Gilead Sciences Inc. (NASDAQ:GILD)

Inventory turnover

The inventory turnover ratio demonstrates a clear upward trend from March 2020 to December 2020, increasing from 2.72 to 3.21. This positive momentum continued into 2021, peaking at 4.71 by December 2021. The subsequent years show some variability, with the ratio declining to 3.45 in September 2023 before modestly recovering to around 3.55-3.66 in late 2024 and early 2025. Overall, the inventory turnover improved significantly from 2020 through 2021 and then stabilized at a slightly lower level.

Receivables turnover

Receivables turnover improved markedly from 2.72 in early 2020 to values consistently around 6 by the end of 2020 and through 2021. The ratio peaked near 7.18 in mid-2022 but showed some mild fluctuations thereafter, generally maintaining a range between about 5.6 and 6.5 up to mid-2025. This indicates a generally stable efficiency in collecting receivables with some short-term volatility.

Payables turnover

The payables turnover ratio experienced substantial growth between early and late 2020, rising sharply from 5.42 to above 9 by the end of 2020 and into early 2021. It briefly peaked at approximately 11.89 in mid-2022 but then declined sharply to around 6.25 by the end of 2022. The following periods exhibit fluctuations between roughly 7.5 and 12.6, indicating volatility in the company's payment practices with creditors over the observed quarters.

Working capital turnover

Working capital turnover increased steadily from 5.3 in early 2020 to a notable peak of 9.14 by mid-2023. However, unusually high values such as 84.15 in September 2023 and 26.58 in June 2024 suggest potential anomalies or accounting irregularities for these periods. Excluding these outliers, the ratio declined from around 9 to near 3.99 in early 2025 before bouncing back moderately. The data suggests generally improving efficiency except for the unusual spikes that warrant further investigation.

Average inventory processing period

There is a clear downward trend in the average inventory processing period, decreasing from 134 days in March 2020 to about 78 days by late 2021. This indicates improved inventory management and faster turnover. The trend reverses somewhat after 2021, increasing to around 105-110 days in 2023 and remaining fairly stable around 100 days through mid-2025, suggesting a slowing in inventory processing efficiency.

Average receivable collection period

The average days to collect receivables improved notably from 73 days in March 2020 to around 51 days by mid-2022. This reflects enhanced receivables management. Post-2022 figures fluctuate between 56 and 65 days, demonstrating some irregularity but maintaining a generally stable collection period.

Operating cycle

The operating cycle shows improvement from 207 days in early 2020 down to about 150 days by March 2021 and further stabilization around 132-137 days in 2021 and 2022. However, a gradual increase resumes in 2023, reaching upward of 160-170 days intermittently until early 2025. This suggests an initial efficiency gain in operating processes followed by some elongation of the cycle later on.

Average payables payment period

The payables payment period decreased significantly from 67 days in March 2020 to below 32 days by mid-2021, indicating faster payments to suppliers. A notable increase to 58 days occurred late 2021, but values mostly stabilized back into the 29-40 day range through 2023 and parts of 2024. Occasional spikes near 49 days suggest episodes of slower payments, contributing to inconsistent payment patterns.

Cash conversion cycle

The cash conversion cycle exhibited variability, starting at 140 days in early 2020, fluctuating around 130-146 days through 2021 and early 2022. It increased again to near 132 days by late 2023 before a decline to about 107 days in September 2024. The cycle ended with a rise to approximately 135 days by March 2025. These fluctuations demonstrate periodic changes in liquidity management efficiency, balancing receivables, inventory, and payables timing over the periods assessed.

Cost of Goods Sold

The cost of goods sold (COGS) exhibited a general increasing trend from March 2020 through December 2021, peaking notably at 2,627 million US dollars in December 2021. Following this peak, there is a marked decrease in subsequent quarters, stabilizing around 1,500 to 1,600 million US dollars from the first quarter of 2023 onwards. This indicates that after a significant rise towards the end of 2021, COGS moderated and maintained a relatively steady level during the most recent periods.

Inventories

Inventories showed a rising trend overall, with some fluctuations. From March 2020 to December 2020, inventories increased significantly from 986 million to 1,683 million US dollars. They continued to rise through the middle of 2024, reaching a high of 2,026 million US dollars in September 2024. However, inventories then declined somewhat towards the end of 2024 and into mid-2025, falling to approximately 1,759 to 1,825 million US dollars. This pattern suggests buildup of inventory levels until late 2024 followed by a modest drawdown in inventory levels thereafter.

Inventory Turnover Ratio

The inventory turnover ratio demonstrates a noticeable improvement starting in the second quarter of 2020 (first available data point), with values ranging from 2.72 to 4.71 between mid-2020 and late 2022. It appears to peak around the middle of 2022 before experiencing a decline in turnover efficiency, reaching values around 3.4 to 3.66 in 2025. The initial increase indicates enhanced inventory management or faster sales relative to inventory, while the decline in later periods suggests a reduction in turnover speed, potentially linked to higher inventories or slower sales.

Overall Observations

The interplay between these metrics points to a period of increasing costs and inventory buildup through late 2021 and 2022, possibly reflecting intensified production or stocking strategies. Following the peak in COGS and inventory levels, a stabilization or reduction phase is observed in both areas, accompanied by a moderate decline in inventory turnover ratio. This could indicate adjustments toward more balanced inventory management and cost control after periods of expansion or stock accumulation.

Product Sales Trend

Product sales exhibit a notable seasonal and cyclical pattern over the observed periods. After an initial dip from 5,467 million USD in March 2020 to 5,067 million USD in June 2020, sales increased sharply to 7,328 million USD by December 2020. This pattern of mid-year declines followed by end-of-year increases recurs across subsequent years with some fluctuations in magnitude. Sales peaked at 7,536 million USD in December 2024, suggesting strong year-end demand or effective sales campaigns during this period. In the most recent periods, the sales figures range between 6,600 and 7,500 million USD, indicating a relatively stable yet oscillating revenue stream across quarters.

Accounts Receivable, Net

The accounts receivable balances show fluctuations corresponding loosely with sales trends but with less pronounced seasonality. Starting at 3,907 million USD in March 2020, receivables dropped to 3,194 million USD in June 2020 before increasing steadily to 4,892 million USD by December 2020. Over the following years, the receivable balances mostly ranged between approximately 4,000 million and 4,800 million USD, with slight decreases in some quarters coinciding with declining sales and increases when sales rose, reflecting typical business credit patterns. Notably, receivables do not follow sales peaks as sharply, indicating potential adjustments in credit terms or collection efficiency.

Receivables Turnover Ratio

The receivables turnover ratio, available from September 2020 onwards, indicates the frequency at which accounts receivable are collected during a period. Starting at 4.98 in September 2020, the ratio improved significantly to values mostly between 5.6 and 7.2 across the quarters. Higher turnover ratios generally occurred in quarters with higher product sales and moderate receivable balances, like in June 2022 (7.18) and June 2025 (6.51), reflecting improved collections or tighter credit control. Conversely, lower turnover rates like 4.98 in September 2020 suggest slower collections, possibly due to higher receivables relative to sales at that time. Overall, the turnover ratio shows a solid improvement after 2020, implying increased efficiency in collecting receivables.

The cost of goods sold (COGS) displays noticeable fluctuations over the observed periods. Starting from US$969 million in March 2020, there is a general upward trend reaching a peak of US$2,627 million in December 2021. Following this peak, the COGS declines and stabilizes around the range of US$1,400 to US$1,500 million for several quarters, before slightly increasing again toward US$1,565 million in September 2023. Subsequently, another rise is seen with an increase up to US$2,090 million in December 2023, followed by a downward trend, ending around US$1,501 million by June 2025.

Accounts payable figures manifest significant variability within the timeframe. Beginning at US$590 million in March 2020, the value drops to US$532 million by June 2020 and remains relatively stable before rising to US$905 million in December 2022. After this peak, accounts payable diminish back to approximately US$550 million to US$600 million in subsequent quarters, again showing increases and decreases, ending at US$582 million in June 2025. This pattern indicates some cyclicality or working capital adjustments over time.

The payables turnover ratio shows considerable oscillations. It starts reporting a ratio of 5.42 in September 2020, climbing steadily to a high of 12.57 in September 2024. This indicates an improvement in the efficiency of managing accounts payable, as higher turnover ratios generally suggest quicker payment to suppliers. However, the ratio also presents short-term declines, such as the drop to 6.25 in March 2023 and 7.49 in September 2024, suggesting occasional slower turnover periods.

Summary of Observations

The cost of goods sold exhibits periods of sharp increase, particularly around late 2021 and late 2023, followed by correction phases. This volatility may reflect fluctuations in production costs or changes in sales volume.

Accounts payable correspondingly swell and contract, implying shifts in the company's payment schedules or supplier credit terms, possibly to align with liquidity needs or operational cycles.

The payables turnover ratio trend toward higher values reflects an overall tendency toward more efficient management of payables, although periodic declines suggest temporary slowdowns in settling supplier obligations.

Collectively, these financial metrics indicate active management of production and supplier relationships with cyclical variations, which could be influenced by broader market conditions or internal operational strategies.

Working Capital

The working capital figures exhibit significant volatility over the periods presented. Starting at 18,071 million USD in March 2020, there is a notable decline by the end of the year to 4,599 million USD in December 2020. Following this, working capital levels stabilize somewhat but remain relatively low compared to the initial value, fluctuating between approximately 300 and 7,169 million USD from early 2023 through mid-2025. These fluctuations suggest varying liquidity and operational funding levels across quarters without a consistent upward or downward trend.

Product Sales

Product sales demonstrate a pattern of cyclical fluctuations aligned with quarterly reporting periods. Initial sales in March 2020 were 5,467 million USD, reaching a peak of 7,515 million USD in March 2025. Sales volumes show multiple rises and falls, but overall there is a mild growth trend observed over the five-year span. Sales generally peak in one quarter and dip in the following, with no sustained decline, indicating relative stability in sales performance with moderate growth.

Working Capital Turnover

The working capital turnover ratio, reported intermittently, reflects considerable variability. Early values in 2020 are not available, but from 2020 Q3 onward, ratios generally range between 5.3 and 9.14 with an extreme high of 84.15 in June 2023, followed by fluctuating high ratios such as 26.58 and 17.98 in later quarters. Such spikes might indicate periods of unusually efficient use of working capital or conversely very low working capital relative to sales. The absence of data in early periods and sporadic spikes suggest the ratio is sensitive to the volatility in working capital and sales figures, reflecting changing operational efficiency or financial management across quarters.

Summary Insights

The data reveals a company experiencing considerable changes in liquidity, as shown by working capital fluctuations, while maintaining relatively stable product sales with slight growth over time. The working capital turnover ratio's volatility indicates periods of efficiency changes in managing working capital relative to sales volumes. The sharp variations in working capital and associated turnover ratios warrant attention for operational planning and liquidity management to sustain sales growth and financial stability.

Inventory Turnover

The inventory turnover ratio exhibits a generally increasing trend from March 31, 2020, to December 31, 2022, rising from approximately 2.72 to 4.71. This indicates improved efficiency in inventory management and faster sales of inventory during this period. However, starting from March 31, 2023, the ratio declines to around 3.4 by June 30, 2025, reflecting a slowdown in inventory turnover efficiency compared to the previous peak.

Average Inventory Processing Period

The average inventory processing period mirrors the inverse pattern of inventory turnover. It decreases significantly from 134 days on March 31, 2020, to a low of 78 days by December 31, 2022, demonstrating accelerated inventory processing and reduced holding time. Following this low, the period extends again, reaching approximately 108 days by June 30, 2025. The increase suggests a lengthening in the time taken to process inventory in the most recent periods.

Overall Analysis

The data suggests that the company experienced a phase of strengthening operational efficiency in inventory management until late 2022, with faster turnover and shorter processing periods improving over that time. From early 2023 onwards, a reversal in these trends indicates potential challenges or strategic shifts resulting in slower inventory turnover and longer processing durations. This could impact working capital management and operational agility if the trend persists.

Receivables Turnover Ratio

The receivables turnover ratio displays fluctuations over the observed periods, beginning at 4.98 and subsequently rising to a peak of 7.18 during the second quarter of 2022. Following this peak, the ratio declines to 5.65 in the first quarter of 2023, indicating a temporary slowdown in turnover efficiency. After this dip, the ratio modestly recovers and stabilizes around the mid-6 range, showing values such as 6.43 in the second quarter of 2023 and hovering near 6.0 by the most recent quarters. Overall, despite some volatility, the turnover ratio maintains a generally higher level compared to the initial recorded values, suggesting moderately improved efficiency in collections over time.

Average Receivable Collection Period

The average receivable collection period inversely reflects the trend observed in the receivables turnover ratio. It initiates at 73 days, decreasing to a low of 51 days in the second quarter of 2022, which aligns with the peak turnover ratio indicating quicker collections. Thereafter, the collection period lengthens again, reaching a higher level of 65 days in the fourth quarter of 2022. Subsequent quarters show a decline with values stabilizing in the low 60s, including 61 days in the first quarter of 2024 and further drops to 56 days in mid-2025 before a slight increase to 61 days at the end of the period analyzed. This pattern suggests periodic changes in the efficiency of receivable collection but generally implies an improvement compared to the longest periods observed initially.

Overall Trend and Insights

The data demonstrates an overall improvement in the efficiency of receivables management over the periods analyzed, highlighted by increased turnover ratios and decreased average collection periods. However, there are evident fluctuations suggesting some episodic challenges or changes in credit or collection policies. The stabilization around certain values in more recent periods points to a relatively consistent management approach toward accounts receivable. These trends are indicative of efforts to optimize working capital by speeding up receivables turnover and reducing the time customers take to settle their obligations.

Inventory Processing Period

The average inventory processing period shows a clear downward trend from March 2021 through December 2022, declining steadily from 134 days to 78 days. This suggests improved efficiency in managing and moving inventory during this period. However, starting from March 2023, the period increases again, fluctuating around 100 to 108 days by mid-2025. This uptick indicates a slowdown in inventory turnover, potentially reflecting changes in supply chain dynamics or inventory management challenges.

Receivable Collection Period

The average receivable collection period demonstrates some variability but generally declines from 73 days in March 2021 to a low around 51 days in mid-2022, indicating improved efficiency in collecting receivables during that time frame. Following this improvement, the collection period oscillates mostly between 56 and 65 days through mid-2025. This range suggests a degree of stability, though it is somewhat higher and less consistent compared to the mid-2022 low, potentially highlighting moderate fluctuations in credit management or customer payment patterns.

Operating Cycle

The operating cycle, which combines inventory processing and receivable collection periods, moves in tandem with the underlying components. It decreases significantly from 207 days in March 2021 to a low of 132-137 days by mid to late 2022, evidencing enhanced overall operating efficiency during this period. From early 2023 onward, the operating cycle rises again, reaching roughly 159 to 172 days through mid-2025. This rebound signals a lengthening in the cash conversion cycle, possibly driven by the previously noted increases in inventory processing and stabilization in receivables collection periods. The trend may imply some emerging operational inefficiencies or shifts in business conditions affecting working capital management.

The payables turnover ratio exhibits notable fluctuation over the observed periods, starting at 5.42 and increasing to peaks above 11 in certain quarters. Specifically, the ratio rises sharply from 5.42 to around 9 in one year, followed by further increments reaching above 11, signaling a trend toward faster turnover of payables over time. However, the data also shows intermittent declines after peaks, suggesting some cyclicality or operational adjustments affecting payables management.

Correspondingly, the average payables payment period, expressed in days, inversely mirrors the payables turnover trend. The period begins at 67 days in early data points and decreases to figures around 29 to 31 days in later quarters. This contraction indicates improved efficiency in settling payables, as fewer days are taken to pay suppliers. Nevertheless, periodic increases to around 49 days imply occasional delays or strategic changes in payment policies.

Payables Turnover Ratio

Initial value is moderate at 5.42, with steady and substantial increases over time.

Peaks exceed 11, indicating rapid payment of payables during certain periods.

Fluctuations suggest variability in operational cash management or supplier terms.

Average Payables Payment Period

Starts at 67 days, showing a clear downward trend throughout the periods observed.

Dips to below 30 days in some quarters, reflecting more prompt payment to creditors.

Intermittent increases to nearly 50 days highlight episodic extensions of payment cycles.

Overall, the data demonstrates a trend toward increased efficiency in payable turnover and shorter payment periods, signifying possible improvements in working capital management. Nonetheless, the presence of cyclical fluctuations indicates the company's payment practices are influenced by varying internal or market-driven factors over time.

Inventory Processing Period

The average inventory processing period exhibits a generally declining trend from 134 days in the first quarter of 2021 to approximately 78 days by the final quarter of 2022, indicating improved inventory turnover. However, starting in early 2023, the period increases gradually to reach 108 days by mid-2025, suggesting a slowing in inventory processing efficiency over this latter timeframe.

Receivable Collection Period

The average receivable collection period shows some fluctuations beginning at 73 days in early 2021, decreasing to a low of 51 days by mid-2022, reflecting enhanced collection efficiency. Thereafter, it presents moderate variability, ranging mainly between 56 and 65 days, without a clear directional trend through mid-2025, signifying relative stability but no consistent improvement.

Payables Payment Period

The average payables payment period declines sharply from 67 days in early 2021 to approximately 31 days by the end of 2021 and remains volatile thereafter. Notably, there is a significant peak at 58 days in late 2022 and another rise around the end of 2024, with values fluctuating between 29 and 49 days. This variation suggests changes in payment policies or supplier dynamics impacting payment timing.

Cash Conversion Cycle

The cash conversion cycle decreases from 140 days at the start of 2021 to around 100 days by mid-2022, indicating improved overall operational efficiency in managing the time between outlay of cash and cash recovery. However, from 2023 onward, the cycle lengthens again, exhibiting a rising trend that reaches 135 days by mid-2025, pointing to a deterioration in the efficiency of working capital management during this period.