Costco Wholesale Corp. (NASDAQ:COST)

Inventory Turnover

The inventory turnover ratio demonstrates fluctuations over the observed periods, generally ranging between approximately 10 and 13 times. There is a noticeable rebound from lower values near 10 to peaks around 12.7 to 13.2, indicating intervals of more efficient inventory management or faster sales cycles. The trend suggests a relatively stable but moderately improving capacity to convert inventory into sales over time.

Receivables Turnover

Receivables turnover shows greater volatility, with values mostly moving between the mid-80s to just over 100. There is a pattern of decline from the highest points around 105 downward to the mid-80s, which may imply slower collection of receivables and, consequently, extended credit periods granted to customers. Temporary spikes suggest some periods with quicker collections, but overall, there is a general softening of turnover efficiency.

Payables Turnover

Payables turnover values vary between approximately 8.8 to 12.5, with periodic peaks signaling more rapid payment to suppliers and troughs indicating slower payments. The observed increases to above 12 in some quarters suggest strategic shifts toward faster payments, potentially to secure supplier relationships or discounts, while other periods with lower turnover hint at extended payment terms.

Working Capital Turnover

The working capital turnover ratio exhibits extreme variability, with some anomalously high values exceeding 3000, while other periods display more moderate figures ranging from about 70 to 400. This inconsistency likely reflects irregularities or changes in working capital levels or operational scale during the periods assessed. Such fluctuations suggest challenges in sustaining consistent working capital utilization efficiency.

Average Inventory Processing Period

The average inventory processing period generally remains within a narrow window of about 28 to 36 days. This relatively steady range suggests consistent inventory management practices with only minor short-term variations. The slight downward trend toward fewer days in recent periods indicates modest improvements in turning over inventory more quickly.

Average Receivable Collection Period

The collection period for receivables is notably stable, persistently around 3 to 4 days across all periods. This steadiness points to a consistent credit policy and efficient receivables management without significant changes in customer payment behavior over time.

Operating Cycle

The operating cycle, calculated as the sum of inventory processing and receivable collection periods, fluctuates between approximately 32 to 40 days. Although there are minor cyclical variations, the relatively steady duration implies consistent operational processes. Some slight elongation and contraction reflect the minor changes in inventory and receivable management timings.

Average Payables Payment Period

The accounts payable duration ranges roughly from 29 to 41 days, with no pronounced long-term trend but rather periodic shifts. Increases in the payment period may indicate extended leverage of supplier credit, whereas decreases could reflect accelerated payments. The variance suggests an actively managed payables strategy balancing cash flow considerations against supplier relationships.

Cash Conversion Cycle

The cash conversion cycle transitions mostly between negative values near -2 and positive values up to 5 days. Negative values signify periods where the company effectively delays payments beyond the combined duration of inventory and receivable cycles, thereby enhancing liquidity. Occasional positive values imply brief intervals where cash is tied up longer in the operating cycle, but overall, the cycle remains short, signaling a strong cash flow position and efficient working capital management.

Merchandise Costs

The merchandise costs exhibit considerable volatility over the observed periods. Starting from approximately 32.2 billion USD, the costs increased significantly around the middle of 2020, reaching peaks above 69 billion USD in late 2020 and again in mid to late 2023 and 2024. These peaks are interspersed with temporary declines, indicating fluctuating purchasing or sales volumes and potentially changes in cost structures or supply chain dynamics. The overall trend suggests an upward trajectory in merchandise costs over the years, reflecting growth in scale or price inflation pressures.

Merchandise Inventories

Merchandise inventories show an overall increasing trend from around 13.8 billion USD in late 2019 to peaks exceeding 20.9 billion USD in early 2025. Although subject to periodic fluctuations, including some decreases during mid-2022 and mid-2023, inventories generally rise, indicating expansion in stock holdings which may align with growing sales volumes or strategic inventory management to meet demand. The inventory levels appear to stabilize somewhat after peaks, suggesting adaptive responses to market conditions.

Inventory Turnover Ratio

The inventory turnover ratio displays relative stability with moderate fluctuations, ranging from about 10.1 to 13.2 over the time periods measured. Notably, turnover ratios increased in the mid-2022 to late 2024 timeframe, peaking above 13 in mid-2025, which suggests improved efficiency in inventory management or faster product turnover rates. Periodic declines in turnover ratios seen earlier may indicate temporary slowdowns in inventory movement or supply chain disruptions.

Overall Analysis

The data reflect a pattern of growth in both merchandise costs and inventories, which is consistent with expanding business operations or increased pricing. The maintenance and gradual improvement in inventory turnover efficiency indicate effective inventory management despite the scaling challenges. The fluctuations in merchandise costs and inventories highlight responsiveness to market conditions, possibly including supply chain adjustments and demand variations. The upward trend in key financial metrics points towards sustained operational expansion over the analyzed periods.

The quarterly financial data reveals several notable trends in the company's performance over the observed periods. Net sales exhibit a generally upward trajectory with periodic fluctuations. A significant increase is observed beginning around mid-2020 and recurs with marked sales spikes roughly every four to five quarters, suggesting seasonality or promotional influences affecting sales volumes. Despite some quarters showing declines or stagnation, the overall sales figures grow steadily over the long term.

Receivables, net follow a pattern that broadly correlates with net sales movements, steadily increasing over time but with some variability. There is a clear upward trend in receivables balances, reflecting the larger scale of operations and potentially increased credit sales or changes in credit management policies. Notably, increases in receivables appear to precede or accompany the peaks in net sales, which may indicate a lag between sales recognition and collections.

The receivables turnover ratio, which measures the efficiency of collecting receivables, shows considerable variability throughout the periods. Early in the data, the ratio peaks at high levels, indicating rapid collection of receivables relative to sales. However, over time, the turnover ratio tends to fluctuate downward with some recovery attempts, signaling potential challenges in maintaining collection efficiency as receivables volumes grow. Periods with the lowest turnover ratios tend to coincide with spikes in receivables and sales, which could reflect temporary extensions in payment terms or customer payment delays during high sales periods.

Net Sales

General growth with seasonal spikes approximately every 4-5 quarters, reflecting possible promotional cycles or holiday impacts.

Notable peak periods include late 2020, mid-2021, late 2022, and late 2023 to 2024.

Some quarterly declines indicate variability in sales performance likely tied to market conditions or operational factors.

Receivables, Net

Progressive increase correlating with rising sales, indicating higher outstanding credit exposure.

Receivables increases tend to align with or slightly precede sales peaks, consistent with timing lags in collections.

Exhibits fluctuations suggesting dynamic credit management or changing customer payment behaviors.

Receivables Turnover Ratio

Initial high ratios signal strong collection efficiency early on, with subsequent volatility.

Downward trends in turnover ratios correspond with increased receivables balances and sales, implying slower collections during growth periods.

Recovery phases indicate efforts to improve collection practices, although ratios generally remain below initial peaks.

Overall, the financial data indicates robust sales growth accompanied by expanding receivables, with ongoing challenges to maintain efficient receivables collection. The cyclical nature of sales and related receivables dynamics suggests that working capital management should remain a strategic focus to sustain cash flow adequacy in tandem with revenue expansions.

The merchandise costs exhibit a fluctuating pattern over the observed quarters with a general increasing trend over time. Initial values near the end of 2019 and early 2020 range from approximately 32 to 34 billion US dollars, followed by a sharp increase in August 2020 to over 46 billion. This increase is then followed by a series of fluctuations where the merchandise costs again rise markedly in mid to late 2022, reaching above 69 billion US dollars in multiple quarters (August 2022, September 2023, and September 2024). Despite some periods of decline or stabilization, the overall trend suggests growing merchandise costs, reflecting possibly increased purchasing or inflation effects in inventory procurement.

Accounts payable values also show an upward movement corresponding broadly with merchandise costs but with less pronounced volatility. Starting from roughly 11 billion US dollars in early 2020, accounts payable exhibit steady increases with values advancing to around 19–21 billion US dollars by the latest quarters in 2024 and 2025. This steady increment implies that the company's obligations to suppliers have increased over time, consistent with the rising merchandise costs, indicating an expansion in scale or volume of business transactions on credit.

The payables turnover ratio reveals insights into how quickly the company is settling its accounts payable relative to its merchandise costs. Early in the series, this ratio is between roughly 8.8 and 10.8, with fluctuations that hint at changes in payment efficiency or purchasing patterns. From late 2021 onwards, the ratio mostly stays above 11, at times peaking near 12.5, before a slight dip and then stabilization around 11.5 to 12 in recent periods. Higher turnover ratios generally signal faster payment cycles or improved supplier payment efficiency. The observed increases in the turnover ratio, despite rising accounts payable balances, suggest that the company may be managing its payable obligations more efficiently over time, possibly negotiating faster payment terms or improving cash flow management.

In summary, the data shows that merchandise costs and accounts payable have both increased substantially over the period. The payables turnover ratio trend indicates enhanced operational efficiency in managing creditors. These trends combined suggest ongoing business growth accompanied by progressively better payment performance, which could have favorable implications for supplier relationships and working capital management.

The financial data reveals several noteworthy trends over the observed periods. Working capital exhibited significant fluctuations, with initial positive values followed by pronounced declines into negative territory around late 2020 and early 2024. Despite intermittent recoveries, working capital remained volatile, indicating potential challenges in managing short-term assets and liabilities consistently.

Net sales demonstrated an overall upward trajectory with some periods of rapid increases, notably between mid-2020 and late 2023. Spikes in net sales were particularly evident in the quarters ending August 2020, August 2022, September 2023, and November 2024, suggesting strong sales performance during those times. However, certain quarters showed stagnation or minor declines, reflecting possible cyclical or external market influences.

The working capital turnover ratio, though sparse in data points, presents extremely high values during specific intervals such as mid-2020 and late 2022, implying highly efficient use of working capital to generate sales during those periods. Nevertheless, the irregularity and large variance in the ratio values suggest potential inconsistencies or one-off effects impacting the turnover calculation.

In summary, the data indicates that while net sales largely improved over time with occasional surges, working capital management showed instability with periods of both negative and positive balances. The working capital turnover ratio's volatility points to fluctuating operational efficiency. Continuous attention to working capital optimization could help support sustained sales growth and financial stability.

Working Capital

Experienced significant fluctuations, with multiple quarters showing negative figures, indicating potential liquidity concerns or shifts in working capital components.

Net Sales

Overall growth trend with episodic sharp increases, reflecting periods of strong market demand or successful sales strategies, albeit with some quarters of minor decline or plateau.

Working Capital Turnover

Highly variable with some extremely high ratios, pointing to periods of exceptional sales generation relative to working capital, but overall inconsistency needing further scrutiny.

Inventory Turnover Ratio

The inventory turnover ratio exhibits fluctuations over the observed periods, initially recorded at 11.84 and subsequently decreasing to 10.08. From that low point, the ratio generally trends upward, peaking at 13.24 towards the latter periods. This indicates variability but an overall improvement in the rate at which inventory is sold and replenished, suggesting more efficient inventory management in recent quarters.

Average Inventory Processing Period

The average inventory processing period, expressed in number of days, shows an inverse trend to the inventory turnover ratio. Initially around 31 days, it rises to a peak of 36 days, reflecting slower inventory processing. Following that, there is a clear downward trend reaching as low as 28 days towards the latest periods. This shortening of the inventory processing cycle implies enhanced operational efficiency and faster turnover of stock.

Relationship Between Metrics

The observed patterns between the inventory turnover ratio and the average inventory processing period align with expected business dynamics: an increase in turnover ratio generally corresponds with a decrease in the inventory processing period, highlighting improvements in inventory movement through the supply chain. Periods with lower turnover ratios coincide with longer processing times, indicating some fluctuations in operational performance.

Overall Trend and Insights

Overall, the data suggests that after an initial period of slower inventory movement and longer processing days, the operation has become more efficient over time. This is evident from the increase in inventory turns and the concurrent decrease in days to process inventory. The most recent data points highlight strong inventory management with high turnover ratios and reduced processing periods, illustrating effective control of stock levels and potentially favorable market conditions or enhanced demand forecasting.

The receivables turnover ratio exhibits fluctuating trends over the analyzed periods. After a notable absence of data in earlier intervals, values start appearing at approximately 105.3 and show a declining pattern reaching near 84.27 by the latest period. There are intermittent increases observed, such as peaks at 114.66 and 107.19 during some quarters, followed by subsequent declines. This volatility suggests variations in the efficiency of receivables collection or changes in sales dynamics over time.

Despite these fluctuations in turnover ratio, the average receivable collection period remains stable at around 3 to 4 days throughout the periods where data is available. This consistency indicates that while the turnover ratio varies, the company manages to maintain a relatively steady period for collecting receivables, implying disciplined credit and collection policies.

Overall, the financial data demonstrates variability in receivables turnover, with a general downward trend in efficiency implied by lower turnover ratios in recent periods. Nevertheless, the consistent average collection days reflect sustained operational control over the receivables process, potentially mitigating adverse effects of turnover fluctuations on cash flow.

The analysis of the quarterly financial data reveals distinct trends in the company's inventory processing period, receivable collection period, and overall operating cycle over the examined timeline.

Average Inventory Processing Period

The average inventory processing period exhibits moderate fluctuations over time, generally ranging between 28 and 36 days. There was a noticeable increase from 31 days to a peak of 36 days around early 2021. Following this peak, the period gradually declined and stabilized towards the end of the observed range, settling close to 28-30 days. This trend suggests an initial slowdown in inventory turnover, potentially due to supply chain dynamics or changes in sales velocity, with subsequent operational efficiencies contributing to an improvement and stabilization in inventory management.

Average Receivable Collection Period

The average receivable collection period remained remarkably stable throughout the periods, mostly oscillating narrowly between 3 and 4 days. This consistency indicates that the company's credit and collections policies have been effective, maintaining a steady and prompt collection process without significant delays or acceleration over time.

Operating Cycle

The operating cycle, calculated as the sum of the inventory processing period and receivable collection period, mirrors the patterns observed in the inventory processing period. It exhibited an increase from 34 to 40 days in early 2021, followed by a gradual decline and stabilization around 32-35 days. This pattern reflects the combined impact of inventory management changes and the consistent receivable collection performance, indicating that improvements in inventory turnover are driving the reduction in the overall operating cycle length.

In summary, the company experienced a temporary extension in the inventory processing and operating cycles around early 2021, possibly reflecting external operational challenges. Subsequent periods show a return to more efficient inventory management, while the receivable collection period remained stable throughout. The overall trend suggests enhanced operational efficiency over the prior few years with relatively predictable credit management practices.

The analyzed financial data reveals discernible trends in payables management over the reported periods. The payables turnover ratio exhibits fluctuations that generally suggest improvements in the company's efficiency in managing its payables, with some periods of slight decline. This ratio rose notably from a low of 8.83 to peaks exceeding 12, indicating periods of quicker payment cycles.

Correspondingly, the average payables payment period measured in days shows inverse movement patterns relative to the turnover ratio. Periods with higher payables turnover ratios coincide with shorter payment periods, reflecting accelerated payment of obligations. The payment period decreased impressively from approximately 41 days to values near 29-30 days during peak turnover ratios, suggesting enhanced cash management or changes in payment policies.

Payables Turnover Ratio

The ratio commenced at moderate levels with values around 10 to 11, then dipped to approximately 8.83 during an early observed period. Subsequent quarters show upward trends reaching upwards of 12.56 at its peak, followed by some fluctuations but maintaining levels generally above 10. The data indicates resiliency in improving turnaround on payables despite some volatility.

Average Payables Payment Period (Days)

This metric corresponds inversely with the turnover ratio. Initial periods report longer payment durations around 36 to 41 days. Over time, this duration shortens substantially to the high twenties and low thirties, demonstrating faster payment cycles. Occasional increases up to mid-thirties occur but are transient.

Relationship and Insights

The inverse correlation between these two metrics points to tighter management of payables. Shorter payment periods and higher turnover ratios tend to suggest a strategic shift toward paying suppliers more quickly or negotiating terms that allow for such practices. This can improve supplier relations and potentially lead to cost savings but may also affect liquidity.

Overall Trend

Overall, the trends suggest an emphasis on improving payables efficiency over the periods analyzed. The company appears to modulate the timing of its payments to optimize working capital while balancing operational requirements. Fluctuations imply responsiveness to market conditions or company-specific factors influencing payment practices.

The analysis of the financial timing metrics over the observed periods reveals several noteworthy trends. The average inventory processing period exhibits fluctuations but generally remains within a range of approximately 28 to 36 days. There is a slight downward trend towards the most recent periods, indicating a modest improvement in inventory turnover speed.

Average Inventory Processing Period

This metric starts with missing data but becomes available at 31 days, increasing to a peak of 36 days shortly thereafter. Subsequent periods show variability, with values mostly oscillating between 28 and 35 days. The recent quarters show a tendency toward lower values around 28 to 30 days, suggesting an enhancement in inventory management efficiency or an acceleration in stock turnover.

Average Receivable Collection Period

This period remains remarkably stable throughout the timeline, consistently holding at 3 to 4 days. Such consistency indicates steady collection processes with no significant delays or credit risks emerging. The slight oscillation between 3 and 4 days likely falls within normal operational variances and reflects effective credit management policies.

Average Payables Payment Period

The payment period to suppliers shows moderate volatility, initially increasing from 36 days to a high of 41 days, then decreasing again to a narrow range mostly between 29 and 35 days in subsequent periods. Recent figures demonstrate a stable payment period around 29 to 31 days, suggesting controlled cash outflows and possibly negotiated payment terms with suppliers designed to optimize working capital.

Cash Conversion Cycle

The cash conversion cycle (CCC), which captures the efficiency of the company's cash flow management, exhibits small but meaningful variability. The values generally range between negative and low positive numbers (-2 to 5 days), indicating a quick turnaround from cash outflow to cash inflow. Most periods show CCC close to zero or slightly positive, pointing to a balanced working capital cycle where cash is efficiently converted. The presence of a few slightly negative values suggests instances where payables are managed such that cash is preserved longer than inventory and receivables tie up the company's resources.

Overall, the quarterly data suggests the company maintains effective management of its working capital components. The slight improvement in inventory processing periods along with a stable receivable collection period and controlled payable payment timelines contribute to a consistently low cash conversion cycle, which is favorable for operational liquidity and financial flexibility.