collection period1 | ||||||
Benchmarks (no. days) | ||||||
Average Receivable Collection Period, Competitors2 | ||||||
AbbVie Inc. | ||||||
Amgen Inc. | ||||||
Bristol-Myers Squibb Co. | ||||||
Danaher Corp. | ||||||
Eli Lilly & Co. | ||||||
Gilead Sciences Inc. | ||||||
Johnson & Johnson | ||||||
Merck & Co. Inc. | ||||||
Pfizer Inc. | ||||||
Regeneron Pharmaceuticals Inc. | ||||||
Thermo Fisher Scientific Inc. | ||||||
Vertex Pharmaceuticals Inc. |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
- Receivables Turnover
- The receivables turnover ratio shows a generally positive trend over the five-year period. It remained relatively stable between 6.45 and 6.90 from 2014 through 2017, with a slight dip in 2015. However, in 2018, the ratio increased notably to 7.39, indicating improved efficiency in collecting receivables during that year.
- Average Receivable Collection Period
- The average receivable collection period exhibits a clear downward trend, decreasing from 56 days in 2014 to 49 days in 2018. This reduction reflects accelerated collection activities, with the number of days slightly fluctuating in the middle years but showing consistent improvement in the final year.
- Summary
- Overall, the analysis of receivables-related data indicates an enhancement in collection efficiency over the five years. A rising receivables turnover ratio accompanied by a shrinking average collection period suggests that the company has improved its ability to convert receivables into cash more quickly, which potentially strengthens its liquidity position.
Operating Cycle
Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Average inventory processing period | ||||||
Average receivable collection period | ||||||
Short-term Activity Ratio | ||||||
Operating cycle1 | ||||||
Benchmarks | ||||||
Operating Cycle, Competitors2 | ||||||
AbbVie Inc. | ||||||
Amgen Inc. | ||||||
Bristol-Myers Squibb Co. | ||||||
Danaher Corp. | ||||||
Eli Lilly & Co. | ||||||
Gilead Sciences Inc. | ||||||
Johnson & Johnson | ||||||
Merck & Co. Inc. | ||||||
Pfizer Inc. | ||||||
Regeneron Pharmaceuticals Inc. | ||||||
Thermo Fisher Scientific Inc. | ||||||
Vertex Pharmaceuticals Inc. |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= + =
2 Click competitor name to see calculations.
The analysis of the annual financial data reveals distinct trends in the inventory processing period, receivable collection period, and operating cycle over the five-year span.
- Average inventory processing period
- The average inventory processing period exhibited an increasing trend from 372 days in 2014 to a peak of 428 days in 2017, indicating a gradual lengthening in the time required to process inventory. However, this trend reversed sharply in 2018, where the period declined significantly to 285 days. This sudden decrease suggests improved inventory turnover or management efficiency in the latest year.
- Average receivable collection period
- The average receivable collection period showed a slight fluctuation but generally declined over the period examined. Starting at 56 days in 2014, it modestly increased to 57 days in 2015, then decreased steadily to 49 days by 2018. This reduction indicates enhanced efficiency in collecting receivables, reducing the time customers take to pay.
- Operating cycle
- The operating cycle mirrored the inventory processing period trends. It increased gradually from 428 days in 2014 to 482 days in 2017, reflecting a longer duration from inventory acquisition through to receivable collection. In 2018, the operating cycle dropped substantially to 334 days, indicating a marked improvement in the overall operational efficiency and cash conversion time.
Overall, the data reflect a period of increasing operational duration up to 2017, followed by a significant improvement in 2018 across all measured cycles, potentially stemming from more effective inventory and receivable management strategies.
Average Payables Payment Period
Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Payables turnover | ||||||
Short-term Activity Ratio (no. days) | ||||||
Average payables payment period1 | ||||||
Benchmarks (no. days) | ||||||
Average Payables Payment Period, Competitors2 | ||||||
AbbVie Inc. | ||||||
Amgen Inc. | ||||||
Bristol-Myers Squibb Co. | ||||||
Danaher Corp. | ||||||
Eli Lilly & Co. | ||||||
Gilead Sciences Inc. | ||||||
Johnson & Johnson | ||||||
Merck & Co. Inc. | ||||||
Pfizer Inc. | ||||||
Regeneron Pharmaceuticals Inc. | ||||||
Thermo Fisher Scientific Inc. | ||||||
Vertex Pharmaceuticals Inc. |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
- Payables Turnover
- The payables turnover ratio exhibits a declining trend over the period analyzed. Starting at 1.95 in 2014, it decreased to 1.74 in 2015, showing a slight recovery to 1.77 in 2016 before a continued decline to 1.51 in 2017 and further to 1.4 in 2018. This suggests that the company is turning over its payables less frequently year over year, indicating potentially extended payment terms or slower payment to suppliers.
- Average Payables Payment Period
- The average payables payment period has been increasing steadily throughout the years, rising from 187 days in 2014 to 209 days in 2015 and remaining relatively stable at 206 days in 2016. Following that, a more pronounced increase occurred, with the period extending to 241 days in 2017 and reaching 260 days in 2018. This increase in days payable outstanding aligns with the decreasing payables turnover, reinforcing the conclusion that the company is taking longer to settle its obligations to suppliers.
- Overall Insights
- The observed trends point toward a strategic extension of payment terms or a buildup of payable balances. Prolonged payment periods can improve short-term liquidity by retaining cash longer but may also indicate potential stress in cash flow management or negotiation for better credit terms with suppliers. It is important to monitor whether these extended payables affect supplier relationships or creditworthiness over time.
Cash Conversion Cycle
Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
---|---|---|---|---|---|---|
Selected Financial Data | ||||||
Average inventory processing period | ||||||
Average receivable collection period | ||||||
Average payables payment period | ||||||
Short-term Activity Ratio | ||||||
Cash conversion cycle1 | ||||||
Benchmarks | ||||||
Cash Conversion Cycle, Competitors2 | ||||||
AbbVie Inc. | ||||||
Amgen Inc. | ||||||
Bristol-Myers Squibb Co. | ||||||
Danaher Corp. | ||||||
Eli Lilly & Co. | ||||||
Gilead Sciences Inc. | ||||||
Johnson & Johnson | ||||||
Merck & Co. Inc. | ||||||
Pfizer Inc. | ||||||
Regeneron Pharmaceuticals Inc. | ||||||
Thermo Fisher Scientific Inc. | ||||||
Vertex Pharmaceuticals Inc. |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 2018 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= + – =
2 Click competitor name to see calculations.
The analysis of the annual financial metrics reveals several notable trends in the company's operational efficiency and working capital management over the five-year period ending in 2018.
- Average Inventory Processing Period
- This metric showed an increasing trend from 372 days in 2014 to a peak of 428 days in 2017, indicating a lengthening time to process inventory. In 2018, a significant reduction to 285 days was observed, suggesting improved inventory turnover or more efficient inventory management in the latest period.
- Average Receivable Collection Period
- Collection periods remained relatively stable with a slight downward trend, moving from 56 days in 2014 to 49 days in 2018. This reduction indicates a modest improvement in the efficiency of collecting receivables, potentially enhancing cash inflow consistency.
- Average Payables Payment Period
- The payment period to suppliers consistently increased from 187 days in 2014 to 260 days in 2018. This lengthening suggests the company took longer to settle its payables, which may have improved cash retention but could also affect supplier relations.
- Cash Conversion Cycle
- The cash conversion cycle (CCC) fluctuated during the first four years, peaking at 262 days in 2016 and then declining to 241 days in 2017. In 2018, there was a dramatic decrease to 74 days, indicating a significant improvement in the overall efficiency of managing working capital, effectively reducing the time between cash outflow and inflow.
Overall, the data indicate efforts toward enhanced working capital management, particularly evident in 2018. The reduction in inventory days combined with a shorter receivable period and an extended payables period contributed collectively to a marked reduction in the cash conversion cycle. These changes suggest more effective operational and financial management in the most recent year.