Micron Technology Inc. (NASDAQ:MU)

Inventory Turnover

The inventory turnover ratio exhibited variability over the years, increasing from 2.48 in 2019 to a peak of 3.85 in 2021, indicating improved inventory efficiency during that period. However, it subsequently declined to 2.02 by 2023 before slightly recovering to 2.20 in 2024, suggesting a reduced pace in clearing inventory compared to the earlier peak.

Receivables Turnover

Receivables turnover dropped considerably from 8.43 in 2019 to 6.13 in 2020, and continued to decline to its lowest point at 4.63 in 2024 after some fluctuations. This trend implies a deterioration in the company's efficiency in collecting receivables over time.

Payables Turnover

The payables turnover ratio fluctuated, starting at 7.58 in 2019, rising sharply to 9.91 in 2021, indicating faster payment to suppliers then. It fluctuated again to end at 7.15 in 2024, reflecting varied payment speeds over the years with a generally faster turnover around 2021 and 2023.

Working Capital Turnover

Working capital turnover showed a declining trend, dropping from 2.31 in 2019 to a low of 0.94 in 2023, which implies decreasing efficiency in utilizing working capital for generating sales. A modest recovery to 1.66 in 2024 was observed, though still below earlier levels.

Average Inventory Processing Period

The average inventory processing period shortened significantly from 147 days in 2019 to a low of 95 days in 2021, reflecting improved inventory management during this period. However, it lengthened sharply afterwards to 181 days in 2023 and slightly decreased to 166 days in 2024, indicating slower inventory turnover in recent years.

Average Receivable Collection Period

This period increased from 43 days in 2019 to 65 days in 2021, indicating slower collection of receivables. While it improved to 48 days in 2023, it rose again sharply to 79 days in 2024, suggesting increased challenges in managing receivables recently.

Operating Cycle

The operating cycle initially decreased from 190 days in 2019 to 160 days in 2021, indicating greater operational efficiency. It then extended substantially to 245 days by 2024, reflecting lengthened time to convert inventory and receivables into cash.

Average Payables Payment Period

The average payment period to suppliers fluctuated, beginning at 48 days in 2019, increasing to 54 days in 2020, decreasing to 37 days in 2021 and 2023, and rising again to 51 days in 2024. This suggests inconsistent payment policies with periods of faster and slower payments.

Cash Conversion Cycle

The cash conversion cycle followed a pattern similar to the operating cycle, remaining relatively stable around 142-143 days in 2019-2020, then decreasing to 123 days in 2021. Subsequently, it extended to reach 194 days by 2024. This trend indicates increasing inefficiency in converting investments in inventory and receivables into cash over the latter years.

Cost of Goods Sold

The cost of goods sold displayed an overall upward trend from 2019 to 2024. Starting at $12,704 million in 2019, it increased steadily each year with a minor dip observed in 2022, followed by a significant rise reaching $19,498 million in 2024. This indicates increasing production or acquisition costs over the years, suggesting expansion or increased operational scale.

Inventories

Inventories show more variability compared to the cost of goods sold. From $5,118 million in 2019, inventory levels increased moderately in 2020, then decreased sharply in 2021 to $4,487 million. However, inventories rose substantially in 2022 and continued increasing through 2023 and 2024, reaching $8,875 million. This pattern suggests fluctuations in inventory management or shifts in demand and supply chain dynamics, with recent years showing higher inventory accumulation.

Inventory Turnover Ratio

The inventory turnover ratio, which measures how efficiently inventory is managed relative to sales, exhibits a fluctuating trend. It increased from 2.48 in 2019 to a peak of 3.85 in 2021, indicating improved inventory efficiency during this period. However, it then dropped sharply to 2.53 in 2022 and further declined to around 2.02 in 2023, before a slight recovery to 2.20 in 2024. This downward trend after 2021 may reflect slower inventory movement relative to sales or increased inventory holding periods.

Revenue Trend

The annual revenue exhibited fluctuations over the six-year period. Starting at $23,406 million in 2019, revenue decreased to $21,435 million in 2020 before increasing significantly to a peak of $30,758 million in 2022. This was followed by a steep decline to $15,540 million in 2023, and subsequently a recovery to $25,111 million in 2024. Overall, the revenue trend shows periods of volatility with sharp decreases and partial rebounds within the observed timeframe.

Trade Receivables Trend

Trade receivables showed a generally increasing trend from 2019 through 2021, rising from $2,778 million to a high of $4,920 million. In 2022, there was a slight decrease to $4,765 million, followed by a substantial drop to $2,048 million in 2023. In 2024, trade receivables surged to $5,419 million, the highest value across the years considered.

Receivables Turnover Ratio Trend

The receivables turnover ratio started relatively high at 8.43 in 2019, indicating a strong efficiency in collecting receivables. This ratio then declined steadily to 5.63 in 2021, slightly rebounded to 6.45 in 2022, and improved further to 7.59 in 2023. However, in 2024, the ratio dropped sharply to 4.63, indicating a reduced efficiency in collecting receivables despite the higher revenue in that year.

Overall Observations

The data illustrates volatilities both in revenue and trade receivables levels, with notable declines in 2020 and 2023. The receivables turnover ratio inversely correlates with the rising and falling trade receivables in some years, suggesting changes in collection efficiency. The marked decrease in turnover ratio in 2024 despite increased receivables and revenue suggests potential challenges in cash collection or credit policies during that period.

The financial data reveals distinct trends in the cost of goods sold, accounts payable, and payables turnover over the six-year period ending in August 2024.

Cost of Goods Sold (COGS)

COGS increased steadily from 12,704 million USD in 2019 to 17,282 million USD in 2021, indicating growing production or sales volume during this period. There was a slight decline in 2022 to 16,860 million USD, followed by stabilization in 2023 at 16,956 million USD. In 2024, COGS showed a significant rise to 19,498 million USD, surpassing all previous years, which may reflect increased raw material costs, higher production volumes, or price changes.

Accounts Payable

Accounts payable fluctuated over the years, starting at 1,677 million USD in 2019 and increasing to 2,191 million USD in 2020. It then declined to 1,744 million USD in 2021 before rising again to 2,142 million USD in 2022. The figure decreased to 1,725 million USD in 2023 but sharply increased to 2,726 million USD in 2024, the highest level recorded in this time series. This volatility indicates changes in payment practices or supplier credit terms.

Payables Turnover Ratio

The payables turnover ratio shows considerable variability, starting at 7.58 in 2019 and declining to 6.79 in 2020, then reaching a peak of 9.91 in 2021. It decreased to 7.87 in 2022, rose again to 9.83 in 2023, and dropped to 7.15 in 2024. These fluctuations suggest inconsistent payment pacing relative to purchases; higher turnover ratios typically imply faster payments to suppliers, while lower ratios indicate slower payments. The decline in 2024 may suggest extended payment terms or delayed settlements despite higher accounts payable.

Working Capital

The working capital exhibits an overall upward trend from 2019 to 2024, starting at 10,113 million USD in 2019 and reaching a peak of 16,479 million USD in 2023 before slightly declining to 15,124 million USD in 2024. This indicates an increase in short-term assets relative to short-term liabilities over this period, reflecting potentially improved liquidity positions, despite the minor decrease in the most recent year.

Revenue

Revenue demonstrates significant fluctuations. It initially declines from 23,406 million USD in 2019 to 21,435 million USD in 2020. This is followed by a strong recovery and growth, peaking at 30,758 million USD in 2022. However, revenue sharply drops to 15,540 million USD in 2023, then recovers again to 25,111 million USD in 2024. The pattern showcases high volatility over the six-year period, possibly influenced by external market conditions or demand cycles.

Working Capital Turnover

The working capital turnover ratio starts at 2.31 in 2019 and gradually decreases to 1.89 in 2020, then improves moderately to 2.16 by 2022. Thereafter, it experiences a substantial decline to 0.94 in 2023, before rebounding to 1.66 in 2024. This ratio reflects the efficiency of utilizing working capital to generate revenue. The sharp drop in 2023 signals decreased operational efficiency or higher working capital relative to revenue, while the partial recovery in 2024 suggests some normalization.

Overall Analysis

The data reveals periods of growth and contraction, with a volatile revenue trend impacting the working capital turnover. Despite increasing working capital over the years, the declining turnover in recent years implies the company’s asset management efficiency faced challenges, possibly due to an imbalance between working capital and sales. The partial recovery in 2024 suggests efforts to enhance operational effectiveness, though it has yet to reach earlier efficiency levels.

Inventory Turnover

The inventory turnover ratio exhibited a fluctuating pattern over the observed periods. It increased from 2.48 in August 2019 to a peak of 3.85 in September 2021, indicating an improvement in the frequency at which inventory was sold and replaced during that time. However, this ratio subsequently declined, falling to 2.53 in September 2022 and further to 2.02 in August 2023, before a slight recovery to 2.2 in August 2024. This suggests that after an initial improvement, the efficiency in managing and selling inventory weakened but showed modest enhancement at the end of the period.

Average Inventory Processing Period

The average inventory processing period, measured in days, generally moved inversely to the inventory turnover ratio, reflecting the dynamic of inventory management efficiency. The period decreased from 147 days in August 2019 to a low of 95 days in September 2021, correlating with the peak in inventory turnover, signifying faster inventory processing. After this improvement, the processing period lengthened notably to 144 days in September 2022 and continued increasing to 181 days in August 2023. By August 2024, it decreased slightly to 166 days but remained considerably higher than the earlier low. This pattern indicates a slowing pace in inventory processing following the 2021 peak, aligning with the declining turnover ratios during the same timeframe.

Receivables Turnover

The receivables turnover ratio shows a fluctuating trend over the observed periods. Starting at 8.43 in August 2019, it declines significantly to 6.13 in September 2020 and further down to 5.63 in September 2021. There is a slight recovery in September 2022 to 6.45, followed by an increase to 7.59 in August 2023. However, it then drops sharply to 4.63 in August 2024, marking the lowest value in the period under review.

Average Receivable Collection Period

The average receivable collection period exhibits an inverse pattern relative to the receivables turnover ratio, as expected. It increases from 43 days in August 2019 to a peak of 65 days in September 2021, indicating a lengthening of time taken to collect receivables. Subsequently, it decreases to 57 days in September 2022 and further to 48 days in August 2023, suggesting improved collection efficiency during this interval. However, there is a marked increase to 79 days by August 2024, denoting a significant deterioration in the speed of receivables collection.

Overall Insight

The analysis reveals considerable volatility in the management of receivables. The declining receivables turnover and increasing collection period in the early years imply challenges in collecting receivables efficiently. The improvement observed in 2022 and 2023 suggests temporary effectiveness in collection processes but the sharp reversal in 2024 raises concerns about renewed collection difficulties or possible credit policy changes. This volatility may impact cash flow and working capital management, necessitating closer scrutiny and potentially corrective actions.

Average inventory processing period

The average inventory processing period exhibited fluctuations over the analyzed years. It initially decreased from 147 days in 2019 to a low of 95 days in 2021, indicating improved efficiency in inventory turnover during this period. However, the trend reversed with an increase to 144 days in 2022 and further escalated to 181 days in 2023, before slightly declining to 166 days in 2024. This suggests a recent deterioration in inventory management efficiency or changes in inventory strategy.

Average receivable collection period

The average receivable collection period generally increased over the period under review. Starting at 43 days in 2019, it rose steadily to reach 65 days in 2021, followed by a marginal decrease to 57 days in 2022. Nevertheless, it increased again to 48 days in 2023, then peaked at 79 days in 2024. This variability, with a notable increase in 2024, indicates challenges or changes in accounts receivable collection efficiency, potentially impacting cash flow.

Operating cycle

The operating cycle, representing the total time taken from inventory purchase to cash collection from receivables, showed an overall upward trend. After rising slightly from 190 days in 2019 to 197 days in 2020, it declined to 160 days in 2021, demonstrating enhanced operational efficiency during that year. However, the operating cycle extended sharply to 201 days in 2022, continued increasing to 229 days in 2023, and further to 245 days in 2024. This reflects a lengthening of the company's cash conversion cycle over recent years, influenced by the combined effects of inventory and receivables periods.

The analysis of the payables metrics over the presented periods reveals some fluctuations without a consistent upward or downward trend.

Payables Turnover Ratio

The payables turnover ratio exhibits variability across the years. Beginning at 7.58 in August 2019, it saw a decline to 6.79 in September 2020, indicating slower payment of payables. This was followed by a sharp increase to 9.91 in September 2021, suggesting faster payments. The ratio then dropped to 7.87 in September 2022, rose again to 9.83 in August 2023, and finally decreased to 7.15 in August 2024. This inconsistency indicates changing payment patterns to suppliers, alternating between quicker and slower settlements.

Average Payables Payment Period (Days)

The average number of days to pay payables reflects a corresponding inverse pattern to the payables turnover ratio, as expected. Starting at 48 days in August 2019, it increased to 54 days in September 2020, indicating longer payment cycles. It then decreased significantly to 37 days in September 2021, rose again to 46 days in September 2022, dropped back to 37 days in August 2023, and finally increased to 51 days in August 2024. These fluctuations suggest varying cash management strategies or supplier terms over time.

Overall, the data illustrates that the company has experienced inconsistent payables management, with payment periods alternately lengthening and shortening over the analyzed years. This pattern may reflect strategic adjustments in working capital management or responses to external economic conditions affecting payment practices.

Average Inventory Processing Period

The average inventory processing period showed fluctuations over the years. It dropped from 147 days in 2019 to a low of 95 days in 2021, indicating improved inventory turnover during this period. However, it increased again to 181 days in 2023 before slightly decreasing to 166 days in 2024, signaling a slower inventory movement in recent years compared to the earlier periods.

Average Receivable Collection Period

The average receivable collection period increased from 43 days in 2019 to a peak of 65 days in 2021, suggesting a lengthening of the time taken to collect receivables. It then improved to 48 days in 2023 but rose sharply to 79 days in 2024, indicating challenges in collecting outstanding payments promptly in the most recent period.

Average Payables Payment Period

The average payables payment period presented a somewhat inconsistent trend. It rose from 48 days in 2019 to 54 days in 2020, decreased to 37 days in 2021, increased again to 46 days in 2022, dropped to 37 days in 2023, and then climbed back to 51 days in 2024. This variability points to fluctuating payment practices to suppliers, with some years of delayed payments and others of faster settlements.

Cash Conversion Cycle

The cash conversion cycle remained relatively stable around the mid-140s in 2019 and 2020, decreased to 123 days in 2021, then rose substantially to 155 days in 2022. It continued to increase, reaching 192 days in 2023 and slightly further to 194 days in 2024. This upward trend indicates a lengthening of the time taken to convert investments in inventory and receivables into cash, suggesting potential liquidity and working capital management concerns in recent years.