Costco Wholesale Corp. (NASDAQ:COST)

The data reveals several notable trends in operational efficiency and cash management ratios over the observed periods. An examination of inventory turnover shows fluctuations generally between approximately 9.7 and 12.8 times per period, with some periods peaking near 12.8 and occasional dips below 11. This indicates relative consistency in inventory management, maintaining the ability to turn over stock roughly 11 to 13 times per year on average. The average inventory processing period, measured in days, correspondingly fluctuates between about 28 and 37 days, inverse to the turnover, reflecting typical inventory holding durations without substantial long-term shifts.

Receivables turnover, an indicator of how effectively the company collects receivables, exhibits more variability, ranging roughly from 77.9 to 114.7 times over the periods. Earlier periods show a downtrend from around 97.3 moving down to the high 70s, followed by some recovery approaching 114.7 before again declining to the mid-80s to low 90s in later periods. The average receivable collection period remains quite stable between 3 and 5 days, illustrating consistent credit terms and collection efficiency despite turnover fluctuations.

Payables turnover shows notable variation as well, spanning approximately from 8.8 up to 12.9 times. This suggests changes in the pace at which the company settles its payables, with periods of quicker payment interspersed with slower cycles. The average payables payment period reflects this, ranging from around 28 to 41 days, indicating changes in payment policies or supplier terms impacting how long payables are outstanding.

The working capital turnover presents more irregular and sparse data, with some extremely high values such as over 3000 in one period and other values generally declining from 602 down to lower hundreds and then near 460 in later periods. This volatility and missing data limit robust conclusions but suggest episodic changes in the efficiency of working capital utilization, potentially reflecting unusual operational circumstances or changes in working capital components.

The operating cycle, constituting inventory processing and receivable collection, fluctuates between 32 and 41 days. It tends to move in tandem with inventory and receivable periods, pointing to short-term dynamics in the company's supply chain and sales collection processes. The cash conversion cycle, combining operating cycle and payables payment, remains close to zero or slightly positive, oscillating between -2 and 7 days with a few missing observations. This near-zero cash conversion cycle indicates effective cash management, whereby the firm nearly matches the time between outflow for payables and inflow from receivables and inventory sales, minimizing working capital tied up in the operations.

Overall, the data indicate consistent operational efficiency with some fluctuations likely influenced by seasonal or market factors. The company manages inventory and receivables effectively with stable collection periods, while payables show somewhat greater variability in payment timing. The close-to-zero cash conversion cycle highlights prudent cash flow management, reducing financing costs associated with funding working capital needs.

Inventory Turnover

Fluctuates between approximately 9.7 and 12.8, indicating consistent inventory management.

Average Inventory Processing Period

Ranges from 28 to 37 days, inversely related to turnover changes.

Receivables Turnover

Varies between 77.9 and 114.7, showing some variability in collection effectiveness.

Average Receivable Collection Period

Remains steady between 3 to 5 days, indicating stable credit terms.

Payables Turnover

Ranges from 8.8 to 12.9 times, reflecting changes in payment velocity.

Average Payables Payment Period

Varies from 28 to 41 days, signaling fluctuating payment practices or terms.

Working Capital Turnover

Displays sporadic large swings and missing data, indicating episodic changes in capital efficiency.

Operating Cycle

Between 32 and 41 days, mirroring inventory and receivables trends.

Cash Conversion Cycle

Hovers close to zero, from -2 to 7 days, demonstrating effective cash flow timing.

The merchandise costs over the reported quarters exhibit a cyclical pattern with marked increases approximately every third quarter. Beginning at 30,623 million USD in November 2018, there is a notable jump to 41,310 million USD by September 2019 before returning to lower levels in the subsequent quarters. This pattern repeats, with the highest peaks occurring in the third quarter of each year, reaching values such as 63,558 million USD in August 2022 and 69,219 million USD in September 2023. The general trend over the entire period shows a gradual increase in merchandise costs, reflecting growth in scale or pricing.

Merchandise inventories demonstrate moderate fluctuation but with a generally upward trajectory. Starting at 12,205 million USD in November 2018, inventories rise unevenly with occasional declines, reaching a peak of 20,979 million USD in November 2024. This upward movement aligns with the increasing merchandise costs, suggesting growing stock levels consistent with expanded operations or inventory strategies. Seasonal patterns are less pronounced compared to merchandise costs, though some incremental increases coincide with the third quarters.

Inventory turnover ratios, available from September 2019 onward, fluctuate between approximately 9.73 and 12.82. The ratio indicates a relatively stable efficiency in managing inventory, with minor variations but no sustained decline or increase. Peaks tend to occur in the latter quarters, evidencing potentially higher sales velocity or more effective inventory management during these periods. The turnover ratio remaining mostly above 10 implies that inventory is cycled roughly ten times per year on average, reflecting solid operational performance in inventory management.

In summary, merchandise costs and inventories both trend upwards over the observation period, with noticeable seasonality in merchandise costs peaking in third quarters. Inventory turnover remains relatively consistent, demonstrating stable inventory management despite increasing inventory levels and costs. These trends suggest ongoing growth in business volume alongside maintained operational efficiency.

Merchandise Costs

Overall increasing trend with seasonal peaks in the third quarter; highest recorded values near or above 65,000 million USD in recent years.

Merchandise Inventories

Gradual rise with some fluctuations, reaching just above 20,000 million USD by late 2024; less pronounced seasonality compared to costs.

Inventory Turnover

Relatively stable, fluctuating between 9.7 and 12.8, indicating steady inventory management efficiency throughout the period.

The financial data indicates fluctuations in net sales over the periods analyzed, with a generally upward trend interrupted by periodic decreases. Net sales experienced significant increases notably around the quarters ending on September 1, 2019; August 29, 2021; August 28, 2022; and September 3, 2023, each followed by a temporary decline in subsequent quarters. The peaks suggest strong seasonal or event-driven sales performance, with the highest net sales recorded near the latter periods of the dataset. Conversely, some quarters show a decline or plateau in sales, reflecting variability in market conditions or operational factors.

Receivables, net, exhibit a progressive increase over the timeline, rising from 1,795 million US dollars to a peak around 3,060 million US dollars. This upward trend in receivables corresponds with the general growth in net sales, though with some deviations. Notably, receivables growth appears smoother than sales fluctuations, suggesting consistent credit extension or customer payment behavior changes over time. Sporadic decreases in receivables occur but are not sustained, indicating a generally expanding credit account portfolio or higher sales on credit terms.

The receivables turnover ratio, available only for certain periods, reflects varying efficiency in collecting receivables. Higher turnover ratios, such as those exceeding 100 in quarters like August 30, 2020, and February 14, 2021, indicate more rapid collection relative to sales, enhancing liquidity. Conversely, lower ratios in some quarters point to slower collections or extended credit terms. The ratio fluctuates without a clear long-term trend, implying alternating collection efficiency or changes in sales composition impacting receivables management.

Net Sales

Demonstrates an overall increasing trend with distinct seasonal or cyclic peaks and troughs, indicating variability influenced possibly by market cycles or promotional activities.

Receivables, Net

Shows a steady increase over time, aligning with growth in net sales but with less volatility, suggesting expanded credit usage by customers or changing credit policies.

Receivables Turnover Ratio

Exhibits fluctuating values without a definitive upward or downward trend, highlighting inconsistency in collection efficiency or changes in receivables management strategy.

The analysis of the quarterly financial data reveals several notable trends and patterns primarily related to merchandise costs, accounts payable, and the payables turnover ratio over the observed period.

Merchandise Costs

The merchandise costs exhibit significant fluctuations throughout the quarters. Initially, there is a moderate increase from approximately 30,623 million US dollars in late 2018, followed by a substantial jump reaching over 46,000 million US dollars by mid-2020. This peak coincides with sustained higher values, occasionally nearing 69,000 million US dollars in late 2023 and 2024. Despite some quarters showing slight reductions or stabilization, the overall trend indicates a rising trajectory in merchandise costs over the period.

Accounts Payable

Accounts payable follows a somewhat similar pattern, with values rising from about 13,133 million US dollars in late 2018 to peaks exceeding 21,000 million US dollars towards late 2024. There are periods of volatility, as observed in the fluctuations between approximately 11,000 and 19,000 million US dollars throughout the timeline. Notably, there is a visible upward trend in accounts payable over the long term, which suggests increasing obligations or purchases on credit consistent with the rising merchandise costs.

Payables Turnover Ratio

The payables turnover ratio, representing how many times accounts payable is paid and replaced over a period, shows variability but remains within a range of approximately 8.8 to 12.9. Initially absent, the data starts from a ratio of 11.38 and exhibits occasional dips as low as 8.83 and peaks nearing 12.93. The ratio's fluctuations suggest changes in payment efficiency or credit terms but lack a clear increasing or decreasing trend over the entire period. The values imply a relatively stable, moderately high turnover, indicating consistent payment cycles despite the changes in merchandise costs and accounts payable.

In summary, the company's merchandise costs and accounts payable both show an increasing trend over the analyzed quarters, indicating growth in scale or inventory procurement. The payables turnover ratio remains relatively stable with minor oscillations, suggesting sustained payment practices amid growing financial volumes. These patterns highlight expanding operational activities with managed credit terms during the period under review.

The working capital figures demonstrate significant volatility over the observed periods. Initially, working capital starts at a positive level but then quickly shifts to negative territory, indicating potential liquidity challenges or changes in operational cycles during those intervals. Following this, the working capital shows a marked upward trend, reaching high positive values around mid-2020, which may suggest improved liquidity or changes in current assets and liabilities management. However, there is a pronounced decline again in the later periods, including substantial negative values near the most recent dates, reflecting renewed liquidity constraints or strategic financial adjustments.

Net sales present a clear seasonal and cyclical pattern, with periodic increases and decreases that correspond to typical retail seasonality. Over time, there is an overall upward trend in net sales, peaking notably in several quarters, particularly during mid to late 2020 and later in 2024. These peaks potentially align with heightened consumer activity or expanded sales operations. Despite fluctuations, the data indicates sustained sales growth over the years, with occasional dips that may correspond to external factors influencing demand or supply chain disruptions.

The working capital turnover ratios exhibit extreme variability and are incomplete in many periods, limiting comprehensive analysis. In the periods where data is available, the ratios are extraordinarily high or erratic, which might reflect mismatches in the timing of sales recognition relative to working capital levels. Some values are unusually large, suggesting either very low working capital bases or timing anomalies influencing these calculations. Overall, the inconsistency in this metric implies volatility in operational efficiency concerning working capital management, requiring cautious interpretation.

In summary, the financial data indicates that while net sales show consistent growth and seasonal patterns, working capital management experiences considerable fluctuations, with periods of both strong positive and negative working capital. The erratic working capital turnover ratios further emphasize the variability in how working capital supports sales over time. Continuous monitoring and analysis of liquidity and capital efficiency appear necessary to ensure balanced operational performance.

Inventory Turnover

The inventory turnover ratio demonstrates some variability over the periods analyzed. Initially, the ratio was recorded at 11.66, followed by a decline to 9.73 in the subsequent quarter. After this dip, the turnover generally fluctuated between approximately 10 and 13, indicating a relatively stable ability to sell and replenish inventory. The highest values reached close to 12.8, while the lowest again neared 9.7. This pattern suggests that while the company maintains an efficient inventory cycle, market or operational factors might cause moderate fluctuations in inventory management efficiency.

Average Inventory Processing Period

The average inventory processing period, measured in days, inversely correlates with inventory turnover as expected. It started at 31 days, increased to a peak of 37 days, and then generally decreased back towards the lower 30s range. Toward the later periods, the processing period stabilized between 28 and 34 days, reflecting consistent inventory holding duration. There were occasional small fluctuations which might be associated with seasonal demand or supply chain conditions.

Overall Insights

The trends in inventory turnover and average processing period collectively indicate a generally steady inventory management process, with some quarter-to-quarter variations. The fluctuations in turnover ratio and processing days underscore typical operational adjustments possibly influenced by demand cycles or inventory replenishment strategies. The company appears to manage its inventory efficiently, maintaining a balance between turnover speed and inventory holding time within a stable range over the reported periods.

The receivables turnover ratio exhibits noticeable fluctuations throughout the observed periods. Starting at a value in the mid-90s during late 2018 and early 2019, it experiences decline reaching approximately 77.92 in May 2020. Subsequently, the ratio recovers sharply, peaking above 114 by August 2021, indicating an improvement in the frequency of collecting receivables.

After this peak, the ratio tends to stabilize but with some downward trends, mostly fluctuating between mid-80s and just above 100. Towards the most recent periods, the receivables turnover ratio hovers around the low 90s, suggesting moderate efficiency in receivables management relative to the earlier peak performance.

Conversely, the average receivable collection period remains consistently low across the periods, generally around 3 to 5 days, with a minor variation. This stability indicates consistent timing in collecting receivables, aligning with the turnover trends where higher turnover rates correspond with shorter collection periods.

Receivables Turnover Ratio

The ratio demonstrates volatility but shows overall resilience post a mid-2020 trough, reflecting the company's effort to effectively manage receivables and convert them into cash.

Average Receivable Collection Period

The collection period maintains a relatively constant short duration, evidencing strong credit and collection policies.

In summary, the data reveals that despite some variability, the company maintains effective receivables management with a short collection cycle and a generally high turnover ratio, which likely contributes positively to liquidity and cash flow conditions over time.

The analyzed financial data reveals notable trends in the inventory processing period, receivable collection period, and operating cycle over multiple quarters.

Average Inventory Processing Period

The average inventory processing period exhibits some fluctuations but generally remains within a relatively narrow range of approximately 28 to 37 days across the observed quarters. Initially, the period is on the higher side reaching 37 days, then gradually decreases to as low as 28-29 days in several quarters, indicating improved inventory turnover efficiency. Towards the most recent quarters, the period hovers around 29 to 31 days, reflecting some stabilization. The occasional increases could be attributed to inventory management adjustments or external supply chain factors impacting processing durations.

Average Receivable Collection Period

The average receivable collection period is notably stable across all observed quarters, consistently hovering around 3 to 5 days. This low and steady collection period indicates strong receivables management and cash collection practices, contributing to healthy liquidity. The lack of significant variation in this metric suggests consistent credit policies and customer payment behavior over time.

Operating Cycle

The operating cycle, which integrates inventory processing and receivables collection, follows a pattern similar to the inventory processing period. It fluctuates from approximately 32 to 41 days. Periods with increases in the inventory days correspond with a higher operating cycle, while decreases in inventory days contribute to a shortened operating cycle. The operating cycle appears to stabilize around 33 to 37 days in the latest quarters, indicating overall consistency in the combined operational efficiency.

In summary, while receivables turnover remains steady and efficient, inventory processing demonstrates moderate variability but generally trends toward improved or stable levels. Consequently, the operating cycle echoes these dynamics, reflecting a balanced operational tempo in converting inventory into cash over the reported periods.

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

Payables Turnover Ratio

The payables turnover ratio exhibits variability across the analyzed periods with values ranging mainly between 8.83 and 12.93 times. Initially, the ratio was relatively lower, around 9.31 to 11.38 in the earliest reported quarters, then it increased, peaking at 12.93, indicating faster payment to suppliers during that time. Subsequently, the ratio fluctuated with intermittent decreases and increases but largely remained above 10, suggesting generally consistent efficiency in managing payables. The latest quarters maintain a ratio in the range of approximately 10.37 to 12.46, reflecting a stable payables management performance with occasional improvements and slight declines.

Average Payables Payment Period

The average payment period measured in days shows an inverse relationship to the turnover ratio, ranging between approximately 28 and 41 days. Earlier quarters show longer payment periods, up to 41 days, indicating slower payment cycles. This period decreased to around 28 to 30 days in some mid-period quarters, reflecting faster payments. Toward the most recent quarters, the payment period stabilizes mostly between 29 and 35 days, showing more balanced supplier payment terms. Minor fluctuations persist but there is no clear trend toward a progressive increase or decrease post stabilization.

Overall, the data indicates that the company has managed to maintain an effective accounts payable process with moderate volatility. The fluctuations in turnover ratio and payment period correspond with operational or potentially market-driven factors influencing payment behaviors. The recent stabilization at moderately efficient levels suggests controlled working capital management without extreme extensions or compressions in payment timelines.

Average Inventory Processing Period

The average inventory processing period demonstrates moderate fluctuations over the observed quarters, ranging roughly between 28 and 37 days. Initially, there is an upward spike reaching 37 days around early 2020, followed by a general decline to a low of 28 days in mid-2023. In more recent quarters, the value stabilizes around 29 to 34 days, indicating a relatively consistent inventory turnover duration in the latter periods.

Average Receivable Collection Period

The receivable collection period remains remarkably stable throughout the timeline, consistently hovering between 3 and 5 days. There are minor variations early on, with a modest peak of 5 days in mid-2020, but it quickly returns to and maintains values around 3 to 4 days thereafter. This suggests efficient and steady collection processes from customers without significant temporal deviation.

Average Payables Payment Period

The average payables payment period exhibits more variability compared to the receivables metric, fluctuating between 28 and 41 days. A noticeable peak occurs near the beginning of 2020, reaching up to 41 days, which could indicate an extended duration in settling payables during that time. Subsequently, the period generally decreases, settling in a range around 29 to 35 days in recent quarters. The overall trend indicates some flexibility in payment terms over time, potentially reflective of strategic cash management or supplier negotiations.

Cash Conversion Cycle

The cash conversion cycle shows cyclical variation between -2 and 7 days, with several periods of negative values, particularly in late 2020 and early 2021. Negative values imply that payables are settled after inventory is converted to sales and receivables are collected, effectively shortening the cash cycle and potentially enhancing liquidity. Following these negative intervals, the cycle tends to return to positive values around 3 to 5 days, suggesting a generally short and efficient cash conversion process throughout the timeframe.