Costco Wholesale Corp. (NASDAQ:COST)

The financial data presents multiple key operational efficiency ratios and periods, highlighting various trends over time.

Inventory Turnover

The inventory turnover ratio exhibits fluctuation within the range of approximately 10.0 to 13.2 over the observed periods. There is a gradual increase from around 10.08 to peaks above 12 in several quarters, indicating relatively consistent inventory movement with intermittent periods of enhanced efficiency in managing stock.

Receivables Turnover

Receivables turnover shows a variable pattern with values ranging roughly between 84 and 115. The ratio tends to decline in the more recent periods, settling closer to the mid-80s to low-90s after higher levels earlier. This suggests some elongation in the collection of receivables or a relatively slower cash conversion from credit sales as time progresses.

Payables Turnover

The payables turnover ratio consistently moves between 8.8 and 12.6, displaying a slight upward trend with some volatility. This reflects adjustments in the frequency or speed of payments to suppliers, with a tendency toward enhanced payment velocity in several recent quarters.

Working Capital Turnover

Significant variability characterizes working capital turnover, with some extraordinarily high and erratic values in the earlier and latter periods. These jumps suggest fluctuations in sales relative to working capital, possibly due to either highly efficient use of working capital at times or distortions caused by missing data points.

Average Inventory Processing Period

This indicator generally reflects a modest decrease from about 36 days down to a range near 28 to 33 days. The reduction implies improvements in inventory management, allowing for quicker turnover and reduced holding periods.

Average Receivable Collection Period

The average collection period remains stable around 3 to 4 days throughout the entire timeline, indicating steady credit collection practices without significant deviations.

Operating Cycle

The operating cycle duration decreases from close to 40 days toward the low 30s, representing an overall improvement in the speed of converting inventory and receivables into cash. The slight upward movement in some quarters is minor compared to the downward trend.

Average Payables Payment Period

Payables payment periods fluctuate between approximately 29 and 41 days. There is a noticeable tendency to reduce this period in several intervals, suggesting a quicker settlement of payables, though some periods see an increase back toward earlier higher values.

Cash Conversion Cycle

The cash conversion cycle remains relatively short, fluctuating near zero or slightly positive, ranging from -2 to 5 days. This indicates an efficient balance between inventory holding, receivables collection, and payments to suppliers, maintaining a lean cash conversion process over time.

Overall, the data suggests improvements in inventory management and operating cycle efficiency, while accounts receivable collection periods remain steady but with some decline in turnover ratios. Payables management experiences moderate fluctuations, with a trend towards quicker payments in several periods. The cash conversion cycle remains tightly managed, supporting effective working capital utilization.

The financial data reveals notable fluctuations and trends in merchandise costs, inventories, and inventory turnover ratios over the analyzed periods.

Merchandise Costs

Merchandise costs exhibit a generally increasing trend with some notable periodic spikes. Beginning at approximately 37,458 million US dollars, costs show a substantial rise in August 2021 and again in August 2022, reaching over 69,000 million US dollars in those months. Following each spike, costs decline but stabilize at levels higher than previous periods before the next surge. This pattern of sharp increases during mid-year quarters suggests seasonality or business cycle impacts on purchasing or sales volume requirements. Despite interim decreases, the long-term trajectory is upward, indicating growth in scale or inflationary pressures on merchandise pricing.

Merchandise Inventories

Inventory levels display a more moderate upward trend compared to merchandise costs. Starting near 14,901 million US dollars, inventories fluctuate with slight seasonal periodicity but progressively rise to exceed 21,000 million US dollars by the last recorded period. Peaks often coincide with periods preceding or following merchandise cost spikes, possibly indicating strategic stock accumulation in anticipation of increased sales or supply chain adjustments. Inventory growth is steady, reflecting either expansion in business operations or adjustments in inventory management policies to support higher cost levels and sales volume.

Inventory Turnover

Inventory turnover ratios remain relatively stable, fluctuating mostly between approximately 10 and 13 times per year. Elevated turnover ratios near 12.5 to 13 occur in several periods, particularly around early 2023 and mid-2025, suggesting improved efficiency in managing inventory relative to cost of goods sold. Lower turnover values below 11 correlate with certain spikes in inventory levels and costs, possibly indicating periods of stock build-up where sales growth did not keep pace immediately. Overall, the turnover ratio trend implies sustained operational efficiency with periods of adjustment corresponding to changing merchandise and inventory levels.

In summary, the data shows a pattern of growth in merchandise costs and inventories accompanied by generally stable and efficient inventory turnover. Periodic spikes in merchandise costs and inventories suggest seasonal influences or strategic operational responses, while the turnover ratios indicate effective inventory management over time despite these fluctuations.

Net Sales

Net sales exhibit a general upward trend with notable seasonal fluctuations and spikes corresponding to certain periods. From November 2020 to August 2021, net sales rose sharply from approximately 42.3 billion to over 61.4 billion USD, indicating strong growth during this timeframe. This surge was followed by a decline in the subsequent quarters, falling to around 49.4 billion USD by November 2021. A similar pattern repeats in the following years, where spikes occur roughly in the third quarter of each year, peaking in August or September (e.g., 70.7 billion USD in August 2022 and 77.4 billion USD in September 2023). This cyclical increase suggests seasonal demand dynamics. The latest data points, ending in November 2025, show the highest net sales figure in the series at approximately 84.4 billion USD, underscoring long-term growth despite interim volatility.

Receivables, Net

Net receivables have generally trended upward over the analyzed periods, growing from about 1.6 billion USD in November 2020 to over 3.2 billion USD by late 2025. The progression is non-linear with some short-term fluctuations; for instance, a slight decrease is observed between February 2022 and May 2022, but the overall trajectory is positive. The consistent increase in receivables aligns with rising sales volumes, reflecting enlarged credit extended to customers or slower collection cycles as the company scales.

Receivables Turnover Ratio

The receivables turnover ratio demonstrates variability with a downward trend over time, indicating changes in the efficiency of collecting receivables. Initial high values, such as above 100 in late 2020 and early 2021, decline to levels mostly between the mid-80s and mid-90s in subsequent years. The ratio peaked again around 104 in September 2023 but then continued to decline to the low 80s by late 2025. This deterioration suggests a gradual lengthening of the collection period or slower cash inflow from receivables, which could be due to extended payment terms, shifts in customer creditworthiness, or changes in operational practices.

Overall Insights

The data indicates robust growth in net sales over a multi-year horizon with clear seasonal peaks. The increase in net receivables correlates with sales expansion, albeit with a modest lag and fluctuations. Meanwhile, the declining receivables turnover ratio signals a potential challenge in maintaining collection efficiency amidst growing sales and receivables balances. Monitoring this metric is important as it may affect cash flow and working capital management. The seasonal spikes in sales and receivables ought to be factored into operational planning and financial forecasting.

Merchandise Costs

The merchandise costs exhibit a fluctuating pattern with notable peaks and troughs over the periods analyzed. Initially, costs rise modestly from 37,458 million to 39,415 million in the early quarters, followed by a significant surge to 54,733 million in August 2021. Thereafter, costs decline but remain elevated compared to the start of the period, fluctuating around 47,000 to 51,000 million until another substantial increase occurs in August 2022, reaching 69,219 million. Subsequently, costs again drop and oscillate near 50,000 to 55,000 million before experiencing another marked jump to 75,037 million by August 2025. This cyclical pattern suggests seasonal or operational factors driving varying inventory procurement expenses, with recent periods indicating heightened costs compared to earlier years.

Accounts Payable

Accounts payable figures show a generally increasing trend with some volatility. Starting at 17,014 million, the values fluctuate with occasional declines but trend upward over the full timeframe, reaching a peak of 23,513 million by November 2025. The increments are not strictly linear but suggest a consistent expansion in liabilities related to trade payables, reflecting potentially larger purchasing volumes or extended payment terms.

Payables Turnover Ratio

The payables turnover ratio displays variability throughout the periods, ranging from a low of 8.83 to a high of 12.56. Early quarters demonstrate moderate turnover rates near 9 to 10, which then climb periodically, hitting values above 12 at multiple points, including February 2023 and February 2025. This indicates a generally improving efficiency in settling payables, though fluctuations imply shifting payment policies or variations in supplier terms. The ratio’s irregular movement suggests the company balances between maintaining supplier credit and managing cash flow demands.

Overall Insights

The data indicates a growth trajectory in both merchandise procurement and accounts payable, reflecting the company’s scaling operations or increased business volume. Meanwhile, the payables turnover ratio improvement suggests active management of payables to optimize liquidity. The cyclical jumps in merchandise costs may correspond to seasonal inventory build-ups, and the correlated increases in payables confirm rising procurement reliance on credit. The financial dynamics suggest careful attention to working capital management, balancing inventory investment and payment timing to support operational growth.

Working Capital

The working capital shows significant fluctuations over the periods analyzed. Initially, it starts with negative values, progressively improving to positive territory around mid-2021, reaching a peak in early 2024. However, after this peak, there is a sharp decline moving back into negative values which continues to early 2025 before rebounding again towards the end of the observed period. This volatility indicates periods of both tightening and loosening liquidity positions within the firm, suggesting changing short-term financial management or operational cash flow conditions.

Net Sales

Net sales exhibit a generally upward trend throughout the period, albeit with some seasonality or periodic fluctuations. Sales figures increase significantly from late 2020 into 2021 and show strong spikes in several quarters, particularly in late 2021, early 2023, and late 2024, indicating periods of heightened market activity or successful sales campaigns. Despite some quarters with downturns or slower growth, the overall sales trajectory remains positive, implying sustained demand and effective revenue generation.

Working Capital Turnover

The working capital turnover ratio, although partially incomplete in the data, demonstrates notable variability. Extremely high ratios are observed early in the period, followed by a general decline, which may reflect changes in operational efficiency or the relationship between sales and working capital management. Lower turnover ratios later in the data could indicate increased working capital investment relative to sales or possibly less efficient use of short-term assets. Some recovery in this ratio is seen towards the end of the timeline, suggesting adjustments in working capital deployment to better support sales volumes.

Overall Insights

There is a clear interaction between working capital and sales, where periods of increased working capital often coincide with sales growth, indicating strategic investment in operational resources to support revenue increases. The volatility in working capital followed by phases of recovery suggests responsive financial management adapting to changing business conditions. The sales growth, despite occasional slowdowns, suggests resilient demand and effective market engagement. The fluctuations in working capital turnover highlight evolving efficiency in managing the balance between sales and working capital, indicating areas where internal controls and asset management might be optimized.

Inventory Turnover Ratio

The inventory turnover ratio exhibits a generally positive trend with notable fluctuations throughout the observed periods. Starting at 10.08 in November 2020, the ratio follows an increasing pattern, reaching a peak of 13.24 by August 2025. Several intermediate peaks and dips are visible:

• A rise from 10.08 to 12.01 between November 2020 and August 2021.
• A decline to 10.46 in November 2021 followed by recovery to above 12.0 in early 2023.
• Stability around 12.7 to 12.8 during mid-2023.
• A slight decline near the end of 2024, followed by an upward spike to 13.24 in mid-2025 before dipping again to 11.56 in late 2025.

This pattern suggests generally improving efficiency in inventory management over time, with occasional periods of slower turnover.

Average Inventory Processing Period

The average inventory processing period, measured in days, inversely complements the inventory turnover ratio. The duration decreased notably from 36 days in November 2020 to a low of 28 days by February 2023, indicating faster inventory processing. Key observations include:

• A consistent decline from 36 days to around 30 days during the first half of the timeline, indicative of improved operational efficiency.
• Fluctuations between 28 and 34 days thereafter, with some periods of slight increase such as reaching 34 days in November 2024 and again in November 2025.
• Overall, the period remains mostly below the initial 36-day figure, which aligns with the increasing inventory turnover ratio.

These changes imply that inventory is generally being processed more quickly over the observed quarters, though some short-term variability exists.

Overall Insights

The analyzed data reveals an overall enhancement in inventory management efficiency over the series of quarters:

• The upward trend in inventory turnover ratio indicates better utilization of inventory relative to sales.
• The complementary reduction in average inventory processing periods suggests streamlined operations and quicker inventory cycles.
• Short-term volatility in both metrics points to periodic adjustments or external influences affecting supply chain or demand conditions.

In summary, the company shows improved inventory dynamics with generally faster inventory movement and processing, which is favorable for operational performance and working capital management.

The receivables turnover ratio exhibits noticeable fluctuations over the examined periods, indicating variability in how effectively the company is managing its receivables. Starting from a high of 114.66 in May 2021, there are several peaks and troughs throughout the timeline, with ratios generally moving between the mid-80s and low-100s range. Notably, the ratio decreases from 102.87 in November 2020 to 90.47 in February 2021, then climbs sharply to 114.66 by May 2021, before demonstrating a somewhat erratic decline overall up to August 2025, ending near the mid-80s. This pattern suggests periods of both improved and diminished efficiency in receivable turnovers, without a clear long-term upward or downward trend.

In contrast, the average receivable collection period remains remarkably stable across all reported periods, consistently hovering around 3 to 4 days. This stability indicates a consistent collection timeframe despite the observed variability in turnover ratios.

Receivables Turnover Ratio

This ratio fluctuates significantly, indicating changing efficiency levels in receivables management. Peaks around May 2021 and August 2023 are followed by declines, with no sustained upward or downward trend over the entire period.

Average Receivable Collection Period

Maintains consistent values predominantly at 4 days, reflecting steady collection processes with minimal variation throughout the examined quarters.

Overall, the company sustains a consistent collection period despite the fluctuations in turnover ratios, which could reflect operational or market dynamics affecting receivables turnover but not extending the average collection days. This steadiness in collection timeframe may suggest effective credit policy enforcement or customer payment behavior remaining stable over time.

Average Inventory Processing Period

The average inventory processing period shows some fluctuations over the observed timeframe. Initially, it decreases from 36 days in November 2020 to a low of 28 days in February 2023, indicating an improvement in inventory turnover efficiency. Following this improvement, the period stabilizes around 29 to 31 days, before increasing again to 34 days in November 2024. Towards the end of the period, it decreases slightly, ending at 32 days in November 2025. This pattern suggests variability in inventory management, with some periods of enhanced efficiency followed by intervals of slower turnover.

Average Receivable Collection Period

The average receivable collection period remains remarkably stable throughout the entire timeframe. The value fluctuates minimally between 3 and 4 days, mostly maintaining 4 days after May 2021. This consistency suggests a steady and effective credit and collections process without significant changes over time.

Operating Cycle

The operating cycle, calculated as the sum of the average inventory processing period and the average receivable collection period, exhibits trends similar to the inventory processing period. It decreases from 40 days in November 2020 to a low of 32 days by February 2023, indicating an overall improvement in the company's efficiency in converting inventory and receivables into cash. After this, it experiences some fluctuations but remains relatively stable between 32 and 38 days. Towards the end of the timeframe, the operating cycle increases slightly before dropping again to 36 days in November 2025, reflecting the combined effect of inventory and receivables management dynamics.

The analysis of the payables turnover and average payables payment period over the observed quarters reveals notable trends and fluctuations indicative of changes in the company's payment practices and supplier relationship management.

Payables Turnover

The payables turnover ratio exhibits a fluctuating pattern throughout the periods, starting at 8.83 and reaching peaks above 12.50 in several quarters. Initial quarters show a gradual increase from 8.83 to values consistently above 10.0, suggesting a more rapid turnover of payables and potentially improved efficiency in settling obligations.

Noteworthy peaks occur around February 2023 (12.56) and February 2024 (12.46), indicating periods of accelerated payment cycles. Slight declines are observed after these peaks, with the ratio fluctuating between approximately 10.37 and 12.46 in later quarters, reflecting variable payment velocity possibly influenced by operational decisions or external factors affecting cash flows.

Average Payables Payment Period

The average number of days to pay payables shows an inverse relationship with the payables turnover ratio, consistent with accounting principles. The period starts at 41 days, decreases to as low as 29 days in several quarters (notably February 2023 and February 2024), indicating faster payments to suppliers during those periods.

Periods with extended payment duration, such as 40-41 days, correspond to lower turnover ratios, confirming slower settlement of accounts payable. The payment period stabilizes in a range mostly between 29 and 35 days in the later quarters, suggesting a relatively consistent but flexible payment timeline targeting supplier terms and cash management.

Overall Interpretation

The interplay between the payables turnover and payment period indicates strategic management of payables, balancing efficiency and cash preservation. The company's ability to reduce payment days at certain points reflects efforts to optimize supplier relationships or take advantage of potential discounts, while fluctuations suggest adaptive financial management responding to operational needs or market conditions.

The data does not document a strictly linear trend but a series of oscillations within defined ranges, implying that payables policies are dynamically managed in response to varying internal and external business factors.

The analysis of the financial operational efficiency over the quarters reveals several key patterns in inventory management, receivables, payables, and the overall cash conversion cycle.

Average Inventory Processing Period

The average inventory processing period shows modest fluctuations over the observed period, starting at 36 days and generally declining to the high 20s and low 30s range. Particularly, a noticeable decrease occurred between November 2022 and February 2023, dropping from 33 to 28 days, indicating improved inventory turnover efficiency. However, intermittent increases back to around 34 days suggest occasional delays or accumulations in inventory processing. Overall, the trend indicates relatively stable inventory management with some improvements in reducing holding time.

Average Receivable Collection Period

The receivables collection period remains remarkably stable throughout the timeframe, consistently fluctuating between 3 and 4 days. This points to a reliable and efficient collection process, maintaining liquidity without significant delays in customer payments.

Average Payables Payment Period

The payables payment period exhibits more variability, ranging from 29 days up to 41 days. Initial periods show payment durations around 40 days, with subsequent reductions to approximately 29–35 days. This variation may reflect strategic management of supplier payments to optimize cash flow, occasionally extending payment terms but also reducing them, likely balancing supplier relationships and liquidity needs.

Cash Conversion Cycle

The cash conversion cycle generally hovers near zero or slightly positive values, starting at -1 day and moving between -2 to +5 days across quarters. The negative and near-zero values indicate an efficient cycle where the company collects cash from sales nearly as quickly, or even faster, than it pays its suppliers and turns over inventory. Minor increases in the cycle to around 4 or 5 days at various points suggest slight delays but overall reflect a tight management of working capital.

In summary, the operational metrics demonstrate consistent performance in receivables and inventory management, with some fluctuations in payment periods influencing the cash conversion cycle. The company effectively maintains a short cash conversion cycle, highlighting efficient working capital management and a strong liquidity position over time.