NVIDIA Corp. (NASDAQ:NVDA)

An examination of short-term operating activity ratios reveals fluctuating performance over the analyzed period. Generally, the initial period demonstrates relatively stable metrics, followed by increased volatility and, in some cases, a declining trend before a partial recovery in later periods. Several key ratios exhibit notable shifts, suggesting evolving operational efficiencies and management of working capital.

Inventory Turnover

Inventory turnover demonstrates a gradual increase from 3.63 to 3.87 in the initial quarters, then begins a consistent decline, reaching a low of 2.25. A slight recovery is observed, peaking at 3.92 before decreasing again to 2.92 and stabilizing around 3. The decreasing trend suggests a potential buildup of inventory relative to sales, potentially indicating slowing demand or inefficiencies in inventory management. The recent fluctuations could be attributed to supply chain dynamics or strategic inventory adjustments.

Receivables Turnover

Receivables turnover initially declines from 6.37 to 5.79, then experiences a significant increase to 7.05 before decreasing substantially to 4.63. Subsequent periods show some recovery, with values fluctuating between 5.40 and 6.81, and ending at 5.61. This pattern suggests changes in credit policies, collection efforts, or the composition of sales. The initial decline and subsequent increase followed by another decline indicate inconsistent performance in converting receivables into cash.

Payables Turnover

Payables turnover exhibits moderate fluctuations, decreasing from 5.94 to 5.19, then increasing sharply to 9.74 before declining again to 5.11. The ratio then shows some recovery, ending at 6.37. This suggests changes in supplier credit terms or the company’s payment practices. The significant increase in 2022 and 2023 may indicate a strategic effort to extend payment terms, potentially improving short-term cash flow, but the subsequent decline suggests a return to more typical practices.

Working Capital Turnover

Working capital turnover generally increases over the period, rising from 1.36 to 2.31. This indicates improved efficiency in utilizing working capital to generate sales. The increase suggests better management of current assets and liabilities, leading to a more effective use of resources. The consistent upward trend is a positive indicator of operational performance.

Days-Based Metrics

The average inventory processing period lengthened from 100 to 135 days before decreasing to 125 days. The average receivable collection period initially increased to 67 days, then decreased to 54 days before increasing again to 65 days. The average payables payment period decreased from 61 to 37 days before increasing to 57 days. The operating cycle lengthened significantly, peaking at 214 days, before decreasing to 190 days. The cash conversion cycle followed a similar pattern, increasing to 177 days before decreasing to 133 days. These fluctuations suggest dynamic shifts in the timing of inventory management, credit collection, and supplier payments, impacting the overall efficiency of the operating cycle.

In summary, the analyzed ratios demonstrate a period of operational adjustments and fluctuating performance. While working capital turnover shows a positive trend, the inconsistencies in inventory, receivables, and payables turnover, along with their corresponding days-based metrics, suggest a need for continued monitoring and potential refinement of working capital management strategies.

The inventory turnover ratio exhibits fluctuations over the observed period, generally demonstrating a declining trend followed by periods of recovery. Initial values indicate a relatively stable turnover, which then decreases before showing some improvement, and ultimately experiencing volatility in later periods.

Initial Period (May 2, 2021 – Oct 31, 2021)

The inventory turnover ratio begins at 3.63 and gradually increases to 3.87. This suggests a slight improvement in the efficiency of inventory management during this timeframe, with inventories being sold and replenished at a modestly faster rate.

Subsequent Decline (Jan 30, 2022 – Jan 29, 2023)

A consistent downward trend is observed, with the ratio declining from 3.62 to 2.25. This indicates a slowing in the rate at which inventory is sold, potentially due to factors such as increased inventory levels, decreased demand, or issues in the sales process. The cost of revenue also shows fluctuations during this period, but does not fully explain the decline in turnover.

Recovery and Volatility (Apr 30, 2023 – Jan 26, 2025)

The ratio experiences a recovery, rising to 3.92 by April 27, 2025, but is interspersed with periods of decline. This suggests some success in improving inventory management, but also highlights ongoing instability. The significant increase in cost of revenue during this period, particularly in July 2023 and beyond, coincides with fluctuations in the inventory turnover ratio.

Recent Period (Apr 27, 2025 – Jan 25, 2026)

The most recent observations show a decrease in the inventory turnover ratio to 2.92. This suggests a renewed slowdown in inventory sales relative to average inventory levels. The inventories themselves have increased substantially during this period, potentially contributing to the lower turnover.

Overall, the inventory turnover ratio demonstrates a complex pattern. While there are periods of improvement, the general trend suggests increasing challenges in efficiently managing inventory, particularly in the most recent quarters. Further investigation into the factors driving these fluctuations, such as changes in demand, supply chain disruptions, or inventory management strategies, would be beneficial.

The receivables turnover ratio exhibits fluctuations over the observed period, generally indicating changes in the efficiency with which the company converts its receivables into cash. An initial period of relative stability is followed by a notable shift, then a return towards earlier levels, and finally a period of renewed fluctuation.

Initial Stability & Decline (May 2021 – January 2022)

The receivables turnover ratio begins at 6.37 and demonstrates a slight decline to 5.79 over the first seven quarters. This suggests a modestly decreasing efficiency in collecting receivables during this timeframe. While the changes are not dramatic, the consistent downward movement warrants attention.

Improvement & Subsequent Decline (February 2022 – October 2022)

A significant increase is observed in the ratio, rising to 7.05 by January 2023. This indicates a substantial improvement in the speed of receivables collection. However, this improvement is not sustained, as the ratio declines to 5.40 by October 2022, suggesting a reversal of the positive trend.

Fluctuation & Recent Trends (November 2022 – July 2025)

From January 2023 through July 2025, the receivables turnover ratio experiences considerable volatility. It rises to 6.71 in April 2025, but then decreases to 5.60 in October 2025, and remains at 5.61 in January 2026. This period is characterized by inconsistent performance in managing receivables. The ratio remains within a relatively narrow band, but the lack of a clear trend is notable.

The observed fluctuations in receivables turnover may be linked to changes in credit policies, customer payment behavior, or overall sales volume. Further investigation into these factors would be necessary to determine the underlying causes of these shifts and assess their impact on the company’s financial health.

The accounts payable turnover ratio exhibits fluctuations over the observed period, generally remaining within a range of approximately 4.86 to 9.91. Initial values demonstrate a slight decline from 5.94 in May 2021 to 5.19 in October 2021, followed by relative stability through May 2022 at 5.13. A notable increase is then observed, peaking at 9.74 in January 2023, before decreasing again to 5.99 in April 2023.

Overall Trend

The ratio does not display a consistent upward or downward trend over the entire period. Instead, it appears to oscillate, potentially influenced by changes in purchasing patterns, supplier credit terms, and the volume of cost of revenue. A period of higher turnover is evident from October 2022 through January 2023, followed by a return to lower levels.

Recent Performance (2024-2025)

From January 2024 through July 2025, the ratio shows a moderate increase, moving from 6.16 to 6.50. This suggests a potential improvement in the efficiency of managing accounts payable, or a faster rate of converting purchases into cost of revenue. However, the ratio then declines slightly to 6.37 in January 2026.

Correlation with Cost of Revenue

The accounts payable turnover ratio appears to have some correlation with the cost of revenue. Periods of higher cost of revenue, such as July 2022, July 2023, and April 2025, are often accompanied by lower payables turnover ratios, indicating that the company is taking longer to pay its suppliers as its purchasing activity increases. Conversely, periods of lower cost of revenue, like January 2023, coincide with higher turnover ratios.

The observed fluctuations warrant further investigation to determine the underlying drivers. Factors such as changes in supplier relationships, inventory management practices, and payment terms could all contribute to the variations in the accounts payable turnover ratio.

The working capital turnover ratio exhibits a generally increasing trend over the observed period, though with notable fluctuations. Initially, the ratio demonstrates volatility, decreasing from 1.36 to 1.03, then increasing to 1.09 and 1.10. Subsequent quarters show a more consistent upward trajectory, peaking at 2.34 before experiencing some moderation.

Initial Period (May 2, 2021 – Jan 30, 2022)

The ratio begins at 1.36 and fluctuates within a relatively narrow range, peaking at 1.10. This suggests a moderate efficiency in utilizing working capital to generate revenue during this timeframe. The initial decrease followed by stabilization indicates potential adjustments in working capital management or revenue generation strategies.

Growth Phase (May 1, 2022 – Oct 30, 2022)

A clear upward trend is observed, with the ratio increasing from 1.23 to 1.75. This suggests improved efficiency in converting working capital into sales. The increase could be attributed to enhanced inventory management, more efficient accounts receivable collection, or optimized accounts payable terms.

Stabilization and Further Growth (Jan 29, 2023 – Apr 28, 2024)

The ratio stabilizes around the 1.8 to 2.1 range, indicating sustained efficiency. A further increase to 2.07 and 2.11 is noted, demonstrating continued improvement in working capital utilization. This period suggests a consistent and effective approach to managing short-term assets and liabilities.

Peak and Recent Performance (Jul 28, 2024 – Jan 25, 2026)

The ratio reaches its highest point at 2.34, followed by a slight decrease to 2.10 and then a rebound to 2.31. This suggests a peak in operational efficiency, potentially driven by strong sales growth and effective working capital management. The recent fluctuations indicate a dynamic environment where maintaining high turnover requires ongoing attention.

Overall, the trend in working capital turnover suggests increasing efficiency in utilizing short-term assets and liabilities to generate revenue. While fluctuations exist, the general direction points towards improved operational performance. The most recent values indicate a strong ability to convert working capital into sales, though continued monitoring is warranted to maintain this level of efficiency.

The average inventory processing period exhibited a generally increasing trend over the observed timeframe, though with notable fluctuations. Initially, the period decreased from 100 days to 94 days between May 2021 and October 2021. Subsequently, a sustained increase was observed, peaking at 162 days in January 2023.

Initial Decline (May 2021 - October 2021)

A consistent decrease in the average inventory processing period during this period suggests improved inventory management efficiency. The company was able to convert inventory into sales more quickly. This could be attributed to increased demand, streamlined supply chains, or effective promotional activities.

Prolonged Increase (October 2021 - January 2023)

From October 2021 through January 2023, the average inventory processing period increased steadily, reaching its highest point. This indicates a lengthening of the time required to sell inventory. Potential causes include a slowdown in demand, overstocking of inventory, or disruptions in the supply chain. The increase from 135 days in October 2022 to 162 days in January 2023 is particularly noteworthy.

Subsequent Fluctuations (January 2023 - January 2026)

Following the peak in January 2023, the average inventory processing period demonstrated volatility. A decrease to 93 days was observed by April 2025, followed by increases to 129 days in October 2025 and 125 days in January 2026. This suggests ongoing challenges in maintaining consistent inventory management. The period remained elevated compared to the levels observed in the earlier part of the analyzed timeframe.

Recent Trend (April 2024 - January 2026)

The most recent observations indicate a period of fluctuation, with the average inventory processing period oscillating between 93 and 129 days. This suggests that while some improvements in inventory turnover have been achieved, maintaining optimal levels remains a challenge. The period ended at 125 days, indicating a continued need for monitoring and potential adjustments to inventory strategies.

Overall, the trend suggests a shift from efficient inventory management in the initial period to a more prolonged processing period, with recent fluctuations indicating ongoing instability. Further investigation into the factors driving these changes is recommended.

The average receivable collection period exhibited fluctuations over the observed timeframe. Initially, the period remained relatively stable, followed by a period of increase, and then a return towards earlier levels, with some subsequent volatility.

Initial Stability and Increase (May 2021 – May 2022)

The average receivable collection period began at 57 days in May 2021 and gradually increased to 67 days by May 2022. This suggests a lengthening in the time taken to collect receivables during this period. The increase was incremental, but consistent.

Subsequent Reduction and Volatility (July 2022 – January 2024)

Following the peak of 67 days, the collection period decreased to 52 days by January 2023. However, this decrease was not sustained, with the period fluctuating between 57 and 60 days through April 2024. This indicates a potential improvement in collection efficiency followed by a return to previous levels.

Recent Trends (April 2024 – January 2026)

From April 2024 through January 2026, the average collection period demonstrated continued volatility, ranging from 54 to 65 days. A slight upward trend is observable towards the end of the period, with the collection period concluding at 65 days in both October 2025 and January 2026. This suggests a possible re-emergence of slower collection times.

Overall Observation

The average receivable collection period does not demonstrate a clear, consistent trend. While there were periods of increase and decrease, the metric largely remained within a range of 52 to 68 days throughout the analyzed timeframe. The recent fluctuations warrant continued monitoring to determine if a definitive trend is developing.

The operating cycle, along with its component parts – average inventory processing period and average receivable collection period – exhibits notable fluctuations over the observed timeframe. An overall lengthening of the operating cycle is apparent, punctuated by periods of contraction. The analysis below details these trends.

Average Inventory Processing Period

The average inventory processing period generally increased from 100 days in May 2021 to a peak of 162 days in January 2023. Following this peak, a decline was observed, reaching 102 days in October 2024. However, the period subsequently increased again, reaching 129 days in October 2025 and remaining at 125 days in January 2026. This suggests potential inefficiencies in inventory management, or shifts in inventory strategy, followed by improvements and then a renewed lengthening of the processing time. The fluctuations may also reflect changes in supply chain dynamics or product mix.

Average Receivable Collection Period

The average receivable collection period demonstrated more moderate fluctuations compared to the inventory processing period. It initially rose from 57 days in May 2021 to 67 days in May 2022, then decreased significantly to 52 days in January 2023. A subsequent increase to 79 days was noted in April 2023, followed by a return to levels around 60-65 days for the remainder of the period, concluding at 65 days in January 2026. These changes could be attributed to alterations in credit policies, customer payment behavior, or the composition of sales.

Operating Cycle

The operating cycle mirrored the trends observed in the inventory processing period, as it is the sum of the two components. It increased from 157 days in May 2021 to a high of 214 days in January 2023. A decrease followed, reaching 176 days in January 2024. The cycle then experienced another increase, peaking at 194 days in October 2025, and settling at 190 days in January 2026. The overall upward trend suggests that the company is taking longer to convert its investments in inventory and receivables into cash. The significant peak in early 2023 warrants further investigation to determine the underlying causes.

In summary, the operating cycle has generally lengthened over the analyzed period, driven primarily by increases in the average inventory processing period. While the receivable collection period exhibited some volatility, its impact on the overall operating cycle was less pronounced. The observed fluctuations suggest a dynamic operating environment requiring ongoing monitoring and potential adjustments to inventory and credit management strategies.

The average payables payment period exhibited fluctuations over the observed period, generally trending upward initially before experiencing a notable decrease and subsequent stabilization. A review of the period from May 2021 through January 2022 reveals a gradual increase in the number of days to settle payables, while the period from October 2022 through January 2024 shows a significant decrease, followed by a period of relative stability.

Initial Trend (May 2021 – January 2022)

The average payables payment period increased from 61 days in May 2021 to 71 days in May 2022, peaking at 75 days in July 2022. This suggests a lengthening of the time taken to pay suppliers during this timeframe. This could be attributable to a variety of factors, including negotiating extended payment terms with suppliers, or a shift in procurement strategy.

Significant Decrease (October 2022 – January 2024)

A substantial decrease in the average payables payment period is observed from 45 days in October 2022 to 37 days in January 2023, remaining at 37 days in April 2023. This indicates a marked improvement in payment efficiency, potentially resulting from proactive cash management, streamlined payment processes, or supplier incentives for faster payment. The period then increased to 61 days in July 2023, before decreasing again to 50 days in April 2024.

Stabilization and Recent Fluctuations (April 2023 – January 2026)

Following the decrease, the average payables payment period generally stabilized, fluctuating between 50 and 71 days. From April 2024 through January 2026, the period shows continued variability, ranging from 56 to 71 days. This suggests a more consistent, though not entirely fixed, approach to managing payables. The most recent value, 57 days in January 2026, is comparable to the values observed in the latter half of 2023 and the first half of 2024.

Overall, the observed pattern suggests a dynamic approach to payables management. The initial lengthening of the payment period was followed by a significant improvement in payment efficiency, and then a period of relative stability with some fluctuation. Further investigation into the underlying causes of these shifts would be beneficial for a more comprehensive understanding.

The operating activity ratios indicate fluctuations in the company’s short-term asset management and liquidity over the analyzed period. The cash conversion cycle, a key metric reflecting the time it takes to convert investments in inventory and other resources into cash flows from sales, exhibits considerable variability.

Average Inventory Processing Period

The average inventory processing period generally increased from 100 days in May 2021 to a peak of 162 days in January 2023. Following this peak, a decreasing trend was observed, reaching 93 days in April 2025, before increasing again to 129 days in October 2025 and stabilizing at 125 days in January 2026. This suggests potential inefficiencies in inventory management during the period of increase, followed by improvements, and then a potential return to longer processing times.

Average Receivable Collection Period

The average receivable collection period showed a moderate increase from 57 days in May 2021 to 67 days in May 2022. It then decreased significantly to 52 days in January 2023, before fluctuating between 54 and 79 days over the subsequent periods. The most recent values, 65 days in both October 2025 and January 2026, indicate a stabilization around this level. This suggests a generally efficient collection process, with some periods of slower collection followed by improvements.

Average Payables Payment Period

The average payables payment period increased from 61 days in May 2021 to 75 days in July 2022, then decreased substantially to 37 days in January 2023. It subsequently increased again, reaching 71 days in October 2024, before decreasing to 57 days in January 2026. This indicates a dynamic relationship with suppliers, potentially leveraging payment terms to manage cash flow, but also demonstrating periods of quicker payment processing.

Cash Conversion Cycle

The cash conversion cycle initially decreased from 96 days in May 2021 to 83 days in October 2021, then increased significantly, peaking at 177 days in January 2023. Following this peak, the cycle generally decreased, reaching a low of 87 days in April 2025. It then increased again to 138 days in October 2025 and remained at 133 days in January 2026. The overall trend suggests a lengthening of the cash conversion cycle, particularly during 2022 and early 2023, followed by some improvement, and then a recent increase. This lengthening cycle could indicate a need to optimize working capital management, potentially by reducing inventory holding periods or accelerating receivable collections.

The interplay between these ratios suggests a complex pattern of working capital management. The significant increase in the cash conversion cycle in early 2023 appears to be driven by a combination of increased inventory processing times and a temporary decrease in the payables payment period. The subsequent improvements and recent increases warrant continued monitoring to identify the underlying causes and potential areas for optimization.