NVIDIA Corp. (NASDAQ:NVDA)

The financial ratios reflect dynamic changes in the company's operational efficiency over the six-year period. Analyzing these ratios offers insight into inventory management, receivables and payables efficiency, working capital utilization, and overall cash flow cycle.

Inventory Turnover

The inventory turnover ratio declined from 4.24 in 2020 to a low of 2.25 in 2023, indicating slower inventory movement and potential overstocking at that point. It showed moderate recovery in subsequent years, reaching 3.24 in 2025, yet remaining below the 2020 level. This suggests some improvement in inventory management but continued cautiousness.

Receivables Turnover

Receivables turnover remained relatively stable, with minor fluctuations. It started at 6.59 in 2020, peaked at 7.05 in 2023, and then declined to 5.66 by 2025. The general range around 6 implies consistent but slightly variable efficiency in collecting receivables, with a slight easing in collection speed towards the end.

Payables Turnover

Payables turnover exhibited considerable variation, starting at 6.04 in 2020, decreasing through 2021-2022 to around 5.23-5.29, then surging sharply to 9.74 in 2023 before declining again to 5.17 in 2025. The spike in 2023 likely indicates much faster payment to suppliers that year, potentially impacting cash outflows, followed by a return to more moderate payment pacing.

Working Capital Turnover

A steady upward trend is evident in working capital turnover, increasing from 0.92 in 2020 to 2.10 in 2025. This improvement suggests progressively enhanced efficiency in using working capital to generate revenues over the period.

Average Inventory Processing Period

This metric aligns inversely with inventory turnover, rising from 86 days in 2020 to a peak of 162 days in 2023, reflecting slower inventory turnover and longer holding periods during this time. It then improved to 113 days in 2025, indicative of better inventory management but still elevated compared to initial levels.

Average Receivable Collection Period

The collection period fluctuated between 52 and 65 days, with no consistent trend. Shorter periods in 2021 and 2023 indicate efficient receivables collection during those years, but increases to 63 and later 65 days in 2022 and 2025 suggest some moderation in collection speed.

Operating Cycle

The operating cycle lengthened significantly from 141 days in 2020 to a peak of 214 days in 2023, largely driven by increased inventory processing and fluctuating receivables collection periods. This lengthening implies slower conversion of inventory and receivables into cash. It then contracted slightly to 178 days by 2025, showing some operational improvement.

Average Payables Payment Period

The payment period trend is irregular, starting at 60 days in 2020, rising to around 70 days in 2021-2022, then dropping sharply to 37 days in 2023, before increasing again to 71 days by 2025. These swings reflect varying approaches to payment timing, with the 2023 dip indicating faster payments that year and a return to longer payment terms thereafter.

Cash Conversion Cycle

The cash conversion cycle increased notably from 81 days in 2020 to 177 days in 2023, highlighting a significant extension in the time to convert investments in inventory and receivables into cash. Subsequent improvements reduced it to 107 days in 2025, yet it remained elevated compared to earlier years, indicating ongoing challenges in cash flow efficiency.

Overall, the data reveals periods of operational stretching around 2022-2023, characterized by slower inventory turnover, longer processing and collection periods, and a longer cash conversion cycle. Since then, the indicators have shown improvement, suggesting efforts to enhance working capital utilization and operational efficiency are underway, though some metrics have not yet returned to earlier levels.

Cost of Revenue

The cost of revenue has experienced a consistent and significant upward trend over the analyzed periods. Starting from US$ 4,150 million in January 2020, there was a notable increase each year, reaching US$ 32,639 million by January 2025. This reflects more than a sevenfold increase over five years, indicating substantial growth in the scale of operations or increased costs associated with revenue generation.

Inventories

Inventories also displayed a clear growth pattern, though somewhat less steep compared to cost of revenue. Beginning at US$ 979 million in January 2020, inventory levels rose steadily to US$ 10,080 million by January 2025. The rise was particularly marked from January 2022 onwards, suggesting accumulation of stock possibly to meet rising demand or due to changes in inventory management strategy.

Inventory Turnover Ratio

The inventory turnover ratio exhibited variability across the timeframe. Initially, it declined from 4.24 in January 2020 to 3.44 in January 2021, slightly increasing to 3.62 in January 2022 before dropping to its lowest point of 2.25 in January 2023. Subsequently, there was a gradual improvement to 3.15 in January 2024 and 3.24 in January 2025. The overall trend indicates reduced efficiency in inventory utilization around 2023, with some recovery in the following years. This fluctuation could reflect operational challenges or changes in market demand affecting how quickly inventory is sold.

Over the analyzed periods, revenue exhibited a pronounced upward trend, increasing significantly from approximately $10.9 billion in January 2020 to over $130 billion by January 2025. This represents a substantial acceleration in revenue growth over the six-year span, with particularly steep increases noted between January 2023 and January 2025.

Accounts receivable, net, showed a similar pattern of increase, rising from around $1.7 billion in January 2020 to over $23 billion by January 2025. Although the general direction aligns with revenue growth, the balance of accounts receivable increased at a less consistent rate, with some periods, such as between January 2022 and January 2023, showing a decrease.

The receivables turnover ratio, which measures how efficiently the company collects its receivables, fluctuated during the period. It began at 6.59 in January 2020, showed minor variations, and declined to 5.66 by January 2025. This decline indicates a modest reduction in collection efficiency or an increase in the average collection period over time. Notably, the highest turnover ratio occurred in January 2023 at 7.05, suggesting a peak in collection efficiency during that year.

Revenue

Showed strong and accelerating growth, reaching nearly 12 times the initial value by 2025.

Accounts Receivable, Net

Also increased substantially, reflecting higher credit sales or extended payment terms but with some variability in growth rate.

Receivables Turnover

Experienced fluctuations with an overall decline from 6.59 to 5.66, implying a slower collection of receivables relative to sales over time.

Cost of Revenue

The cost of revenue exhibits a consistent upward trend over the analyzed periods. Starting at $4,150 million in early 2020, it increased to $6,279 million in early 2021 and continued to rise steadily through 2022 and 2023, reaching $16,621 million by early 2024. Notably, there was a significant jump to $32,639 million in early 2025, indicating a rapid increase in the expense associated with generating revenue.

Accounts Payable

Accounts payable also show an overall increasing pattern, although with less consistency than the cost of revenue. The value rose from $687 million in early 2020 to $1,201 million in early 2021, then to $1,783 million by early 2022. A decline occurred in early 2023 to $1,193 million, followed by a substantial increase to $2,699 million in early 2024 and then a large jump to $6,310 million by early 2025. This pattern suggests fluctuating payment obligations with a notable escalation in recent periods.

Payables Turnover Ratio

The payables turnover ratio fluctuates over the years, reflecting changes in how quickly the company settles its accounts payable. It decreased from 6.04 in early 2020 to around 5.23-5.29 in 2021 and 2022, indicating a slower turnover. There was a notable increase to 9.74 in early 2023, representing a faster payment cycle during that period. However, the ratio again declined to 6.16 in early 2024 and further to 5.17 in early 2025, pointing to a general trend toward slower payments relative to the earlier peak in 2023.

Overall Insights

The data suggests a strong growth in operational scale, as reflected by the increasing cost of revenue. Concurrently, accounts payable grew substantially but with variability, indicating changes in working capital management or supplier credit terms. The payables turnover ratio indicates periods of faster payments alternating with slower payment intervals, with the peak turnover occurring in early 2023 followed by a slowdown in subsequent years. These trends may highlight shifts in liquidity management, supplier relations, or operational demands.

Working Capital

The working capital exhibits a general upward trend over the observed periods. It increased modestly from 11,906 million USD in early 2020 to 12,130 million USD in early 2021. A significant jump occurred in early 2022, reaching 24,494 million USD, almost doubling the previous year. The figure then declined to 16,510 million USD in early 2023 but subsequently surged in the two following years, peaking at 62,079 million USD by early 2025. This fluctuation followed by a steep increase suggests changing operational liquidity, potentially driven by growing business scale or changes in current assets and liabilities management.

Revenue

Revenue shows a robust and substantial increase throughout the timeline. Starting at 10,918 million USD in early 2020, revenue rose steadily to 16,675 million USD in early 2021, then experienced a marked jump to 26,914 million USD in early 2022. Revenue stabilized between early 2022 and early 2023, with a slight rise to 26,974 million USD. From early 2023 onwards, revenue sharply escalated to 60,922 million USD and then more than doubled to reach 130,497 million USD by early 2025. This considerable growth signifies strong market demand, expanded product offerings, or successful strategic initiatives.

Working Capital Turnover

The working capital turnover ratio, which indicates how efficiently working capital is used to generate revenue, improved over the entire period. Starting at 0.92 in early 2020, it increased to 1.37 in early 2021, then decreased to 1.1 in early 2022. Following this dip, the ratio progressively increased to 1.63 in early 2023, 1.81 in early 2024, and reached 2.1 in early 2025. The rising ratio in recent years, especially despite the growing working capital, reflects enhanced efficiency in utilizing working capital to drive revenue growth.

Overall Insights

The data indicates strong financial growth characterized by significant increases in both working capital and revenue. The large increase in working capital particularly in the latter years coincides with a dramatic rise in revenue, which is supported by improvement in working capital turnover ratio, pointing to more effective use of operational resources. The temporary decline in working capital in early 2023, along with the dip in turnover, suggests a short-term operational adjustment or investment phase before resuming accelerated growth. The trends imply an expanding operational scale and improving efficiency in converting working capital into revenue over the long term.

Inventory Turnover

The inventory turnover ratio shows a fluctuating trend over the six-year period. It started at 4.24 in early 2020 and declined to a low of 2.25 in early 2023, indicating a slower rate of inventory being sold or used. However, the ratio partially recovered to 3.24 by early 2025. This pattern suggests that the company experienced challenges in efficiently managing inventory during the middle years but showed signs of improvement in recent periods.

Average Inventory Processing Period

The average inventory processing period, measured in days, correspondingly increased from 86 days in early 2020 to a peak of 162 days in early 2023. This indicates that inventory was held for longer periods before being sold or used, reflecting slower inventory turnover. Subsequently, the period decreased to 113 days by early 2025, signaling a reduction in inventory holding time. The inverse relationship observed between inventory turnover and processing period aligns with typical operational dynamics, where longer processing time results in lower turnover ratios.

Overall Insights

The data reflects a phase of reduced inventory efficiency between 2021 and 2023, possibly due to market demand fluctuations, supply chain disruptions, or changes in inventory management strategies. While inventory turnover decreased and processing periods lengthened during this interval, recent improvements suggest recovery or adjustments have been made to enhance inventory management effectiveness.

The analysis of the available financial data indicates variability in the receivables turnover and corresponding average receivable collection period over the six-year span.

Receivables Turnover Ratio

The receivables turnover ratio fluctuated during the period under review. It began at 6.59 in 2020, saw a slight increase to 6.86 in 2021, followed by a decline to 5.79 in 2022. Subsequently, it increased again to 7.05 in 2023, but then experienced a downward trend to 6.09 in 2024 and further decreased to 5.66 in 2025. This pattern suggests variable effectiveness in managing receivables, with periods of improved turnover interspersed with periods of deterioration.

Average Receivable Collection Period

The average collection period inversely reflects the receivables turnover trends. It started at 55 days in 2020 and slightly improved to 53 days in 2021. However, it lengthened to 63 days in 2022, indicating slower collection. This was followed by a shortening to 52 days in 2023, suggesting improved efficiency. Afterward, it increased again to 60 days in 2024 and reached the highest level of 65 days in 2025, which points to a longer time to collect receivables over the recent years.

Overall, the data reveals cyclical performance in accounts receivable management, with periods of both enhanced and reduced efficiency. The most recent years showcase a trend toward a slower collection cycle and lower turnover, which may warrant further investigation to understand underlying causes and potential impacts on cash flow and working capital management.

Inventory Processing Period

The average inventory processing period displayed an increasing trend from 86 days in early 2020 to a peak of 162 days in early 2023, indicating that inventory was held longer over time. This was followed by a reduction to 116 days in early 2024 and a slight decrease to 113 days by early 2025, suggesting some improvements in inventory turnover efficiency in the latter years.

Receivable Collection Period

The average receivable collection period experienced fluctuations throughout the analyzed period. It started at 55 days in early 2020, decreased slightly to 53 days by early 2021, then increased to 63 days in early 2022. This was followed by a decrease to 52 days in early 2023, then rose again to 60 days and 65 days in the subsequent two years. These variations point to inconsistency in the collection efficiency, with periods of both improvement and deterioration.

Operating Cycle

The operating cycle, which sums the inventory processing and receivable collection periods, rose steadily from 141 days in early 2020 to a high of 214 days in early 2023. This substantial increase suggests a lengthening of the overall cash conversion cycle, potentially impacting liquidity. The operating cycle then declined to 176 days by early 2024 and stabilized around 178 days in early 2025, indicating some recovery but remaining elevated relative to the initial period.

Payables Turnover

The payables turnover ratio shows fluctuations over the observed periods. It started at 6.04 in early 2020, then decreased to around 5.23–5.29 in 2021 and 2022, indicating a slower rate of payment to suppliers. A significant spike occurred in early 2023, reaching 9.74, suggesting a much faster payment cycle during that period. However, the ratio then declined to 6.16 and further to 5.17 by early 2025, moving closer to the levels seen in 2021 and 2022.

Average Payables Payment Period

This metric, representing the average number of days taken to pay suppliers, mirrors the inverse trend of the payables turnover ratio. Beginning at 60 days in 2020, it extended to around 69–70 days in 2021 and 2022, suggesting a lengthened payment cycle. In 2023, the period sharply shortened to 37 days, implying faster payments to creditors during that year. Subsequently, the payment period increased again, reaching 59 days in 2024 and 71 days in early 2025, indicating a return to longer payment timelines similar to earlier years.

Overall Observations

The data reveal a notable deviation in payables management during 2023, characterized by accelerated payments as evidenced by the sharp rise in payables turnover ratio and corresponding drop in payment period. Before and after this outlier year, the payment trends suggest a generally longer payment cycle, closer to 60–70 days on average. This pattern indicates some strategic or operational adjustment in managing payables during the 2023 period, followed by a gradual return to historical norms in subsequent years.

Average inventory processing period

The average inventory processing period exhibited fluctuations over the examined years. Starting at 86 days in 2020, it increased substantially to 106 days in 2021. It then slightly decreased to 101 days in 2022 before experiencing a significant spike to 162 days in 2023, indicating slower inventory turnover during that year. Subsequent years showed some improvement, with the period reducing to 116 days in 2024 and slightly further to 113 days in 2025, though remaining elevated compared to the initial years.

Average receivable collection period

This period demonstrated variability without a clear directional trend. It started at 55 days in 2020, decreased marginally to 53 days in 2021, then rose to 63 days in 2022. In 2023, it declined to 52 days, indicating quicker collection, but increased again to 60 days in 2024 and further to 65 days in 2025. These fluctuations suggest inconsistent efficiency in receivables management over time.

Average payables payment period

The payment period showed notable variability as well. From 60 days in 2020, it rose to 70 days in 2021, maintaining a similar level at 69 days in 2022. A sharp decline occurred in 2023, dropping to 37 days, which could suggest accelerating payments to suppliers. However, this was followed by increases to 59 days in 2024 and 71 days in 2025, indicating a return to longer payment terms.

Cash conversion cycle

The cash conversion cycle, which measures overall liquidity efficiency, increased from 81 days in 2020 to 89 days in 2021, then to 95 days in 2022. A marked increase occurred in 2023, with the cycle extending to 177 days, reflecting reduced liquidity and slower cash flow recovery. Improvement was observed in the following two years, with cycles shortening to 117 days in 2024 and 107 days in 2025, yet still considerably higher than the earlier periods.