Cintas Corp. (NASDAQ:CTAS)

Inventory Turnover

The inventory turnover ratio showed a declining trend from 11.31 in August 2019 to a low of 7.01 by February 2021. This indicates a slower movement of inventory during that period. Since then, the ratio steadily improved, reaching 12.69 by November 2024, reflecting enhanced efficiency in inventory management and faster inventory liquidation towards the end of the analyzed period.

Receivables Turnover

Receivables turnover remained relatively stable over the periods, fluctuating around 7.5 to 8.1 with minor variations. There was a slight dip during 2022 and early 2023 but overall, the turnover suggests consistent effectiveness in collecting receivables without significant changes in credit policy or collection efficiency.

Payables Turnover

Payables turnover exhibited moderate variability. It started high at 16.03 in August 2019, then decreased to a low near 11.97 by November 2024. The initial decrease suggests a lengthening of the period to pay suppliers, potentially indicating better cash management or extended payment terms. However, peaks such as 19.09 in August 2021 show intermittent faster payments at certain times.

Working Capital Turnover

Working capital turnover displayed significant fluctuations. It remained around 4 to 6 from 2019 through early 2021, then spiked sharply to very high values (e.g., 120.4 in February 2022), likely due to reporting anomalies or extraordinary events impacting working capital or sales levels temporarily. Subsequently, turnover normalized back to the typical range of about 5 to 9, with an upward trend leading to 8.55 in November 2024, suggesting improved efficiency in leveraging working capital for revenue generation over time.

Average Inventory Processing Period

The average inventory processing period gradually increased from 32 days in August 2019 to a peak of 52 days in late 2020 and early 2021, indicating slower inventory movement during that time. Thereafter, it steadily decreased to 29 days by late 2024, aligning with the improving inventory turnover ratio and reflecting enhanced inventory management efficiency.

Average Receivable Collection Period

The average receivable collection period remained mostly stable between 45 and 50 days throughout the analyzed quarters. Minor fluctuations occurred but no consistent upward or downward trend emerged, implying steady credit policies and collection practices.

Operating Cycle

The operating cycle showed a moderate increase from around 80 days in 2019 to above 100 days during 2020–2021, reflecting lengthened time for inventory turnover plus receivables collection. Following this peak, it gradually shortened to around 79 days by late 2024, indicating improved overall efficiency in managing inventory and receivables processes.

Average Payables Payment Period

The payables payment period varied moderately, increasing from about 23 days in 2019 to roughly 30 days by late 2024. This suggests a trend toward taking longer to pay suppliers, possibly to optimize cash flow or due to changed payment terms.

Cash Conversion Cycle

The cash conversion cycle increased from 57 days in 2019 to a peak of 78 days around early 2021, indicating longer duration between cash outflow and inflow. Thereafter, it improved steadily, decreasing to below 50 days by late 2024, signifying enhanced cash flow management and operational efficiency in converting investments in inventory and receivables back into cash.

Cost of Revenue

The cost of revenue exhibited an overall increasing trend throughout the analyzed periods. Starting from around 962 million US dollars at the end of August 2019, it decreased slightly by May 2020 but resumed a gradual rise afterward. By November 2024, the cost of revenue reached approximately 1.29 billion US dollars. Despite minor fluctuations, the consistent upward movement indicates growing expenses related to the company’s core operations over time.

Inventories, Net

Net inventories showed a significant increase from 336 million US dollars in August 2019, peaking near 534 million US dollars by November 2020. From that peak, inventories generally declined, reaching a lower value of around 395 million US dollars by November 2024. The initial growth followed by a steady reduction suggests that the company built up inventory levels during the early periods but later managed or reduced its stock more aggressively.

Inventory Turnover Ratio

The inventory turnover ratio started at a high level of about 11.31 at the end of August 2019, then declined to a low point near 7.01 by February 2021, indicating slower turnover during this phase. Following this period, the ratio steadily increased, surpassing previous levels, and reached approximately 12.69 by November 2024. The recovery and eventual improvement in turnover imply enhanced efficiency in managing inventory and converting stock into sales over the latter periods.

Summary of Trends and Insights

The data reflects increasing operational costs alongside fluctuating inventory management. Initially, inventories expanded considerably, potentially linked to increased procurement or stockpiling, before a persistent reduction phase indicating tighter inventory control. Concurrently, the inventory turnover ratio’s dip followed by a sustained rise signifies an improvement in inventory utilization efficiency after a period of deceleration. Collectively, these patterns suggest that the company adjusted its inventory strategy to better align with operational demands and reduce carrying costs, while cost of revenue continued rising, possibly reflecting higher input costs or increased sales volume.

Revenue Trends

The revenue shows a general increasing trend over the observed periods. Starting from approximately $1.81 billion in August 2019, revenue experienced a dip around May 2020, declining to approximately $1.62 billion, which may reflect an external disruptive event during that time. Following this decline, revenue recovered steadily, reaching over $2.56 billion by November 2024. This suggests a resilient business model that has expanded revenue significantly over the period after the mid-2020 trough.

Accounts Receivable, Net

The accounts receivable exhibit a gradual increase over time, beginning near $918 million in August 2019 and rising to about $1.37 billion by November 2024. There is a noted slight decline in certain early 2020 months, consistent with the revenue dip noted prior, but accounts receivable generally track upward, indicating that as sales increase, outstanding customer balances also grow. The upward trend suggests increasing credit sales or extension of payment terms consistent with revenue growth.

Receivables Turnover Ratio

The receivables turnover ratio demonstrates moderate fluctuations around an average range of approximately 7.2 to 8.1 over the periods. The ratio peaked at about 8.14 in May 2020, coinciding with the lowest revenue quarter, which could indicate more efficient collection or reduced credit sales. Post this peak, the turnover ratio gradually declined to around 7.25 by November 2024, potentially signaling a slight easing in collection efforts or longer credit terms accompanying the rise in receivables.

Overall Analysis

The data reflects a business that experienced a temporary revenue setback around early to mid-2020 but subsequently demonstrated strong recovery and consistent growth. Accounts receivable grew in tandem with revenue, and although receivables turnover showed some volatility, it generally remained within a stable range. The trends indicate expanding sales volumes alongside a measured approach to credit management, balancing growth objectives with receivables efficiency.

Cost of Revenue

The cost of revenue shows a generally upward trend over the analyzed periods. Starting at approximately 962 million USD in August 2019, it experiences a slight decline in the mid-2020 quarter, coinciding with the onset and initial impact of the global pandemic. Following this dip, there is a consistent increase through 2021 and 2022, reaching over 1.15 billion USD by early 2023. The upward trajectory continues with some fluctuations, culminating in a peak close to 1.29 billion USD by November 2024. This overall rising trend suggests increasing expenses incurred to generate revenue, possibly reflecting growth or inflationary pressures.

Accounts Payable

Accounts payable display more volatility compared to the cost of revenue. Initially at 237 million USD in August 2019, the figure fluctuates moderately through 2020, with a notable decline in the middle of the year. From late 2021 through 2022, accounts payable increase steadily, peaking around 311 million USD in November 2022. After a slight dip in early 2023, the accounts payable rise sharply towards the end of the dataset, reaching over 418 million USD by November 2024. These variations may indicate changes in supplier payment practices or shifts in operating activities affecting the company's short-term obligations.

Payables Turnover Ratio

The payables turnover ratio reveals a generally decreasing trend over the period analyzed. Beginning at a high of about 16.03 in August 2019, it experiences some fluctuations but mainly trends downward from 2020 onward. A peak turnover of 19.09 is observed in August 2021, indicative of faster payment cycles during that time. However, after this point, the ratio steadily declines to around 11.97 by November 2024. A decreasing payables turnover ratio suggests the company is taking longer to pay its suppliers, potentially improving cash flow by extending payment terms, or reflecting changes in purchasing or supplier agreements.

Overall Insights

The combination of increasing cost of revenue and rising accounts payable, along with a declining payables turnover ratio, points to a scenario where the company is incurring higher costs but possibly managing cash outflows by extending payment periods. The spikes and dips within accounts payable and turnover ratios correspond to tactical changes in working capital management. The trends imply that while operational costs are growing, the company may be offsetting the associated cash demands through slower payments to suppliers. Monitoring these dynamics will be crucial to understanding liquidity risk and supplier relationships going forward.

Working Capital

Working capital exhibited a general upward trend from August 2019 through February 2021, increasing from approximately 1.17 billion USD to about 1.71 billion USD. However, a sharp decline occurred in May 2021, dropping to approximately 0.91 billion USD. This was followed by even lower values in August and November 2021, with working capital reaching its lowest point at around 63 million USD in February 2022. Subsequently, there was a robust recovery trend, with working capital increasing steadily through May 2023, peaking at roughly 1.82 billion USD in November 2023. The value then experienced some fluctuations but remained above 1 billion USD through the last period in November 2024.

Revenue

Revenue showed a consistent growth trajectory over the entire period. Starting at approximately 1.81 billion USD in August 2019, revenue dipped slightly to around 1.62 billion USD in May 2020, which could indicate an impact from external conditions affecting sales. Following this decline, revenue steadily increased each quarter, reaching approximately 2.56 billion USD by November 2024. This indicates a strong recovery and ongoing business expansion over the period analyzed.

Working Capital Turnover

The working capital turnover ratio generally followed an inverse pattern relative to the working capital values. It started at around 6 in August 2019, decreased steadily to approximately 4 by February 2021, and then exhibited a pronounced spike beginning in May 2021, peaking dramatically at 120.4 in February 2022. This spike corresponds with the period of very low working capital, indicating a temporary increase in efficiency or asset utilization. After the peak, the ratio normalized back to a range of roughly 5 to 9, fluctuating moderately through the final periods, suggesting stabilization in working capital management relative to sales volume.

Summary

The data reflect significant volatility in working capital, particularly a sharp dip during the middle of the period followed by a strong recovery. Revenue demonstrated steady growth overall, with a minor interruption coinciding with the working capital trough. The working capital turnover ratio's sharp peak corresponds with minimal working capital levels, indicating potential short-term operational adjustments or liquidity pressures during that time. After this period, the company appears to have stabilized both working capital and revenue growth, suggesting effective management of operational resources and sustained business expansion.

Inventory Turnover

The inventory turnover ratio exhibits a downward trend starting from a high of 11.31 in August 2019, declining steadily to reach a low of 7.01 by February 2021. This indicates a period of slower inventory movement over these quarters. However, after this low point, the ratio begins a consistent recovery, increasing through subsequent periods to reach 12.69 by November 2024. This upward movement suggests improved efficiency in inventory management and faster inventory cycles toward the end of the period analyzed.

Average Inventory Processing Period

The average inventory processing period, measured in days, shows an inverse pattern compared to the inventory turnover ratio. It starts at 32 days in August 2019 and gradually lengthens to a peak of 52 days around November 2020 and February 2021, reflecting slower inventory turnover during that interval. After February 2021, the processing period shortens progressively, reaching 29 days by November 2024. This decline suggests enhanced inventory handling and quicker processing times in the later periods.

Insights on Trends

The observed trends in inventory turnover and processing period are inversely correlated as expected. During early 2020 and 2021, there was a noticeable slowdown in inventory turnover, with longer processing times possibly due to operational challenges or changes in demand patterns. From mid-2021 onward, there is a clear improvement, as inventory is turning over more rapidly and processing periods are decreasing, reflecting enhanced operational efficiency and potential stabilization or growth in business activity. The final values surpass the initial figures from 2019, suggesting not only recovery but improvement in inventory management practices over the analyzed timeframe.

The analysis of receivables turnover and average receivable collection period over the reported quarters reveals several notable trends and fluctuations. These indicators collectively reflect the efficiency of the company in managing its accounts receivable and collecting cash from customers.

Receivables Turnover

Over the examined periods, the receivables turnover ratio exhibits moderate variability, generally oscillating between approximately 7.2 and 8.1. The ratio peaked at 8.14 in May 2020, indicating improved efficiency in receivables collection during that quarter. Subsequently, the ratio declined and stabilized mostly around the mid-to-high 7s. The downward trend after May 2020 suggests a slight deterioration in how quickly receivables are converted into cash. However, the turnover remains relatively consistent, which indicates steady management of receivables despite some fluctuations.

Average Receivable Collection Period

The average collection period largely mirrors the inverse pattern of receivables turnover, as expected. The number of days typically ranges between 45 and 51 days over the timeframe. The shortest collection period was recorded in May 2020 at 45 days, coinciding with the peak in receivables turnover, reflecting accelerated cash collection. In contrast, the longest collection periods approach 50-51 days in late 2023 and early 2024, indicating a lengthening time to collect receivables during these quarters. This trend may suggest emerging challenges in accounts receivable management or changes in customer payment behavior.

Overall Trends and Insights

The data suggests that the company experienced peak efficiency in receivables management around mid-2020, possibly adapting effectively during early pandemic-related disruptions. Post this period, there is a mild deterioration characterized by slightly lower turnover ratios and increased collection periods, yet values remain within a relatively narrow band. This stability implies consistent receivables management practices with some sensitivity to external factors affecting customer payments. The slight rise in average collection days toward the end of the period warrants monitoring to ensure it does not escalate and impact cash flows adversely.

The analysis of the quarterly financial data reveals several noteworthy trends concerning the company's inventory management, receivable collections, and overall operating cycle over the observed periods.

Average Inventory Processing Period

The inventory processing period experienced an upward trend starting from 32 days in August 2019, gradually increasing to a peak of 52 days during the November 2020 and February 2021 quarters. Following this peak, there was a gradual decline, reaching 29 days by November 2024. This pattern indicates an initial lengthening of the inventory holding duration, which later improved significantly, suggesting enhanced inventory turnover efficiency in more recent quarters.

Average Receivable Collection Period

The receivable collection period remained relatively stable throughout the periods, fluctuating in a narrow range primarily between 45 and 51 days. While minor increases and decreases occurred, no significant trend was evident. This stability suggests consistent credit management and collection practices over time.

Operating Cycle

The operating cycle mirrored the trends observed in inventory processing, starting at 80 days in August 2019 and rising to a peak of 101 days by February 2021. Thereafter, it demonstrated a downward trajectory, reaching 79 days by May 2024. This decline reflects the improvements in inventory processing combined with stable receivables collection, contributing to a shorter cash conversion cycle overall.

In summary, the company experienced an increase in inventory holding periods during 2020 and early 2021, which extended the operating cycle. Subsequently, both the inventory processing period and operating cycle showed consistent improvement, suggesting more efficient working capital management. Receivables collection remained steady, indicating maintained effectiveness in credit controls.

Payables Turnover Ratio

The payables turnover ratio shows variability over the observed periods. Initially, it fluctuated around the mid-teens, ranging between 15 and 17 from the third quarter of 2019 through early 2021. A notable increase occurred in August 2021, reaching a peak of 19.09, indicating a faster payment cycle during that quarter.

Following this peak, the ratio generally trended downward with some fluctuations, stabilizing around the mid-teens again through early 2023. From mid-2023 onwards, the payables turnover steadily decreased, reaching the lowest recorded values of approximately 12.5 to 12 at the end of 2024. This trend suggests a lengthening in the payment cycle, with the company taking longer to pay its obligations in recent quarters.

Average Payables Payment Period (Days)

The average payment period aligns inversely with the payables turnover ratio. It began near 23 to 24 days during 2019 and early 2020, indicating relatively consistent payment timing.

During mid-2020 to early 2021, the payment period fluctuated between 22 and 27 days, reflecting some variability in payment practices. The shortest average period was observed in August 2021 at 19 days, coinciding with the peak in payables turnover, indicating accelerated payments.

From late 2021 through early 2023, the average payment period generally oscillated around 21 to 25 days, showing relatively stable payment timing. However, starting mid-2023, there was a clear upward trend reaching 29 to 30 days by late 2024, highlighting a tendency toward longer payment durations.

Overall Analysis

The data indicate a cyclical pattern with a temporary acceleration in paying payables around mid-2021, followed by a gradual extension of payment periods towards the end of the observed timeline.

This lengthening of payment days and reduction in payables turnover ratio in the latest quarters could imply strategic cash management decisions, possibly to optimize working capital, or may reflect changes in supplier negotiations or financial constraints. Continuous monitoring of these trends is advised to assess impacts on supplier relationships and liquidity.

Inventory Processing Period

The average inventory processing period displayed a rising trend from 32 days in August 2019 to a peak of 52 days in November 2020 and February 2021. Following this peak, there was a consistent decline, reaching 29 days by November 2024. This indicates an initial lengthening of inventory holding times during the 2020-early 2021 period, likely reflecting operational challenges or inventory buildup, followed by improved efficiency and faster inventory turnover in the subsequent quarters.

Receivable Collection Period

The average receivable collection period remained relatively stable throughout the period, fluctuating around the high 40s, particularly between 45 and 51 days. There was no significant upward or downward trend, suggesting consistent credit and collection policies. Minor variations occurred but do not indicate material changes in receivables management.

Payables Payment Period

The average payables payment period showed moderate variability. Starting at 23 days in August 2019, it increased gradually to a range between 24 and 30 days by late 2024. Notably, there was a more distinct elongation of payment terms from mid-2023 onwards, peaking at 30 days in November 2024. This suggests a strategic extension of payables duration, potentially to optimize cash flow or reflect supplier negotiations.

Cash Conversion Cycle

The cash conversion cycle lengthened from 57 days in August 2019 to a high of 78 days in February 2021, coinciding with the peak inventory days. Post that peak, there is a steady decline with minor fluctuations, reaching 49 days by November 2024. This downward trend in the cash conversion cycle after early 2021 indicates enhanced overall working capital management, combining improved inventory turnover and effective receivables and payables timing.