Cisco Systems Inc. (NASDAQ:CSCO)

Inventory Turnover

The inventory turnover ratio demonstrates a decreasing trend over the observed periods, starting from 13.74 and declining to a low of 5.63 before slightly rebounding to around 6.28. This suggests a slowdown in the rate at which inventory is sold and replaced, indicating potential challenges in inventory management or changes in sales dynamics.

Receivables Turnover

The receivables turnover ratio fluctuates significantly, ranging from a low near 7.79 to a high of approximately 12.08. This variability points to inconsistent effectiveness in collecting receivables, with periods where collection is more efficient contrasted by intervals of slower collection activity.

Payables Turnover

Payables turnover ratios exhibit moderate fluctuations, rising from around 7.22 to above 11 at some points before retreating to the 7.86 level. The increase in turnover indicates a period of faster payment to suppliers, followed by a reversion suggestive of more extended payment terms or slower payments in later quarters.

Working Capital Turnover

Working capital turnover shows an upward trend initially, reaching a peak around 5.08 before data availability ceases. This implies improving efficiency in utilizing working capital to generate sales in the early periods, although recent data is incomplete to confirm whether this trend sustains.

Average Inventory Processing Period

The average inventory processing period lengthens consistently, extending from 27 days to over 65 days at its peak before slightly decreasing toward the end of the dataset. This pattern aligns with the declining inventory turnover ratio and reflects slower inventory movement and potentially higher holding costs.

Average Receivable Collection Period

This metric fluctuates within a range of approximately 30 to 47 days, with occasional spikes. While there are periods of efficient receivable collection near 30 days, other intervals display slower collection, impacting liquidity and cash flow.

Operating Cycle

The operating cycle generally trends upward, increasing from 58 to over 110 days at its maximum, indicating a longer duration between acquiring inventory and receiving cash from sales. This lengthening could signal inefficiencies or shifts in operation and cash flow timing.

Average Payables Payment Period

The average payables payment period varies between roughly 33 and 51 days, with a slight downward movement toward later periods. This suggests a tendency to delay payments over some quarters, followed by a move toward quicker settlement of payables, potentially reflecting changes in payment policies or cash management strategies.

Cash Conversion Cycle

The cash conversion cycle broadly increases from around 10 days to over 66 days before showing some volatility. A longer cash conversion cycle indicates that the company takes more time to convert resource inputs into cash flows, which could affect liquidity and operational efficiency.

Cost of Sales

The cost of sales exhibits a fluctuating pattern throughout the periods analyzed. Beginning at 4,695 million US dollars in October 2019, the cost generally declined until early 2021, reaching a low point of 4,176 million US dollars in January 2021. Subsequently, a rising trend is observed with several fluctuations, peaking at 5,455 million US dollars in July 2023. Following this peak, costs demonstrate a decreasing trend until January 2024 but then increase again by October 2025, reaching 5,393 million US dollars. Overall, while volatility is evident, the cost of sales appears to have increased over the entire period.

Inventories

Inventory levels show a clear upward trend over the period. Starting at 1,344 million US dollars in October 2019, inventory values steadily increased with brief periods of slower growth. The increase accelerated from 2021, reaching the highest levels in the third quarter of 2023 at 3,644 million US dollars. Following this peak, inventories declined somewhat but remained elevated relative to initial values, ending at 3,164 million US dollars in October 2025. This pattern suggests an accumulation of stock or increased holding of assets in inventory over time.

Inventory Turnover Ratio

The inventory turnover ratio is available from the period ending July 25, 2020, and shows a continuous decline from 13.74 to a low of 5.63 by October 2024. Following this low, the ratio shows slight improvements but remains well below the initial figure, ending near 6.28 in July 2025. The steady decrease in inventory turnover indicates that the company is selling inventory more slowly relative to its stock levels, which, alongside increased inventory, could signal slower movement of goods or challenges in inventory management efficiency.

Summary of Interrelated Trends

The increasing inventory levels combined with the declining inventory turnover ratio suggest a potential buildup of stock that is not being converted into sales at the previous pace. Although cost of sales fluctuates, the overall higher inventory and lower turnover ratio may hint at operational challenges or market conditions affecting sales velocity. The fluctuations in cost of sales, with recent increases, coupled with inventory trends, indicate that the company should monitor inventory management closely to avoid excess stock and potential obsolescence risks.

Revenue Trends

Revenue shows a fluctuating yet generally upward trajectory over the reported periods. Starting at 13,159 million USD in late 2019, revenues decreased to a low point around 11,929 million USD in October 2020, likely impacted by external economic factors during that period. A steady recovery is observed thereafter, with revenue rising to peak levels exceeding 15,203 million USD by mid-2023. Subsequent quarters exhibited some volatility with decreases and recoveries, stabilizing in the range of approximately 13,641 to 14,673 million USD towards late 2024 and early 2025.

Accounts Receivable, Net of Allowance

Accounts receivable exhibited considerable variability. Initial levels near 4,878 million USD in late 2019 declined notably to around 3,980 million USD by October 2020, correlating with lower revenues. Following this, the receivables balance rebounded, reaching highs above 6,622 million USD by late 2022 and further fluctuated with peaks and troughs throughout 2023 and into 2024, indicating potential changes in credit policy, collection efficiency, or customer payment behaviors. The pattern suggests intermittent increases in outstanding customer balances, with notable peaks at mid-2023 and mid-2024 periods.

Receivables Turnover Ratio

The receivables turnover ratio demonstrates variability consistent with changes in accounts receivable and revenue. Recorded ratios range broadly from a low near 7.79 to highs approximately 12.08, indicating fluctuating efficiency in collecting receivables. Higher turnover ratios observed around early 2020 suggest improved collection efficiency, while subsequent declines to near 8.05 indicate slower collections during some quarters. The turnover ratio's fluctuations throughout the periods imply varying credit management effectiveness, with no sustained trend either upward or downward.

Overall Insights

The revenue recovery post-2020 indicates resilience and possible business growth despite external challenges. The variability in accounts receivable levels and turnover ratios suggests oscillating credit management and collection processes, potentially influenced by customer payment cycles or credit terms adjustments. Periods of increased accounts receivable coupled with lower turnover ratios highlight transient delays in collections, which may warrant closer monitoring to manage liquidity risk. The recent stabilization of revenue and accounts receivable metrics toward late 2024 and early 2025 could reflect the company’s adjustments to optimize working capital management and enhance operational performance.

The cost of sales demonstrates significant fluctuations over the examined periods, generally showing an upward trend toward the later quarters. Beginning with a value of 4,695 million US dollars in October 2019, it decreases through early 2020, reaching a low point around January 2021 at 4,176 million US dollars. Subsequently, the cost of sales increases again, peaking multiple times above the 5,000 million mark from mid-2022 onward. Notably, the highest recorded value occurs in October 2025, reaching 5,393 million US dollars. This pattern indicates variability possibly linked to changes in business volume or cost structures, along with a tendency for growth in recent quarters.

Accounts payable follow a somewhat cyclical pattern but with a slight downward tendency in the middle periods followed by stabilization and moderate increases. Starting at 2,016 million US dollars in October 2019, the figure shows some peaks and troughs, with values dipping near 1,867 million US dollars in January 2021. Thereafter, accounts payable generally oscillate between approximately 1,848 million and 2,528 million US dollars, with a peak observed around October 2025. This suggests active management of short-term liabilities, with variability potentially reflecting operational adjustments or supplier payment terms.

Payables turnover ratios, available from April 2020 onwards, display considerable variability, generally fluctuating between approximately 7.2 and 11.1 times. Starting at 7.94, the ratio dips to a minimum of 7.22 in July 2020 before recovering and exhibiting several peaks above 9, including a maximum ratio of 11.08 in January 2024. The ratio tends to rise and fall, indicating changes in how quickly the company settles its accounts payable. Higher turnover ratios reflect faster payments to suppliers, while lower ratios suggest slower payment cycles. The peak in early 2024 suggests a period of more rapid payment activity.

In summary, the data reveal that the company's cost of sales has gradually increased with episodic variability, accounts payable figures fluctuate within a moderate range without a definitive long-term trend, and the payables turnover ratio shows dynamic shifts indicative of changing payment practices. These patterns suggest responsive financial and operational management in adapting to varying business conditions over the analyzed quarterly periods.

The financial data demonstrates several noteworthy trends over the observed periods. Working capital figures show volatility, with a general declining tendency toward the latter dates. Starting from positive values exceeding 17,000 million US dollars in early periods, working capital experiences fluctuations and finally turns negative in the most recent quarters, reaching its lowest point at -5,338 million US dollars. This decline in working capital indicates potential liquidity pressures or changes in short-term asset and liability management.

Revenue has followed a relatively steady upward trajectory with periodic fluctuations. Initially, it fluctuates around 12,000 to 13,000 million US dollars but shows consistent growth from the period labeled "Oct 29, 2022" onward, peaking at 15,203 million US dollars in the "Jul 29, 2023" quarter before settling around 14,000 to 14,600 million US dollars in the latest periods. This pattern reflects stable sales growth, although recent slight decreases after the peak could warrant attention for future performance.

Working capital turnover, where available, exhibits an increasing trend across the periods measured. It rises from approximately 2.7 to over 5.0, particularly between mid-2020 and early 2024, indicating increased efficiency in using working capital to generate revenue. This improvement suggests better operational management or a shift in the capital structure that enables more effective revenue generation relative to working capital.

Working Capital

Highly variable with a declining trend, turning negative in the most recent quarters, signaling potential liquidity challenges or asset-liability structure shifts.

Revenue

Generally exhibits modest growth with some fluctuations, peaking in mid-2023 and stabilizing slightly lower afterward, reflecting steady but variable sales performance.

Working Capital Turnover

Demonstrates a consistent increase, indicating enhanced efficiency in generating revenue from working capital resources over the periods analyzed.

Inventory Turnover Ratio Trend

The inventory turnover ratio exhibits a clear declining trend over the observed periods. Starting at 13.74 in July 2020, it decreases steadily to 6.28 by July 2025. This suggests that the frequency with which inventory is sold and replaced has been reducing, indicating slower inventory movement over time.

Average Inventory Processing Period Trend

The average inventory processing period shows an increasing trend throughout the same timeframe. Initially at 27 days in July 2020, the period extends to a peak of 65 days by October 2024 before slightly declining to 58 days by July 2025. This growing duration implies that inventory remains on hand longer before being sold or utilized.

Relationship Between Inventory Turnover and Processing Period

The data reveals an inverse relationship between inventory turnover ratio and average processing period, as expected. As inventory turnover decreases, the number of days inventory is held increases. This consistent inverse movement confirms changes in inventory management or demand conditions affecting stock efficiency.

Implications and Observations

The decreasing inventory turnover ratio coupled with an increasing processing period may indicate challenges in moving inventory efficiently, potentially resulting from market demand shifts, supply chain disruptions, or changes in product mix. The slight reduction in processing days towards the end of the period suggests possible adjustments or improvements in inventory control. Overall, these trends may warrant a review to optimize inventory management strategies to enhance operational performance.

The trend in receivables turnover demonstrates noticeable fluctuations over the observed periods. Initially absent for several quarters, the ratio first appears at 9.01 and increases substantially to a peak of 12.08. Subsequently, it oscillates, declining to 7.79 at one point before rising again to values above 10 in several quarters. The ratio notably peaks at 12.01 and remains generally elevated in multiple quarters thereafter, suggesting variability in the efficiency with which receivables are collected.

Correspondingly, the average receivable collection period, measured in days, exhibits an inverse pattern relative to receivables turnover, as expected. At the first available data point, the collection period is 41 days, decreasing to a low of 30 days at a certain quarter, indicating faster collection of receivables. Later, the period extends up to 47 days, before again declining towards the low 30s in subsequent quarters. This cyclical pattern suggests fluctuations in the time taken to convert receivables into cash, correlating with the changes seen in the turnover ratio.

Overall, there is a clear inverse relationship between the two metrics, consistent with the typical understanding that higher receivables turnover implies shorter collection periods. The variations suggest episodic shifts in the company's credit and collection effectiveness or changes in sales mix and terms, which may impact cash flow management and working capital dynamics over these quarters.

Inventory Processing Period

The average inventory processing period shows a generally increasing trend from October 2019 through July 2025. Beginning at 27 days in October 2019, it gradually rises with some fluctuations to reach a peak of 65 days by October 2024. After this peak, a slight decline is observed, ending around 58 days by July 2025. This prolonged period suggests a trend towards slower inventory turnover over the analyzed timeframe, which could indicate changes in inventory management or supply chain dynamics.

Receivable Collection Period

The average receivable collection period presents variability across the quarters without a stable linear trend. Initially decreasing from 41 days in October 2019 to around 30 days by January 2021, it then fluctuates between the low 30s to mid-40s days in subsequent periods. Notably, a sharp increase to 45 days is seen in October 2024 but reduces again towards 35 days by July 2025. This variability indicates potential inconsistencies or changes in credit and collection policies or customer payment behaviors over time.

Operating Cycle

The operating cycle, representing the combined duration of inventory processing and receivable collection, generally trends upward, starting at 68 days in October 2019 and increasing to a high of 110 days in October 2024. This upward trend indicates that the total time to convert inventory into cash has lengthened over the period. Post-peak, a partial reduction occurs, ending slightly lower at around 101 days by July 2025. The growing operating cycle may reflect elongation in either inventory turnover, receivables collection, or both, suggesting a lengthening of the company's cash conversion cycle.

Summary Insights

The data reveal that the company’s operational liquidity management is facing an elongation trend in both inventory processing and the overall operating cycle, with the receivable collection period showing more fluctuation but no clear sustained improvement or deterioration. The increasing days in inventory and operating cycles may imply challenges in managing working capital efficiently, potentially impacting cash flow dynamics. Monitoring and addressing factors driving these lengthening periods could be essential for improving operational efficiency in the future.

Payables Turnover Ratio

The payables turnover ratio shows variability over the analyzed quarters, beginning from a value of 7.94 and experiencing fluctuations throughout the periods. After declining slightly to 7.53, it rose sharply to 9.22, followed by a decrease to 7.22. Subsequent quarters show an overall upward trajectory, peaking at 11.08 before declining again to values around 7.86 towards the end. This pattern indicates variations in the company's efficiency in paying off its suppliers, with periods of accelerated payment activity interspersed with slower payment intervals.

Average Payables Payment Period (Days)

The average payables payment period inversely correlates with the payables turnover ratio, starting at 46 days and fluctuating within a range between 33 and 51 days. The payment period shortened notably from 51 days down to 33 days during mid-periods, indicating faster payments to creditors. However, it subsequently extended back towards 46 days, highlighting a somewhat cyclical pattern in payment practices. This suggests that the company alternates between expedient and more extended payment terms across different quarters.

Summary of Trends and Insights

Overall, the data reflects fluctuating payables management efficiency, with some quarters demonstrating rapid turnover and reduced payment periods, and others indicating slower payment cycles. This variability may be influenced by operational and market conditions affecting the company's cash flow management and supplier negotiations. The peak in payables turnover ratio signifies occasional prioritization of quicker creditor settlements, while the longer payment periods suggest phases of more conservative cash utilization.

Inventory Processing Period Trends

The average inventory processing period shows a clear increasing trend over the observed quarters. Starting from 27 days in October 2019, there is a gradual rise reaching a peak of 65 days by October 2024. Following the peak, there is a slight decline toward the following quarters, ending at 58 days in July 2025. This indicates a lengthening duration of inventory holding, potentially pointing to slower inventory turnover or changes in inventory management.

Receivable Collection Period Trends

The average receivable collection period fluctuates throughout the observed period without a consistent trend. It starts at 41 days in October 2019, decreases to as low as 30 days in January 2021, and then oscillates between 30 and 47 days in subsequent periods. The variable pattern suggests occasional shifts in credit policies or customer payment behaviors without a long-term directional change.

Payables Payment Period Trends

The average payables payment period displays a moderate variability, initially increasing from 46 days in October 2019 to 51 days in July 2020, implying a temporary extension in payment terms. Thereafter, it tends to decrease steadily, reaching a minimum of 33 days by October 2023. Subsequently, the period increases again to 46 days by July 2025. These fluctuations may reflect changing supplier relationships or cash management strategies.

Cash Conversion Cycle Analysis

The cash conversion cycle, which measures the net time interval between cash outlay and cash recovery, shows a complex pattern. Starting at 22 days in October 2019, it declines to a low of 10 days by January 2021, indicating improved operational efficiency. After this point, it generally increases, peaking at 66 days in October 2024, then decreasing slightly to 45 days by July 2025. The lengthening cycle suggests increasing working capital requirements and potential challenges in managing the timing of receivables, inventories, and payables.

Overall Insights

Over the examined periods, there is a notable expansion in the inventory processing period and cash conversion cycle, implying increased capital tied up in operations. The receivable collection period remains inconsistent without a clear trend, while the payables payment period shows some cyclicality. Collectively, the data suggests evolving working capital management dynamics, with a tendency toward slower turnover and longer cash ties, which could impact liquidity and operational flexibility if the trends persist.