Micron Technology Inc. (NASDAQ:MU)

The financial data reveals significant trends in the operational efficiency and asset management of the company over multiple quarterly periods.

Inventory Turnover Ratio

This ratio increased steadily from 2.65 to a peak of 3.85 in late 2021, indicating improved efficiency in inventory management during that period. However, following this peak, there was a noticeable decline that brought the ratio down to approximately 2.01 by early 2023. Subsequently, a gradual recovery is apparent, reaching 2.69 by mid-2025. Overall, the inventory turnover shows variability with a peak followed by a trough and a gradual rebound, suggesting fluctuating inventory management effectiveness.

Receivables Turnover Ratio

Receivables turnover exhibited an upward trend from 5.48 to a high of 10.12 around early 2023, reflecting faster collection of receivables and potentially improved credit management. Thereafter, a steady decline is observed, with the ratio falling to around 4.03 by mid-2025. This decreasing trend after the peak indicates a slowing in receivables collection efficiency over the most recent periods.

Working Capital Turnover Ratio

The ratio initially hovered around 1.9 to 2.17, reflecting efficient use of working capital. Starting from early 2022, it decreased sharply to a low of 0.94 by mid-2023, suggesting less efficient utilization of working capital. After this decline, the ratio gradually improved, reaching 2.15 by mid-2025, indicating a recovery in working capital management efficiency.

Average Inventory Processing Period

The number of days to process inventory decreased significantly from 138 days in late 2019 to a low of 95 days by the end of 2020, denoting faster inventory turnover. Yet, the period lengthened markedly afterwards, peaking near 192 days in early 2023, consistent with the earlier noted dip in inventory turnover ratio. A subsequent decline to 136 days by mid-2025 suggests an improvement in managing inventory levels and processing times.

Average Receivable Collection Period

The collection period improved from 67 days in late 2019 to a shortest period of 36 days in early 2023, indicating enhanced efficiency in receivables collection. However, from that point, there is a clear upward trend with the collection days increasing to approximately 90 days by mid-2025. The lengthening receivable period corresponds with the decreasing receivables turnover ratio, highlighting potential challenges in credit collections recently.

Operating Cycle

The operating cycle shortened from 205 days in late 2019 to a minimum of 158 days in mid-2020, reflecting improved overall efficiency in inventory turnover and receivables collection. Thereafter, the operating cycle lengthened steadily, reaching a maximum of 262 days by mid-2024 before slightly improving to 226 days by mid-2025. This increase reflects the combination of slower inventory processing and extended receivable periods seen in the data.

In summary, the company experienced an initial phase of operational efficiency improvement through 2020 and early 2021, as evidenced by increasing turnover ratios and decreasing processing/collection periods. However, from early 2022 through early 2023, a reversal of these trends occurred, marked by declines in turnover ratios and elongation of inventory and receivable periods, suggesting challenges in asset management. The most recent data show modest recoveries in these metrics, indicating cautious improvements in operational efficiency going forward.

The analyzed periods reveal distinct patterns and shifts in the company's cost of goods sold, inventories, and inventory turnover ratios. These metrics reflect operational efficiency, inventory management, and sales performance over time.

Cost of Goods Sold (COGS)

The cost of goods sold exhibits fluctuations across the quarterly periods. Initially, from late 2019 through early 2020, COGS remained relatively stable, ranging between approximately 3,400 and 4,000 million USD. From mid-2020 onwards, there is a general upward trend with some volatility, peaking significantly in late 2024 and 2025, where the values surpass 5,000 million USD and reach above 6,200 million USD by August 2025. This increase indicates rising expenses related to the production or acquisition of goods sold, suggesting either higher sales volume, increased input costs, or both.

Inventories

Inventories steadily increased from approximately 4,900 million USD in late 2019 to a peak of over 8,800 million USD during the late 2024 period. Notably, there was a pronounced buildup between late 2021 and early 2024, suggesting accumulation of stock. Toward the most recent quarters covered, inventories show some decline but remain at significantly higher levels than earlier periods, indicating either a strategic increase in stock levels or slower inventory turnover relative to prior years.

Inventory Turnover

Inventory turnover ratios begin with missing data for the earliest periods but are available from the third quarter of 2020 onward. Initially, turnover rose from 2.65 to a high near 3.85 during 2021, reflecting improved efficiency in managing inventory and converting stock into sales. However, starting in late 2021, turnover declined substantially to a low near 1.91 by late 2022, indicating slower inventory movement relative to inventory levels. Eventually, turnover stabilizes and gradually improves in subsequent quarters, reaching around 2.69 by mid-2025, which suggests some recovery in inventory management efficiency though it remains below previous peak levels.

Overall, the increase in cost of goods sold combined with a substantial build-up in inventories and declining then stabilizing turnover ratios suggests that the company experienced growth pressures possibly leading to excess inventory accumulation. The trends may indicate cautious inventory management amid fluctuating demand or supply chain challenges, with a partial improvement in operational efficiency towards the end of the analyzed period.

The revenue of the company demonstrates a fluctuating yet generally upward trend over the observed periods. Starting at $5,144 million in late 2019, it experienced some volatility with occasional declines but resumed growth in subsequent quarters. The revenue reached a peak of $11,315 million by mid-2025, indicating substantial expansion over the longer term. Notable dips are observed around late 2022 and early 2023, where revenue dropped to as low as $3,693 million, subsequently recovering thereafter.

Receivables similarly follow a pattern of variation, albeit with more pronounced fluctuations. Beginning at $3,419 million in late 2019, receivables initially decreased and then increased significantly through mid-2021, aligning with a rise in revenue. However, receivables displayed considerable volatility in the later periods, peaking at $9,265 million by mid-2025. The variation in receivables suggests changes in the efficiency of collections or credit terms over time.

Receivables turnover, available for fewer periods, shows a general decline after peaking at 10.12 in early 2023. This ratio decreased from high values above 7 in early 2021 to lower values near 4 by mid-2025. The decline in turnover ratio indicates a slowing in the collection process relative to sales, which may reflect longer credit terms or challenges in receivables management as revenue increased substantially.

Revenue

The revenue trend indicates overall growth with episodes of volatility, achieving more than double the starting figure over the full timeframe observed. The growth is notable from mid-2023 onward.

Receivables

The receivables value shows considerable fluctuation, with peaks and troughs not always perfectly aligned with revenue fluctuations, highlighting potential shifts in credit policy or collection effectiveness.

Receivables Turnover

The receivables turnover ratio displays a declining trend after a peak, suggesting a degradation in the speed of converting receivables into cash relative to sales, which could impact liquidity and working capital efficiency if the trend continues.

The analysis of the financial data over the presented quarters reveals several notable trends in working capital, revenue, and working capital turnover for the company.

Working Capital

The working capital exhibits a general upward trend over the period. Starting from approximately $9,850 million, it gradually increases to a peak around $17,784 million in August 2025. There are minor fluctuations, such as a slight dip toward the end of 2022 and early 2023, but the overall pattern is a steady growth in liquidity, indicating improved short-term financial health and increased operational resources.

Revenue

Revenue figures display more volatility compared to working capital. Initially, revenue starts at $5,144 million and shows fluctuations with periods of growth and decline. For instance, revenue peaked at $8,642 million in June 2022, followed by a sharp drop to $4,085 million in December 2022. After this trough, revenue gradually recovers, reaching a high of $11,315 million by August 2025. This recovery phase, particularly from early 2023 onwards, suggests a strong rebound and growth momentum in the company’s sales performance.

Working Capital Turnover

The working capital turnover ratio reflects how efficiently the company is using its working capital to generate revenue. The ratio starts around 1.89 in mid-2020, peaks at about 2.17 by early 2021, and then declines noticeably to a low near 0.94 in late 2022. Subsequently, there is a gradual improvement back to approximately 2.15 by mid-2025. This trend indicates that efficiency dropped significantly around late 2022, coinciding with the sharp revenue decrease, but cost and asset management appear to improve thereafter, enhancing revenue generation relative to working capital.

In summary, the financial data depicts a company with increasingly strong liquidity but facing challenges in maintaining consistent revenue growth until a notable recovery occurs from early 2023 onward. The fluctuations in working capital turnover align closely with changes in revenue, highlighting periods of less efficient use of working capital during downturns and improved operational efficiency during growth phases.

The analysis of the inventory turnover and average inventory processing period over the observed quarterly periods reveals several notable trends and fluctuations. Inventory turnover ratio begins to be available from the period ending September 3, 2020, and shows an initial increase, peaking around the period ending December 2, 2021. This peak indicates a higher efficiency in inventory management, with the company turning over inventory more frequently.

Following this peak, there is a noticeable decline in inventory turnover from early 2022 through the period ending December 1, 2022, suggesting a slowdown in the rate of inventory turnover. Post this period, the ratio stabilizes and then gradually increases again towards early 2025, reflecting a modest improvement in inventory management efficiency.

Conversely, the average inventory processing period, expressed in days, exhibits an inverse relationship to the inventory turnover ratio throughout most of the timeline, which is consistent with financial principles. Initially declining to a low of around 95 days by December 3, 2020, the processing period then expands significantly to a peak of 192 days by December 1, 2022. This increase corresponds with the decline in inventory turnover, indicating that inventory was held longer during this time frame, which may point to slower sales or potential accumulation of stock.

From the peak, the inventory processing period gradually decreases into early 2025, falling to approximately 136 days by August 28, 2025. This reduction aligns with the observed increase in the inventory turnover ratio, suggesting enhanced inventory efficiency and possibly better alignment of inventory levels with sales demand.

Inventory Turnover Ratio Trends

- Initial increase from approximately 2.65 to around 3.85, indicating improving efficiency.

- Decline during 2022, reaching lows near 1.91, suggesting less frequent turnover.

- Stabilization and modest recovery towards 2.69 by mid-2025.

Average Inventory Processing Period Trends

- Decrease to a minimum of 95 days by late 2020, demonstrating faster processing.

- Increase peaking at 192 days in late 2022, indicating slower inventory movement.

- Subsequent decline to 136 days by mid-2025, reflecting improved inventory handling.

Insights

- The inverse correlation between inventory turnover and processing period highlights typical inventory behavior dynamics.

- The fluctuations suggest periods of adjustment in inventory strategy or market conditions impacting inventory demand and supply chain efficiency.

- The recovery in turnover and reduction in processing time towards the later periods may signal operational improvements or market recovery.

The analysis of the receivables turnover ratio and the average receivable collection period over the observed periods reveals notable fluctuations that indicate changes in the company's efficiency in collecting receivables.

Receivables Turnover Ratio

The ratio shows an initial upward trend reaching a peak around the period of March 2023, where the ratio climbed to 10.12. This signifies an improvement in the frequency of receivables being collected during that time.

Following the peak, the turnover ratio generally declined, moving down to values around 3.8 by August 2024, with minor fluctuations thereafter. The decreasing trend suggests a slowdown in the efficiency of collecting receivables or potentially longer credit terms granted to customers.

Average Receivable Collection Period

This metric moves inversely to the receivables turnover ratio. There is a decrease in the number of days to collect receivables up to March 2023, reaching a low of 36 days, indicating improved collection efficiency.

Post-March 2023, the collection period extends significantly, rising to a maximum of 96 days in August 2024. This extension in collection days points toward customers taking longer to settle their balances, which could impact cash flow negatively.

Overall, the data indicates a period of strengthening in the company's receivables management up to early 2023, followed by a period of deterioration. Such trends could be influenced by changes in credit policy, market conditions, or customer payment behavior, and warrant further investigation to manage working capital effectively.

The analysis of the financial data reveals several notable trends in operational efficiency metrics over the observed periods.

Average Inventory Processing Period

The average inventory processing period shows a downward trend initially, decreasing from 138 days to a low of 95 days within about one year. This suggests an improvement in inventory turnover efficiency during that timeframe. However, after reaching this low point, the period increases steadily, peaking at 192 days, indicating a slowdown in inventory processing. In the most recent periods, this metric declines again, ending at 136 days, suggesting a partial recovery in managing inventory levels.

Average Receivable Collection Period

The average receivable collection period demonstrates fluctuations throughout the timeline. It starts at 67 days, decreases to a low of 36 days, indicating improved efficiency in collecting receivables, and then rises again, reaching as high as 96 days in one of the later periods. This pattern reflects variability in the company's ability to collect payments from customers promptly. The most recent values suggest some stabilization around the 80-90 day range, which implies a relatively longer collection period compared to the earlier low point.

Operating Cycle

The operating cycle, which combines inventory processing and receivable collection periods, generally mirrors the trends seen in the two components. It decreases from 205 days to a low of 158 days, indicating overall operational efficiency gains. Following this, the cycle lengthens, peaking at 262 days, which signals a significant slowing in the conversion of inventory and receivables back into cash. Toward the end of the timeline, there is a modest decline, settling near 226 days, though still well above the earlier low points.

In summary, the data indicates an initial phase of operational improvement with shorter inventory and receivables periods, followed by a period of increased delays in both inventory turnover and receivable collection. This resulted in a longer operating cycle and potentially reduced liquidity. The most recent data points suggest some recovery but not a return to the lowest cycle lengths observed earlier.