Cisco Systems Inc. (NASDAQ:CSCO)

The data reveals discernible trends in turnover ratios and related operational metrics over the analyzed quarters.

Inventory Turnover

The inventory turnover ratio shows a steady decline from approximately 13.91 to 6.83 over the observed period. This indicates a gradual decrease in the frequency with which inventory is sold and replaced, suggesting slower inventory movement and potentially increasing inventory levels or reduced sales velocity.

Receivables Turnover

Receivables turnover fluctuates within a range, generally oscillating between 8.0 and 12.0, with no consistent linear trend. Periods of improvement alternate with declines, indicating variability in the effectiveness of credit and collection processes over time.

Payables Turnover

The payables turnover ratio remains somewhat stable, fluctuating mostly between approximately 7.5 and 11.0. It exhibits moderate variability but no clear upward or downward trend, implying consistent payment behavior to suppliers over the quarters.

Working Capital Turnover

Working capital turnover shows some improvement in the mid-periods, rising to near 5.0 before recent periods with missing data. This suggests more efficient utilization of working capital during those intervals, although recent data gaps limit conclusive interpretation on the latest status.

Average Inventory Processing Period

There is a clear upward trend, with the average inventory days increasing from roughly 26 days to over 60 days. This aligns with the decline in inventory turnover, indicating lengthening inventory holding periods.

Average Receivable Collection Period

The average days to collect receivables show variability but generally fluctuate between 30 to 45 days without a clear long-term trend. Some periods indicate faster collection while others slower, reflecting inconsistency in receivable management.

Operating Cycle

The operating cycle lengthens notably, moving from the mid-60 day range to around 90-110 days. This extension points to longer total durations to convert inventory and receivables into cash.

Average Payables Payment Period

Days payable outstanding remain relatively stable, oscillating near 40-50 days with minimal directional change. This stability reflects consistent payment terms and supplier relations over time.

Cash Conversion Cycle

The cash conversion cycle exhibits an increasing trend with notable volatility, ranging from single digits up to over 65 days. The rise indicates a lengthening time to convert resource inputs into cash flows, potentially signaling a liquidity pressure or changed working capital dynamics.

Overall, the data highlights a lengthening in inventory holding and operating cycles along with a continuous decrease in inventory turnover, suggesting slower inventory movement. Receivables and payables management remain variable but generally stable, while the elongation of the cash conversion cycle may reflect challenges in cash flow conversion efficiency during the period observed.

The data reveals several trends related to cost of sales, inventories, and inventory turnover over the examined periods.

Cost of Sales

The cost of sales generally shows fluctuations over the periods without a consistent upward or downward trajectory. It started around 4,926 million US dollars in late 2018, experienced a decline reaching approximately 4,176 million US dollars in early 2021, before increasing again to peak levels near 5,455 million in mid-2023. Recently, cost of sales exhibits a downward adjustment, declining to roughly 4,871 million US dollars by the second quarter of 2025. This pattern indicates variability likely influenced by operational factors or changes in product mix over time.

Inventories

Inventories demonstrate a clear increasing trend from 1,572 million US dollars in the fourth quarter of 2018 to a peak close to 3,644 million in mid-2023. After this peak, inventory levels have slightly receded to around 2,832 million US dollars by the second quarter of 2025. This long-term increase in inventories suggests accumulation of stock, which may reflect strategic stocking, anticipated demand growth, or slower inventory turnover.

Inventory Turnover

Inventory turnover ratios are available beginning from the first quarter of 2019 and show a steady declining trend from peaks around 14.85 to lows near 5.63-6.45 in recent periods. The turnover ratio decreased from approximately 14.85 in early periods to stabilizing around 6–7 in the latest quarters. This reflects a slower rate at which inventory is sold or used, implying increased holding periods for inventory or possible challenges in inventory management efficiency.

Overall, the interplay between rising inventory levels and decreasing inventory turnover ratios suggests that the company is holding more stock for longer periods. Coupled with relatively stable yet fluctuating cost of sales, this might point to changing supply chain dynamics or operational adjustments. Such trends warrant attention as they may impact working capital requirements and operational liquidity in the near term.

Revenue Trends

Revenue shows fluctuations across the quarters, with an initial value of approximately $13,072 million in October 2018. A declining trend is observed through early 2020, reaching a low near $11,983 million in April 2020. From mid-2020 onward, revenue generally recovers and grows, peaking at around $15,203 million in July 2023. The latter periods, from October 2023 through April 2025, show some volatility with values ranging approximately between $12,702 million and $14,149 million, indicating some instability or cyclical variation in revenue generation.

Accounts Receivable, Net of Allowance

The accounts receivable figures demonstrate considerable volatility over the analyzed period. Values fluctuate between roughly $3,745 million (January 2019) and $6,685 million (October 2024). Initial quarters exhibit lower receivables, but there is a marked increase beginning around mid-2019 and continuing intermittently thereafter. The periods with higher revenue often correspond with elevated accounts receivable, but this relationship is not strictly proportional. Notably, spikes in receivables in October 2021, January 2022, and October 2024 suggest periods where collections may have slowed, or credit extension increased.

Receivables Turnover Ratio

The receivables turnover ratio exhibits considerable variability, generally fluctuating between approximately 7.79 and 12.08. Higher turnover ratios, such as those around 11 to 12 occurring in January 2019, October 2019, and January 2024, imply more efficient collections relative to sales during those periods. Conversely, lower ratios observed in quarters like October 2021, January 2022, and October 2024 suggest slower collection efficiencies or increased credit risk. The turnover ratio trend does not display a consistent directional movement but alternates, reflecting shifting dynamics in credit management and sales.

Integrated Insights

Analyzing the interplay between revenue, accounts receivable, and receivables turnover ratio reveals an overall scenario of revenue recovery after an early 2020 dip, accompanied by fluctuating collection efficiency. Periods of revenue growth generally coincide with higher receivables balances, but collection efficiency, as measured by turnover ratio, does not always improve correspondingly, highlighting potential challenges in credit management or customer payment behaviors. The data also points to cyclical or seasonal factors affecting these financial metrics, warranting ongoing monitoring for effective working capital management.

Cost of sales

The cost of sales displays a generally fluctuating pattern over the observed periods. Initial figures around late 2018 and early 2019 show values in the vicinity of 4,600 to 4,900 million USD. A notable decline appears starting in early 2020, reaching a low near 4,176 million USD in the first quarter of 2021. Subsequent quarters reflect moderate recovery and an upward trend through mid-2022, peaking around 5,300 million USD. From late 2022 through early 2024, values show moderate volatility but remain relatively elevated, often exceeding 5,000 million USD. The most recent quarters signal a slight downward adjustment but still maintain levels close to historical highs, indicating increased cost activity compared to the start of the period.

Accounts payable

Accounts payable figures exhibit a cyclical pattern with several peaks and troughs throughout the observed timeframe. During the end of 2018 and most of 2019, the values oscillated mainly between 1,650 million USD and just above 2,000 million USD. A sharp increase is observed in early to mid-2020, reaching a peak near 2,393 million USD, followed by some decline and subsequent stability between approximately 2,200 and 2,400 million USD until early 2022. From mid-2022 onwards, the payable amounts experience relatively stable values, mostly hovering around 2,200 to 2,300 million USD, with a minor dip late in 2023 and some recovery in early 2024. Overall, the payable balances show moderate growth from the initial periods, reflecting possibly increased procurement or extended payment terms.

Payables turnover

The payables turnover ratio is available starting mid-2019 and shows substantial variation. Initial readings are high, close to 9.3 to 9.6, before sharply declining to approximately 7.2 to 7.9 ratios in the subsequent quarters, indicating slower payment cycles during that phase. From late 2019 into 2021, the ratio fluctuates moderately, staying generally below 9.5 but above 7.2. Beginning in late 2021 and through 2023, a clear upward trend is visible, peaking at values above 11 in early 2024, suggesting accelerated payments and improved turnover of payables compared to earlier periods. The ratio then slightly declines but remains robust, implying enhanced efficiency in managing payables relative to cost of sales in recent quarters.

Summary

In summary, cost of sales has shown an increasing trajectory with occasional dips, particularly notable during the early 2020 period, likely reflecting market or operational impacts. Accounts payable have increased moderately with some fluctuations, suggesting cautious management of liabilities or changes in procurement strategies. The payables turnover ratio indicates relative payment speed slowed initially but subsequently accelerated, reaching a peak in recent periods, which may reflect more efficient cash management or supplier payment policies. Collectively, the data suggest a dynamic environment with adjustments in cost structures and payable practices over the observed periods.

The financial data reveals discernible trends across key metrics over the analyzed periods.

Working Capital

There is a general declining trend in working capital from late 2018 through early 2021, decreasing from $29,272 million to $12,798 million. This was followed by relative stabilization around the $11,000 to $12,000 million range until early 2024, after which a sharp decline occurs, plunging to negative values reaching approximately -$5,338 million by the reported period ending April 2025. This implies a significant shift in current assets versus current liabilities, potentially indicating increased short-term liabilities or decreased current assets.

Revenue

Revenue displays moderate fluctuations, remaining largely within the $12,000 to $15,000 million range. Initial revenue figures from late 2018 decline slightly until early 2020 but maintain a broadly stable range between $11,900 and $13,000 million. Starting mid-2021, there is a general upward trajectory peaking near $15,203 million in mid-2023. However, revenue experiences a decline soon after, falling to about $12,702 million by early 2024, and then moderately recovering to approximately $14,149 million by early 2025. Overall, revenue demonstrates resilience despite periodic troughs, with cyclical rises and falls.

Working Capital Turnover Ratio

The working capital turnover ratio, reported intermittently, shows a strong improvement from around 2.7-3.2 in mid to late 2019 to consistently above 4.0 from late 2020 through early 2024 where data is available. The ratio even peaks near 5.08, indicating increasing efficiency in using working capital to generate revenue during those periods. This improved utilization of working capital, despite the declining or volatile working capital balances, suggests operational effectiveness in managing short-term assets and liabilities prior to the significant working capital reduction observed in 2024-2025.

Overall Insights

The data highlights a company managing revenue growth with fluctuating working capital levels and improving efficiency up to early 2024. The abrupt decrease and inversion of working capital post-2024 could warrant close attention due to possible liquidity or operational concerns it may signify. Revenue's recovery following a dip points to underlying business resilience, yet the divergence in working capital and turnover metrics after 2024 suggests potential shifts in financial structure or strategy requiring further analysis.

The analysis of the inventory turnover ratio and the average inventory processing period over the presented quarters reveals distinct trends in inventory management efficiency.

Inventory Turnover Ratio

The inventory turnover ratio started at relatively high levels around 13.91 and 14.14 in the earlier measured quarters and maintained similar values for the next few periods. Over time, however, there is a clear downward trend in this ratio, reaching a low point around 5.63 before a modest recovery to values near 6.83 in the most recent quarter. This decline indicates that inventory is being sold and replaced less frequently as time progressed.

Average Inventory Processing Period

Inversely correlated with the inventory turnover ratio, the average inventory processing period lengthened significantly over the same time frame. The period began near 26 days and increased steadily, reaching peaks above 60 days in the latter periods, before demonstrating a slight reduction to around 53 days in the most recent quarter. This suggests that inventory remains on hand for longer durations before being processed or sold.

Overall Trends and Insights

The data depicts a clear shift towards slower inventory turnover and longer holding periods over the analyzed quarters. Such trends may imply challenges in sales velocity or changes in inventory strategy, possibly reflecting adjustments in market demand or operational dynamics. The recent mild improvement in both metrics could indicate early signs of stabilization or strategy adjustment to improve inventory throughput.

Receivables turnover

The receivables turnover ratio exhibits noticeable fluctuations over the observed periods. Starting from a level of 9.45, the ratio improved, reaching a peak of 12.08 in January 2021, which suggests an enhanced efficiency in collecting receivables at that time. However, subsequent quarters revealed a downward trend, with values dropping to as low as 7.79 in October 2022, indicating slower collection activity or increased outstanding receivables. The ratio then displayed recovery signs, climbing again to levels around 12.01 in October 2023 before experiencing further oscillations. Overall, the ratio demonstrates variability but maintains in a range approximately between 7.79 and 12.08 across the time span.

Average receivable collection period

The average receivable collection period, expressed in days, inversely mirrors the receivables turnover ratio trends, as expected. Initial data points illustrate a decrease from 39 days down to a low of 30 days by January 2021, indicating a quicker collection process. Following this period, the collection duration increased, peaking at 47 days in October 2022, signaling slower receivables turnover. A subsequent improvement phase is observed as the days reduce again to around 30–31 days by January and April 2024. Over the entire period, the collection period fluctuates between approximately 30 and 47 days, reflecting variability in the effectiveness of the company's credit and collection management.

Summary Insights

Overall, the data reveals cyclical patterns in the management of receivables. Periods of higher turnover and shorter collection periods align, denoting efficient credit management. Conversely, intervals with reduced turnover and longer collection times suggest potential challenges in receivables collection or changes in credit terms. The oscillations may be influenced by internal operational changes, market conditions, or customer payment behaviors. The latest data does not suggest a long-term consistent trend but rather ongoing fluctuations, indicating that receivables management remains a dynamic aspect of the company’s operations.

The data indicates notable trends in the inventory processing period, receivable collection period, and the overall operating cycle over the observed timeline.

Average Inventory Processing Period

The inventory processing period shows a general upward trend with fluctuations. Starting around 26 days in early periods, it gradually increased to peak values above 60 days, reaching up to 65 days at one point. In the most recent periods, a decreasing trend is observed, with the period shortening back to the low 50s. This suggests an initial slow-down in inventory turnover, followed by recent improvements in inventory efficiency.

Average Receivable Collection Period

The receivable collection period exhibits moderate variability but lacks a strong upward or downward trend. Periods generally range between 30 and 45 days, with occasional spikes and dips. The data points to relative stability in the time required to collect receivables, with some intermittent increases indicating possible challenges in accounts receivable management during specific quarters.

Operating Cycle

The operating cycle closely follows the shifts in the inventory and receivable periods and reflects a clear increase over time. Starting in the mid-60s, it climbs steadily to peak values exceeding 100 days before marginally declining toward the end of the dataset. This rising trend suggests increasing overall time to complete the combined process of inventory turnover and receivables collection, which may impact liquidity and operational efficiency.

In summary, the company experienced a lengthening of the operating cycle primarily driven by an increase in inventory processing time, while receivable collection periods remained more stable. The recent downturn in the inventory processing period may indicate efforts to enhance operational processes, potentially leading to improved working capital management going forward.

The analysis of the payables turnover and average payables payment period over the reported quarters indicates several notable trends and fluctuations.

Payables Turnover Ratio

The payables turnover ratio shows variability with an overall range between approximately 7.22 and 11.08. Initially, in late 2018 and early 2019, the ratio hovers around 9.34 to 9.6 but drops significantly to around 7.22 to 7.94 in mid-to-late 2020. Thereafter, the ratio fluctuates moderately within a band between 7.59 and 9.19 through early 2023. From 2023 onward, there is a clearer upward movement, peaking at 11.08 in January 2024, indicating an increased frequency of payables turnover during this period. However, the ratio falls back to the 8–9 range in the most recent quarters of 2024 and early 2025.

Average Payables Payment Period (Days)

The average payment period inversely correlates with the payables turnover, ranging mostly between 33 and 51 days. Early periods exhibit a relative stability around 38 to 39 days, which abruptly increases to around 49-51 days in mid-2019 to mid-2020. This suggests slower payment cycles during this time frame. Subsequently, the payment period decreases consistently to a low of approximately 33 days in early 2024, coinciding with the peak payables turnover ratio observed. Following this, the payment period expands again to about 44 days toward the latter part of 2024 and remains around high 30s to low 40s in early 2025.

In summary, the data reveals alternating periods of quicker and slower payment practices. Notably, the company experienced extended payment terms around 2019-2020, potentially reflecting strategic cash flow management or operational factors affecting disbursements. More recently, the trend towards higher turnover and shorter payment periods in early 2024 suggests an acceleration in paying suppliers, perhaps to capitalize on discounts or improve supplier relationships, followed by a slight easing back to longer payment terms into 2025.

The financial data shows distinct trends in inventory, receivables, payables, and the overall cash conversion cycle for the periods analyzed.

Average inventory processing period

This period exhibits a general upward trajectory from 26 days at the start of the data to a peak of 65 days. After reaching this high point, there is a gradual decline to 53 days by the last reported quarter. This suggests that the time taken to process inventory extended considerably before showing signs of improvement.

Average receivable collection period

The receivable collection days demonstrate noticeable fluctuations without a consistent long-term trend. Initial data points indicate variability between approximately 31 and 47 days, oscillating frequently throughout the timeline. This variability points to inconsistent collection efficiency or credit terms over the periods.

Average payables payment period

The payables payment period remains relatively stable compared to inventory and receivables. Values mainly range from the high 30s to low 50s, experiencing minor fluctuations across quarters. There is no marked increasing or decreasing trend, indicating steady management of payment terms and obligations.

Cash conversion cycle

The cash conversion cycle initially decreases noticeably from 26 days down to as low as 9 days, reflecting improved cash management and quicker conversion of resources into cash. However, from this low point, the cycle tends to increase, reaching a peak near 66 days in the later periods before slightly decreasing again. This pattern implies that after initial efficiency gains, working capital management became less efficient, potentially due to extended inventory or receivables periods.

Overall, the data reveals that although payment practices have remained consistent, periods outstanding for inventory and receivables have exhibited considerable variability and growth. This has directly affected the cash conversion cycle, leading to a longer duration in the later stages, which may impact liquidity and operational efficiency if not addressed.