Linde plc (NASDAQ:LIN)

Inventory Turnover

The inventory turnover ratio exhibited an upward trend from 9.2 to a peak of 10.75 between March 2021 and September 2022, indicating improved efficiency in managing inventory during this period. However, from late 2022 through 2025, the ratio declined steadily, reaching around 8.06 by September 2025. This suggests a slowdown in inventory movement in the more recent quarters.

Receivables Turnover

The receivables turnover ratio showed relatively moderate fluctuations, ranging roughly between 6.28 and 7.34 over the entire timeline. It peaked in September 2022 before decreasing again, with some smaller cyclical variations. This indicates that the collection efficiency of receivables remained fairly stable but showed a slight weakening toward the later periods.

Payables Turnover

Payables turnover increased significantly from initial values around 5.3 in early 2021 to a peak near 6.98 in mid-2025. This upward trend reflects a faster payment pace to suppliers over time, particularly after mid-2021, suggesting improved financial liquidity or changing payment policies favoring quicker settlements.

Average Inventory Processing Period

This period decreased from 40 days in early 2021 to a low of 34 days around June–September 2022, correlating with the rise in inventory turnover during that period. Afterward, it increased again gradually, settling near 45 days by late 2024 and 2025, which aligns with the observed decline in inventory turnover, indicating slower inventory handling in recent quarters.

Average Receivable Collection Period

The average collection period remained relatively steady throughout the timeframe, fluctuating between about 50 to 58 days. There was a slight increase observed towards the end of the period, suggesting that customers took longer on average to settle receivables during the later quarters.

Operating Cycle

The operating cycle shortened from approximately 94 days in early 2021 to a low of 84 days in late 2022 but began increasing afterward, reaching a peak around 103 days by late 2025. This lengthening suggests a slowing overall operating efficiency, reflecting longer durations of inventory and receivable management combined.

Average Payables Payment Period

This period generally decreased from about 69–73 days in early 2021 to a low near 52–53 days in mid-2025, indicating that the company has been paying suppliers faster over time. This aligns with the upward trend in payables turnover.

Cash Conversion Cycle

The cash conversion cycle decreased between early 2021 and mid-2021, reaching a minimum of 16 days, which reflects improved cash flow management. However, from that point onward, the cycle expanded steadily to around 47 days by late 2025. A longer cash conversion cycle indicates increased time for the company to convert resources into cash, which may point to tightening liquidity or less efficient working capital management in recent periods.

The analysis of the quarterly financial data reveals several notable trends related to cost of sales, inventories, and inventory turnover over the observed periods.

Cost of Sales, Exclusive of Depreciation and Amortization

The cost of sales exhibits some fluctuations throughout the observed quarters. Initially, there is an upward trend from 4054 million USD in March 2021 to a peak of 5285 million USD in September 2022. Subsequently, costs decline sharply to 4427 million USD in December 2022 and then largely stabilize with minor variations. In the most recent quarters, values remain within a range of approximately 4157 to 4431 million USD, signaling a period of relative consistency after the earlier peak.

Inventories

Inventories demonstrate a steady upward movement from 1695 million USD in March 2021 to a high of 2128 million USD by September 2025. The growth in inventory levels is consistent, with only slight variations in some quarters, but overall it reflects an accumulation trend. Notably, the inventory levels increased more sharply during the periods from late 2021 through 2023 and continue to maintain higher values thereafter.

Inventory Turnover Ratio

The inventory turnover ratio shows an initial increase from 9.2 in March 2021 to a peak around 10.75 in September 2022, indicating an improvement in how quickly inventory is sold and replaced. However, after this peak, there is a gradual decline in the turnover ratio, dropping to as low as approximately 8.06 by September 2025. This decrease suggests a slowing of inventory movement relative to sales, despite the rising inventory levels over the same period.

In summary, the cost of sales rose to a significant peak before stabilizing, while inventory levels steadily increased throughout the timeframe. Concurrently, although inventory turnover initially improved, it has weakened in more recent quarters. This combination points to a scenario where inventory accumulation is occurring alongside a relative slowdown in inventory turnover efficiency, warranting further examination to understand underlying operational or market factors influencing this dynamic.

Sales Trends

Sales figures exhibit fluctuations over the examined quarterly periods, ranging from a low of approximately 7,243 million US dollars to a high near 8,797 million US dollars. There is an observable general increase in sales from early 2021 through late 2022, peaking in the third quarter of 2022. Subsequently, sales decline towards the end of 2022 but show signs of recovery in 2023 and early 2024. However, volatility persists with alternating periods of modest growth and decline. Most recently, the sales amount trends upward, reaching around 8,615 million US dollars by the third quarter of 2025. Overall, sales demonstrate moderate growth albeit with certain cyclical variations.

Accounts Receivable, Net

The net accounts receivable balance follows a generally increasing trajectory over the period analyzed. Starting at approximately 4,139 million US dollars in the first quarter of 2021, it rises steadily with minor fluctuations to over 5,331 million US dollars by the third quarter of 2025. This upward trend suggests an expanding credit extension to customers or a build-up of outstanding receivables in line with growing sales volumes. Notably, periods of slight decline or stabilization (such as in late 2022 and mid-2024) are temporary and are followed by resumed growth.

Receivables Turnover Ratio

The receivables turnover ratio indicates the efficiency with which the company collects its receivables. Values fluctuate between approximately 6.28 and 7.34 times per year during the timeframe. Initial values in early 2021 are around 6.7 and show a minor increase, peaking at 7.34 in the third quarter of 2022. Afterward, this ratio declines gradually reaching 6.28 in the third quarter of 2025, which points to a slight decrease in collection efficiency. The general pattern suggests that while the company was able to accelerate collections during certain periods, over time there has been a modest weakening in receivables turnover, potentially due to extended credit terms or slower collections.

Overall Analysis

The financial data reveal a company experiencing moderate growth in sales and accounts receivable over the observed periods, with seasonality and cyclical influences affecting quarterly results. Increasing accounts receivable balances paired with a slight decline in receivables turnover ratio by the end of the dataset could indicate some challenges in maintaining receivables collection efficiency amid rising sales volumes. Continuous monitoring of these trends is advisable to ensure that working capital and cash flow management remain effective as the business expands.

Cost of Sales, Exclusive of Depreciation and Amortization

The cost of sales shows a generally fluctuating trend over the observed periods, with values ranging approximately between 4,000 million and 5,300 million US dollars. Initially, the cost increased steadily from around 4,054 million at the start of 2021 to a peak of about 5,285 million in the third quarter of 2022. Thereafter, it experienced a significant decline at the end of 2022, dropping to approximately 4,427 million. From 2023 through 2025, the cost of sales exhibits moderate fluctuations, generally moving in a narrow band between 4,150 million and 4,430 million. Overall, the data indicates a peak mid-way followed by a relative stabilization at a moderately lower level.

Accounts Payable

Accounts payable values exhibit a downward trend over the period. Starting at roughly 2,945 million US dollars in early 2021, the figure shows a slight rise mid-2021 with a peak nearing 3,143 million before decreasing consistently to about 2,446 million by mid-2025. The reduction is more pronounced from late 2023 onwards, indicating a purposeful management of payables or changes in supplier credit terms. The overall trend suggests increasingly efficient management of short-term liabilities or possibly tighter payment conditions.

Payables Turnover Ratio

The payables turnover ratio demonstrates variability with a general upward trend over the examined period. Initial values near 5.3 in early 2021 dip slightly but increase gradually, reaching values near 6.49 by the end of 2022. In the subsequent years, the ratio continues to rise, peaking around 6.98 in the second quarter of 2025 before declining slightly to about 6.49 in the third quarter of 2025. This increasing turnover ratio suggests that the company is accelerating its rate of paying suppliers, potentially reflecting stronger cash flow management or stricter payment policies.

Working Capital

The working capital displays high volatility over the observed periods, consistently reflecting negative values which indicate a current liability exceeding current assets. The most negative figures appear sporadically, with significant dips observed around March 2023 (-4881 million USD) and to a lesser extent later in the timeline. There is a partial recovery trend starting from late 2023 to mid-2024, with values becoming less negative, reaching the smallest negative figure around June 2024 (-661 million USD). However, this improvement is not sustained as the working capital turns more negative again towards the end of the period, particularly in the final quarter (September 2025: -2861 million USD).

Sales

Sales revenue exhibits a general upward trend across the period, with some fluctuations. Beginning at 7243 million USD in the first quarter of 2021, sales increased gradually, peaking at 8797 million USD in the third quarter of 2022. A decline follows this peak in late 2022 and early 2023 but sales maintain a relatively stable range between approximately 8100 million USD and 8600 million USD through the latter part of the time series. Overall, sales maintain a positive momentum with a slight upward bias towards the end of the dataset, reaching 8615 million USD by the third quarter of 2025.

Working Capital Turnover

No data is available for working capital turnover, preventing direct analysis of this efficiency metric in relation to working capital management.

Summary

The company’s working capital remains negative throughout the periods, indicating ongoing reliance on current liabilities to finance operations or inventory management challenges. While sales have grown steadily over the analyzed timeframe, the persistent negative working capital suggests potential liquidity pressure or a strategic use of payables and other short-term obligations. The fluctuation and occasional substantial reduction in negative working capital may reflect seasonal operational variations, changes in supplier payment terms, or inventory adjustments. The absence of working capital turnover data limits a deeper assessment of how effectively the company utilizes its short-term funds in relation to sales. Overall, the sales growth coupled with recurring negative working capital posits a scenario where sales expansion is potentially funded through increased short-term liabilities, warranting attention to liquidity risk and working capital management strategies.

Inventory Turnover

The inventory turnover ratio exhibited a generally upward trend from the first quarter of 2021 through the third quarter of 2022, increasing from 9.2 to a peak of 10.75. This suggests an improvement in the efficiency of inventory management during this period, with inventory being sold and replaced more rapidly. However, starting in the last quarter of 2022, there was a noticeable decline in this ratio, dropping steadily through the first three quarters of 2024 to as low as 8.22. A modest recovery occurred in the last quarter of 2024 with a rise to 8.81, but this was followed by another decline towards the third quarter of 2025, settling close to 8.06. Overall, this pattern indicates a decreasing efficiency in inventory turnover after the mid-2022 peak, with some short-term fluctuations.

Average Inventory Processing Period

The average inventory processing period decreased consistently from 40 days in the first quarter of 2021 to 34 days in the third quarter of 2022, reflecting a shortening of the time inventory remained on hand before being processed or sold. This improvement aligns with the increasing inventory turnover ratio observed over the same timeframe. Starting from the fourth quarter of 2022, the processing period began to elongate, rising to 37 days and continuing to increase gradually through 2023 and into 2024, reaching a plateau around 44 days for several quarters. There was a slight decline in the last quarter of 2024 to 41 days, followed by another increase and stabilization near 45 days by the third quarter of 2025. The elongation of the inventory processing period after 2022 indicates a deceleration in inventory movement, consistent with the decreasing inventory turnover ratio.

Overall Analysis

The data reflects two distinct phases in the company's inventory management performance. During the initial phase, from early 2021 to late 2022, inventory turnover improved, and the average inventory processing period shortened, suggesting enhanced operational efficiency and better inventory control. Conversely, from late 2022 onwards, a reversal of this trend occurred, characterized by declining inventory turnover and extended processing periods, signaling potential challenges in inventory management or changes in demand and supply conditions. The period also shows some volatility in the metrics, indicating fluctuating inventory efficiency. These trends warrant further investigation to identify underlying causes and to formulate strategies to optimize inventory levels and turnover moving forward.

Receivables Turnover Ratio

The receivables turnover ratio exhibits moderate fluctuations over the observed quarters. Beginning at 6.7 in the first quarter of 2021, it experienced a slight decline to 6.56 by the first quarter of 2022, followed by an upward trend reaching approximately 7.34 in the third quarter of 2022. This peak is succeeded by a gradual decrease to around 6.54 in the first half of 2024. Subsequently, the ratio climbs again, peaking near 7.14 in the fourth quarter of 2024, before declining to approximately 6.28 by the third quarter of 2025. Overall, the turnover ratio remains in a range between 6.2 and 7.4, indicating some variability in the efficiency with which receivables are collected.

Average Receivable Collection Period

The average receivable collection period inversely mirrors the trends observed in the receivables turnover ratio. It initially decreases slightly from 54-55 days in early 2021 to a low near 50 days in the third and fourth quarters of 2022, indicating quicker collections. This period elongates again towards late 2023 and into 2024, reaching peaks of around 56 days, indicative of slower collection periods. The metric further increases to the highest observed values of 57-58 days by mid-2025. These trends suggest fluctuations in the time taken to collect outstanding receivables, affecting liquidity and cash flow dynamics.

Overall Insights

The data suggests a cyclical pattern in receivables management efficiency. Periods with higher receivables turnover ratios correspond to shorter collection periods, reflecting improved cash conversion cycles. Conversely, lower turnover ratios coincide with extended collection periods, implying potential challenges in receivables collections during those times. The variation across the quarters may be influenced by market conditions, customer payment behaviors, or internal credit policies. Careful monitoring and management of these metrics are essential to maintain optimal liquidity and working capital efficiency.

Inventory Processing Period

The average inventory processing period shows a general downward trend from March 2021 through June 2022, decreasing from 40 days to 34 days. This suggests an improvement in inventory turnover efficiency during this time. However, from June 2022 onwards, the period starts to increase, reaching 45 days by September and December 2025, indicating a slowdown in inventory processing and possibly higher inventory levels or reduced sales velocity in recent quarters.

Receivable Collection Period

The average receivable collection period remains relatively stable but shows some variability within a narrow range. It starts at 54 days in March 2021 and fluctuates slightly, peaking at 58 days in September 2025. Notably, there are short periods of reduction, such as from March to September 2022 where it trends downward to 50 days, followed by an upward movement in the later quarters. This pattern indicates some variability in credit management or customer payment behavior but without drastic shifts.

Operating Cycle

The operating cycle, which combines inventory processing and receivables collection, generally trends downward from 94 days in March 2021 to 84 days by September 2022, reflecting increased operational efficiency in managing working capital. Nevertheless, from Q4 2022 onward, the operating cycle extends again, reaching as high as 103 days by December 2025. This increase mirrors the trends observed in both longer inventory and receivable periods, suggesting a recent elongation of the full cash conversion cycle.

Overall Insights

The data indicates an initial phase of improving working capital management characterized by shorter inventory and receivable periods and a reduced operating cycle up to mid-2022. After that period, a reversal is observed with both inventory processing and operating cycle lengthening, which could imply challenges such as slower sales, higher inventory buildup, or delayed customer payments. The receivable period shows moderate volatility but generally trends higher towards the end of the period analyzed, contributing to the extended operating cycle.

Payables Turnover

The payables turnover ratio exhibits a general upward trend over the observed period. Starting at 5.3 in the first quarter of 2021, it experiences some fluctuations but maintains an overall increase, peaking around 6.98 in mid-2025. This indicates the company is increasingly efficient in paying off its suppliers, reflecting potentially improved liquidity or stronger negotiation terms.

Average Payables Payment Period

The average payables payment period, measured in days, trends downward overall from 69 days in early 2021 to as low as 52 days around mid-2025, before slightly rising again toward the end of the period. This decline aligns with the increasing payables turnover ratio, suggesting that the company is shortening the time it takes to settle its payables, which may enhance supplier relationships or take advantage of early payment discounts.

Relationship and Insights

The inverse relationship between payables turnover and the average payment period is evident, as expected, since higher turnover ratios correspond to fewer days payable outstanding. The data implies a strategic emphasis on more timely payments starting from 2022, where the payables turnover accelerates notably, and the payment period decreases concurrently. Such patterns might reflect improved cash management policies or operational efficiencies.

Overall Financial Management Perspective

The company demonstrates a move toward more efficient payables management over the quarters, balancing liquidity needs with supplier payment obligations. The consistency in maintaining higher turnover ratios and reduced payment periods may contribute positively to the company's credit standing and operational execution. However, the slight fluctuations in the latter part of the timeline indicate some variability that could be monitored for risk or operational adjustments.

Inventory Processing Period

The average inventory processing period shows a general downward trend from 40 days at the beginning of the first quarter of 2021 to a low of 34 days in mid-2022. This improvement indicates more efficient inventory turnover during that period. However, from late 2022 onwards, there is a noticeable increase, reaching up to 45 days by the third quarter of 2025. This suggests a slowing down in inventory processing efficiency in the more recent periods.

Receivable Collection Period

The average receivable collection period remains relatively stable, fluctuating in the range of 50 to 58 days throughout the observed timeframe. There is a slight increase from around 54-56 days in 2021 and early 2022 to peaks near 57-58 days by late 2024 and 2025. This pattern indicates that receivables are being collected somewhat more slowly in the later periods compared to earlier ones, potentially impacting cash inflows.

Payables Payment Period

The average payables payment period demonstrates variability with a range from 52 to 73 days. Early in the period, there is a peak around 71-73 days, followed by a decline to the mid-50s in 2023. Notably, there is a further reduction to around 52-56 days in late 2024 and 2025. This suggests that the company has been paying its suppliers quicker in recent periods compared to earlier ones, which may affect cash outflows and working capital management.

Cash Conversion Cycle (CCC)

The cash conversion cycle starts at 25 days in early 2021 and declines to a low point of 16 days by the end of 2021, reflecting improved operational efficiency and liquidity management in that timeframe. Subsequently, the CCC increases steadily, reaching 47 days by the third quarter of 2025. This rising trend in the CCC indicates that the company's working capital is increasingly tied up, suggesting slower conversion of investment in inventory and receivables back into cash.

Overall Insights

The financial data reveals that the company experienced improvements in inventory management and cash conversion efficiency through 2021 and early 2022. However, from mid-2022 onwards, there is a reversal with longer inventory processing times and a growing cash conversion cycle. Receivables collection has slightly slowed down, while the company has been accelerating its payables payments in recent periods. The combined effect is a lengthening cash conversion cycle, which may signal increased liquidity pressure or changing operational conditions. Ongoing attention to working capital components may be warranted to sustain operational efficiency and liquidity.