Mondelēz International Inc. (NASDAQ:MDLZ)

An analysis of short-term operating activity ratios reveals several trends between 2021 and 2025. Generally, the company demonstrates efficient management of its short-term assets and liabilities, though some areas exhibit increasing strain. Inventory and receivables management show signs of slowing efficiency, while payables management fluctuates.

Inventory Management

Inventory turnover decreased from 6.45 in 2021 to 5.97 in 2022, then slightly recovered to 6.16 in 2023 before declining again to 5.80 in 2024. It showed a modest increase to 6.25 in 2025. This suggests a slight weakening in the speed at which inventory is sold. Correspondingly, the average inventory processing period increased from 57 days in 2021 to 63 days in 2024, before decreasing to 58 days in 2025. This indicates inventory is taking longer to convert into sales.

Receivables Management

Receivables turnover consistently declined from 12.29 in 2021 to 9.41 in 2024, with a slight recovery to 9.87 in 2025. This indicates a decreasing efficiency in collecting receivables. The average receivable collection period increased from 30 days in 2021 to 39 days in 2024, then decreased to 37 days in 2025, confirming a lengthening of the time required to receive payment from customers.

Payables Management

Payables turnover remained relatively stable between 2021 and 2023, at approximately 2.6. It decreased to 2.35 in 2024 before increasing to 2.72 in 2025. The average payables payment period increased from 141 days in 2021 to a peak of 155 days in 2024, then decreased to 134 days in 2025. This suggests a trend towards taking longer to pay suppliers, potentially to manage cash flow, but with a recent improvement.

Overall Operating Cycle & Cash Conversion Cycle

The operating cycle lengthened from 87 days in 2021 to 102 days in 2024, before decreasing to 95 days in 2025. This reflects the combined effect of slower inventory turnover and receivable collection. The cash conversion cycle remained negative throughout the period, ranging from -54 days in 2021 to -39 days in 2025. This indicates the company effectively utilizes its payables to finance its operating activities, maintaining a positive cash flow position. The cash conversion cycle became more negative in 2024, then improved in 2025.

In summary, while the company maintains a negative and generally improving cash conversion cycle, trends in inventory and receivables turnover suggest a potential need for attention to improve efficiency in these areas. The fluctuations in payables turnover and payment period warrant monitoring to ensure optimal supplier relationships and financial flexibility.

The analysis reveals fluctuations in inventory turnover over the five-year period. Cost of sales demonstrates a consistent upward trend, while inventories also generally increased, though the relationship between the two dictates the inventory turnover ratio’s behavior.

Cost of Sales

Cost of sales increased from US$17,466 million in 2021 to US$27,602 million in 2025. The most significant year-over-year increase occurred between 2022 and 2023 (US$2,068 million), followed by 2024 and 2025 (US$5,418 million). This suggests growing sales volume or increasing production costs, or a combination of both.

Inventories

Inventories exhibited an overall increasing trend, rising from US$2,708 million in 2021 to US$4,419 million in 2025. The rate of increase was relatively consistent between 2021 and 2024, with a more substantial increase observed between 2024 and 2025 (US$592 million). This could indicate a build-up of stock in anticipation of future demand, or potentially slower sales relative to production.

Inventory Turnover

The inventory turnover ratio began at 6.45 in 2021, decreased to 5.97 in 2022, and then slightly recovered to 6.16 in 2023. A further decline to 5.80 was observed in 2024, followed by a modest increase to 6.25 in 2025. The initial decrease in 2022 coincided with a larger increase in inventories relative to the increase in cost of sales. The subsequent fluctuations suggest a dynamic relationship between inventory management and sales activity. While the ratio experienced a slight recovery in 2025, it did not return to the level observed in 2021. This indicates that, despite rising cost of sales, inventory is being turned over at a slightly slower pace overall.

In summary, while cost of sales consistently increased, the inventory turnover ratio experienced volatility. The increasing inventory levels, coupled with the fluctuating turnover ratio, warrant further investigation to determine the underlying causes and potential implications for operational efficiency and working capital management.

An examination of the provided financial information reveals a fluctuating pattern in receivables turnover over the five-year period. While net revenues demonstrate a consistent upward trajectory, receivables turnover exhibits a decreasing trend, followed by a slight recovery in the most recent year.

Receivables Turnover

The receivables turnover ratio decreased from 12.29 in 2021 to 10.20 in 2022, representing a decline in the efficiency with which the company collects its receivables. This downward trend continued into 2023, with the ratio falling to 9.91, and further decreased to 9.41 in 2024, indicating a progressively slower collection period. However, a modest increase to 9.87 is observed in 2025, suggesting a potential stabilization or slight improvement in collection efficiency.

Concurrently, trade receivables, net of allowance, increased from US$2,337 million in 2021 to US$3,903 million in 2025. This increase in outstanding receivables, coupled with the declining turnover ratio, suggests that the company is taking longer to convert its receivables into cash. The growth in net revenues does not appear to be directly translating into a proportional increase in the speed of receivables collection.

Relationship to Net Revenues

Despite a consistent rise in net revenues – from US$28,720 million in 2021 to US$38,537 million in 2025 – the receivables turnover ratio has not followed suit. This divergence warrants further investigation to determine the underlying causes, such as changes in credit terms offered to customers, shifts in the customer mix, or potential issues with the collection process.

The slight recovery in receivables turnover in 2025 may indicate the initial success of implemented strategies to improve collection efficiency, but continued monitoring is necessary to confirm a sustained positive trend.

The accounts payable activity demonstrates a generally stable pattern with some fluctuations over the five-year period. Cost of sales exhibited a consistent upward trend, while accounts payable also increased, though not always in direct proportion. This relationship is reflected in the payables turnover ratio.

Cost of Sales

Cost of sales increased from US$17,466 million in 2021 to US$27,602 million in 2025. The most significant increase occurred between 2024 and 2025, with a rise of US$5,418 million. Prior to this, growth was relatively consistent year-over-year.

Accounts Payable

Accounts payable also increased over the period, moving from US$6,730 million in 2021 to US$10,139 million in 2025. The largest absolute increase in accounts payable was observed between 2023 and 2024, increasing by US$1,112 million. The rate of increase in accounts payable slowed in the final period, rising by US$706 million between 2024 and 2025.

Payables Turnover

The payables turnover ratio remained relatively consistent between 2021 and 2023, fluctuating between 2.60 and 2.67. A decrease to 2.35 was observed in 2024, indicating a slower rate of paying suppliers. However, the ratio rebounded to 2.72 in 2025, suggesting a return to a faster payment cycle. The fluctuations in the ratio suggest a dynamic relationship between purchasing and payment practices, potentially influenced by supplier negotiations or changes in credit terms.

The increase in both cost of sales and accounts payable suggests growth in business activity. The slight dip in payables turnover in 2024 warrants further investigation to determine if it represents a strategic shift in payment terms or a temporary operational issue. The subsequent recovery in 2025 indicates that this dip was likely not indicative of a long-term trend.

The working capital position of the company demonstrates a consistently negative balance over the observed period, increasing in absolute value from 2021 to 2025. Simultaneously, net revenues exhibit an upward trend throughout the same timeframe. Consequently, the working capital turnover ratio, calculated from these figures, reveals a pattern of increasing negativity.

Working Capital

Working capital is reported as negative throughout the period, ranging from -3,666 million in 2021 to -8,913 million in 2025. This indicates that current liabilities consistently exceed current assets. The magnitude of the negative working capital increased each year, with a notable jump between 2021 and 2022, and again between 2024 and 2025.

Net Revenues

Net revenues increased steadily from 28,720 million in 2021 to 38,537 million in 2025. The growth rate appears relatively consistent year-over-year, suggesting stable revenue generation.

Working Capital Turnover

Given the negative working capital and increasing net revenues, the working capital turnover ratio is negative and becomes increasingly negative over time. While a positive ratio generally indicates efficient use of working capital, a consistently negative ratio suggests that the company is financing its operations with a substantial reliance on liabilities exceeding assets. The increasing negativity implies a growing dependence on this financing structure as revenues increase. Further investigation into the composition of current assets and liabilities is warranted to understand the drivers of this trend.

The combination of negative and worsening working capital turnover alongside revenue growth suggests the company is successfully increasing sales while simultaneously relying more heavily on short-term financing through liabilities. This dynamic requires careful monitoring to assess potential risks related to liquidity and financial flexibility.

The average inventory processing period exhibited fluctuations over the five-year period. While generally remaining within a narrow range, a discernible pattern of increase followed by decrease is observed. Inventory turnover demonstrated a similar, albeit inverse, pattern.

Average Inventory Processing Period

The average inventory processing period initially increased from 57 days in 2021 to 61 days in 2022. This suggests a lengthening in the time required to convert inventory into sales during that year. A slight decrease to 59 days was noted in 2023, but the period then extended to 63 days in 2024, representing the longest processing period within the observed timeframe. Finally, the period contracted to 58 days in 2025. These fluctuations could be attributable to changes in supply chain efficiency, demand patterns, or inventory management strategies.

Inventory Turnover

Inventory turnover decreased from 6.45 in 2021 to 5.97 in 2022, aligning with the increased inventory processing period. A modest increase to 6.16 was seen in 2023, followed by a further decline to 5.80 in 2024. The ratio then recovered slightly to 6.25 in 2025. This inverse relationship between inventory turnover and the processing period indicates that as the time to sell inventory increases, the number of times inventory is sold and replaced during the year decreases, and vice versa.

The relatively stable, yet fluctuating, nature of these ratios suggests consistent, but not necessarily optimized, inventory management practices. The peak in the average inventory processing period in 2024 warrants further investigation to determine the underlying causes and potential areas for improvement.

The average receivable collection period exhibited an increasing trend from 2021 to 2024, followed by a slight decrease in the most recent year. This indicates a lengthening in the time required to collect payments from customers over the initial period, with a marginal improvement in the latest reporting period.

Average Receivable Collection Period

In 2021, the average receivable collection period stood at 30 days. This figure increased to 36 days in 2022 and continued to rise to 37 days in 2023. The period peaked at 39 days in 2024 before decreasing slightly to 37 days in 2025. This suggests a potential slowdown in customer payment habits or changes in credit terms offered during the 2022-2024 timeframe, with a minor reversal of this trend in the latest year.

Concurrently, the receivables turnover ratio demonstrated a declining trend throughout the analyzed period. This decline in turnover reinforces the observation of a lengthening collection period, as a lower turnover ratio directly corresponds to a longer time to collect receivables.

Receivables Turnover Ratio & Correlation

The receivables turnover ratio decreased from 12.29 in 2021 to 9.41 in 2024, before experiencing a modest increase to 9.87 in 2025. This consistent decline, coupled with the increasing average collection period, suggests a potential need to evaluate credit policies and collection efforts. The slight increase in the turnover ratio in 2025 may indicate the initial success of any implemented improvements, though further monitoring is warranted to confirm a sustained positive trend.

The combined movement of these ratios suggests a potential area for operational improvement. While the 2025 figures show a slight positive shift, the overall trend indicates a need for continued attention to managing accounts receivable effectively.

The operating cycle of the company has demonstrated a generally increasing trend over the analyzed period, with some moderation in the most recent year. A closer examination of the components reveals the drivers behind this overall pattern.

Average Inventory Processing Period

The average inventory processing period fluctuated modestly between 57 and 63 days. An initial increase from 57 days in 2021 to 61 days in 2022 was followed by a slight decrease to 59 days in 2023. A further increase to 63 days occurred in 2024, before decreasing to 58 days in 2025. This suggests potential variability in inventory management efficiency, though the changes remain within a relatively narrow range.

Average Receivable Collection Period

The average receivable collection period exhibited a consistent upward trend from 30 days in 2021 to 39 days in 2024. This indicates a lengthening of the time required to collect payments from customers. However, a slight decrease to 37 days was observed in 2025, potentially signaling a stabilization or minor improvement in collection efficiency.

Operating Cycle

The operating cycle, calculated as the sum of the average inventory processing period and the average receivable collection period, increased from 87 days in 2021 to a peak of 102 days in 2024. This lengthening cycle suggests that, overall, it took longer to convert investments in inventory and receivables into cash. The decrease to 95 days in 2025 indicates a partial reversal of this trend, likely influenced by the slight improvements observed in both inventory processing and receivable collection during that year. The primary driver of the overall increase in the operating cycle appears to be the lengthening receivable collection period.

In summary, while the inventory processing period remained relatively stable, the increasing receivable collection period contributed significantly to the expansion of the operating cycle between 2021 and 2024. The modest improvements in both components during 2025 offer a potential indication of stabilizing operating efficiency.

The average payables payment period exhibited some fluctuation over the five-year period. While generally remaining within a relatively narrow range, observable shifts indicate potential changes in the company’s supplier relationships and working capital management practices.

Payables Turnover

Payables turnover remained relatively stable between 2021 and 2023, at 2.60, 2.67, and 2.67 respectively. A decrease to 2.35 was noted in 2024, suggesting a slower rate of paying suppliers. The ratio rebounded to 2.72 in 2025, indicating a return towards the earlier, more frequent payment pattern.

Average Payables Payment Period

The average payables payment period decreased from 141 days in 2021 to 137 days in 2022, and further to 136 days in 2023. This suggests the company was, on average, settling its obligations to suppliers more quickly during this timeframe. A notable increase to 155 days occurred in 2024, coinciding with the decrease in payables turnover, and indicating a lengthening of the time taken to pay suppliers. The period then decreased to 134 days in 2025, aligning with the increased payables turnover and suggesting a return to a faster payment cycle.

Overall Trend

The observed pattern suggests a period of efficient payables management from 2021 to 2023, followed by a temporary slowdown in payments during 2024. The return to shorter payment terms in 2025 implies a potential correction or adjustment in payment strategies. The fluctuations warrant further investigation to determine the underlying causes, such as changes in supplier terms, cash flow management, or strategic sourcing initiatives.

The short-term operating activity ratios indicate a generally stable, yet fluctuating, cash conversion cycle over the five-year period. Individual components contributing to this cycle – inventory processing, receivable collection, and payable payment – exhibit distinct trends.

Average Inventory Processing Period

The average inventory processing period experienced a slight increase from 57 days in 2021 to 61 days in 2022. It then decreased to 59 days in 2023 before rising again to 63 days in 2024. The most recent year, 2025, shows a decrease to 58 days. This suggests some variability in the efficiency of inventory management, but remains relatively consistent overall.

Average Receivable Collection Period

The average receivable collection period demonstrates a consistent upward trend from 30 days in 2021 to 39 days in 2024. However, it decreased slightly to 37 days in 2025. This indicates a lengthening of the time required to collect payments from customers, potentially suggesting a shift in credit terms or collection efficiency, followed by a minor improvement in the latest year.

Average Payables Payment Period

The average payables payment period fluctuated over the period. It decreased from 141 days in 2021 to 137 days in 2022 and remained at 136 days in 2023. A notable increase to 155 days occurred in 2024, followed by a decrease to 134 days in 2025. This suggests changes in supplier credit terms or payment strategies, with a recent return towards shorter payment durations.

Cash Conversion Cycle

The cash conversion cycle remained negative throughout the period, ranging from -54 days in 2021 to -40 days in 2022 and 2023. It then decreased to -53 days in 2024 before improving to -39 days in 2025. A negative cycle indicates that the company generally receives cash from customers before it needs to pay its suppliers. The trend towards a less negative number in 2024 and 2025 suggests a slight decrease in this advantage, potentially due to the lengthening receivable collection period and the increased payable payment period in 2024.

Overall, the company maintains a strong liquidity position as evidenced by the consistently negative cash conversion cycle. However, the observed trends in individual components warrant continued monitoring to ensure optimal working capital management.