NXP Semiconductors N.V. (NASDAQ:NXPI)

Inventory Turnover

The inventory turnover ratio exhibited a slight decline from 3.75 in 2017 to 3.56 in 2018, remaining relatively stable in 2019 at 3.57. Thereafter, it increased noticeably to 4.25 in 2020 before a marginal decrease to 4.2 in 2021. This indicates improved efficiency in inventory management in the later years, particularly in 2020.

Receivables Turnover

Receivables turnover showed a consistent upward trend from 10.53 in 2017 to a peak of 13.31 in 2019, suggesting improved collection of receivables. However, it declined to 11.26 in 2020 and slightly recovered to 11.99 in 2021, indicating some variability in receivables management post-2019.

Payables Turnover

The payables turnover ratio increased from 4.05 in 2017 to a high of 4.56 in 2018, then decreased gradually over the subsequent years to 3.99 by 2021. This decline suggests the company took longer to settle its payables in recent years.

Working Capital Turnover

The working capital turnover ratio showed significant growth between 2017 and 2019, rising from 2.78 to 6.01, indicating more efficient use of working capital initially. However, it dropped markedly to 3.73 in 2020, with a slight improvement to 3.99 in 2021, reflecting some challenges in working capital utilization during this period.

Average Inventory Processing Period

There was an increase in the average inventory processing period from 97 days in 2017 to 102 days in both 2018 and 2019, implying slower inventory turnover. This was followed by a significant reduction to 86 days in 2020 and a small rise to 87 days in 2021, indicating improved inventory management in the later years.

Average Receivable Collection Period

The average receivable collection period declined steadily from 35 days in 2017 to 27 days in 2019, showing enhanced collection efficiency. A slight increase to 32 days occurred in 2020, followed by a reduction to 30 days in 2021, suggesting some variability yet relatively efficient receivables collection overall.

Operating Cycle

The operating cycle remained fairly stable over the years, fluctuating slightly between 129 and 133 days from 2017 through 2019, then decreased to 118 days in 2020 and further to 117 days in 2021. This reflects an overall improvement in the time taken to convert inventory and receivables into cash.

Average Payables Payment Period

The average payables payment period shortened from 90 days in 2017 to 80 days in 2018, then slightly increased to 81 days in 2019 and further to 83 days in 2020. In 2021, there was a noticeable elongation to 91 days, indicating a longer payment timeframe to suppliers in the most recent year.

Cash Conversion Cycle

The cash conversion cycle initially increased from 42 days in 2017 to 53 days in 2018, then decreased to 48 days in 2019. It saw a substantial reduction to 35 days in 2020 and further improvement to 26 days in 2021, suggesting significant enhancement in overall working capital efficiency and liquidity management recently.

Cost of Revenue

The cost of revenue exhibited a fluctuating pattern over the observed years. It decreased slightly from 4637 million USD in 2017 to 4556 million USD in 2018, followed by a more notable reduction to 4259 million USD in 2019. However, a reversal occurred thereafter, with the cost increasing to 4377 million USD in 2020 and further to 4996 million USD by the end of 2021. This upward trend in the final two years could indicate rising production or procurement expenses.

Inventories, Net

Net inventories showed marginal variability across the period. An increase was noted from 1236 million USD in 2017 to 1279 million USD in 2018, followed by a decrease to 1192 million USD in 2019 and a more significant reduction to 1030 million USD in 2020. In 2021, inventories rose again to 1189 million USD, approaching earlier levels. These changes suggest a dynamic management of inventory levels, possibly in response to supply chain or demand shifts.

Inventory Turnover Ratio

The inventory turnover ratio reflects the rate at which inventories were sold and replaced. It decreased from 3.75 in 2017 to 3.56 in 2018, stabilizing slightly to 3.57 in 2019. The ratio then increased substantially in 2020 to 4.25, before marginally declining to 4.2 in 2021. The rise from 2019 to 2020 indicates improved efficiency in inventory management, with faster turnover, though the slight decline in 2021 suggests a minor reduction in this efficiency.

The annual financial data reveals several notable trends in the company's revenue, accounts receivables, and receivables turnover over the five-year period ending December 31, 2021.

Revenue

Revenue exhibited moderate fluctuations throughout the period. It increased slightly from 9,256 million US dollars in 2017 to 9,407 million US dollars in 2018, followed by a decline to 8,877 million US dollars in 2019 and a further decrease to 8,612 million US dollars in 2020. However, a significant recovery occurred in 2021, with revenue rising sharply to 11,063 million US dollars, marking the highest value observed in the timeframe.

Accounts Receivables, Net

Net accounts receivables generally declined between 2017 and 2019, decreasing from 879 million US dollars in 2017 to 667 million US dollars in 2019. This downturn was followed by an increase in both 2020 and 2021, reaching 765 million US dollars and 923 million US dollars, respectively. Despite this recovery, the 2021 balance remained only slightly above the 2017 level.

Receivables Turnover

The receivables turnover ratio experienced an overall upward trend from 10.53 in 2017 to a peak of 13.31 in 2019, indicating improved efficiency in collecting receivables during this period. However, the ratio declined notably to 11.26 in 2020 before recovering somewhat to 11.99 in 2021. The variation in turnover ratios suggests changes in the company's collection dynamics, with efficiency peaking in 2019 and normalizing thereafter.

In summary, the company's revenue showed resilience with a pronounced rebound in 2021 following declines in previous years. The fluctuations in net accounts receivables, coupled with the changing receivables turnover ratio, indicate variable collection efficiency and possibly shifts in credit policies or customer payment patterns over the years analyzed.

Cost of Revenue

The cost of revenue exhibited a general downward trend from 2017 to 2019, decreasing from 4,637 million US dollars in 2017 to 4,259 million US dollars in 2019. This was followed by a slight increase in 2020, reaching 4,377 million US dollars, and a more notable rise in 2021 to 4,996 million US dollars. The initial reduction may indicate efforts to control production or direct costs, but the increase in the latter years suggests growth in operational activities or higher costs incurred.

Accounts Payable

Accounts payable showed a declining pattern from 1,146 million US dollars in 2017 to 944 million in 2019. After 2019, the liability increased, reaching 991 million in 2020 and further climbing to 1,252 million in 2021. This rise in payables in the final years could point to extended credit terms from suppliers or increased purchases on credit, aligning with the rising cost of revenue.

Payables Turnover Ratio

The payables turnover ratio fluctuated slightly but demonstrated an overall decreasing trend over the period. It increased from 4.05 in 2017 to a peak of 4.56 in 2018, then decreased gradually to 4.42 in 2020, and further declined to 3.99 in 2021. This reduction indicates a slower rate of payment to suppliers relative to the cost of goods sold, which may be consistent with the rise in accounts payable and potentially a strategic choice to optimize cash flow.

Working Capital

The working capital exhibited a fluctuating trend over the observed periods. It decreased from 3,326 million US dollars at the end of 2017 to 1,476 million US dollars in 2019, indicating a significant reduction in liquid assets available for short-term obligations. However, it subsequently increased to 2,776 million US dollars by the end of 2021, suggesting an improved liquidity position towards the later years.

Revenue

Revenue demonstrated minor fluctuations initially, with a modest increase from 9,256 million US dollars in 2017 to 9,407 million US dollars in 2018, followed by a decline to 8,612 million US dollars in 2020. Notably, there was a substantial rebound in 2021, where revenue increased markedly to 11,063 million US dollars, indicating strong sales growth in the final year of the dataset.

Working Capital Turnover Ratio

The working capital turnover ratio showed an increasing trend from 2.78 in 2017 to a peak of 6.01 in 2019, implying improved efficiency in utilizing working capital to generate revenue during this period. However, after 2019, the ratio declined to 3.99 by 2021, reflecting a decrease in turnover efficiency. Despite this decline, the ratio in 2021 remained higher than the initial 2017 value, pointing to a generally better working capital management across the full period despite some volatility.

Insights

The overall analysis indicates that despite a reduction and subsequent recovery in working capital, the company achieved significant revenue growth in the final year. The fluctuation in the working capital turnover ratio suggests variability in operational efficiency, with a peak in 2019 followed by a decrease, possibly linked to changes in business strategy or market conditions. The recovery in working capital combined with increased revenue in 2021 may signal a strengthened financial position and enhanced operational performance.

Inventory Turnover

The inventory turnover ratio exhibits a generally positive trend over the observed period from 2017 to 2021. Starting at 3.75 in 2017, the ratio decreased slightly to 3.56 in 2018 and remained almost stable at 3.57 in 2019. However, a significant improvement is noticeable in 2020 when the ratio increased to 4.25, followed by a minor decrease to 4.2 in 2021. This suggests enhanced efficiency in inventory management, reflecting a faster turnover of inventory in later years compared to the initial period.

Average Inventory Processing Period

The average inventory processing period, expressed in days, largely mirrors the trends seen in the inventory turnover ratio and confirms the improvement in inventory efficiency. The period initially increased from 97 days in 2017 to 102 days in both 2018 and 2019, indicating slower inventory movement during those years. However, starting in 2020, there is a marked reduction to 86 days and a slight increase to 87 days in 2021, which aligns with the increase in inventory turnover. This decrease in the processing period confirms quicker inventory cycles and suggests improvements in supply chain or inventory control practices.

Overall Analysis

The data highlights a phase of less efficient inventory management during 2018 and 2019, with lower turnover ratios and longer processing periods. From 2020 onwards, there is clear evidence of improved inventory handling, with faster turnover and reduced processing times. These changes indicate a strategic shift or operational improvements that allowed for more effective utilization of inventory, potentially contributing positively to the company's working capital management and operational performance.

Receivables Turnover

The receivables turnover ratio exhibited an overall upward trend from 10.53 in 2017 to 11.99 in 2021, peaking at 13.31 in 2019. This indicates an improvement in the efficiency with which receivables were collected over the period, particularly reaching a high in 2019 before declining slightly in 2020 and recovering somewhat in 2021.

Average Receivable Collection Period

The average receivable collection period decreased from 35 days in 2017 to 30 days in 2021, with the shortest period observed in 2019 at 27 days. This trend suggests a general improvement in the speed of collecting receivables, although there was a slight increase in 2020 to 32 days, possibly reflecting challenges during that year.

Summary of Trends

Overall, the data indicate enhanced management of receivables over the five-year span, with increasing turnover ratios and decreasing collection periods. The peak efficiency in 2019 was followed by a minor setback in 2020, after which performance improved again in 2021. These patterns may reflect operational or market influences affecting the collection process during the 2020 period.

Average Inventory Processing Period

The average inventory processing period showed a slight increase from 97 days in 2017 to 102 days in 2018 and remained stable at 102 days in 2019. Subsequently, there was a notable decrease to 86 days in 2020, followed by a slight increase to 87 days in 2021. This indicates an overall reduction in the time taken to process inventory in recent years, especially from 2019 to 2020.

Average Receivable Collection Period

The average receivable collection period exhibited a consistent decline from 35 days in 2017 to 27 days in 2019, suggesting improved efficiency in collecting receivables during this period. However, this trend reversed slightly, with the collection period increasing to 32 days in 2020 before decreasing again to 30 days in 2021. Despite fluctuations, the collection period in 2021 remained lower than the initial value in 2017.

Operating Cycle

The operating cycle demonstrated a gradual shortening over the five-year span. It increased slightly from 132 days in 2017 to 133 days in 2018, then declined consistently to 129 days in 2019, 118 days in 2020, and finally 117 days in 2021. This contraction suggests improvements in the overall efficiency of the operating process, combining both inventory processing and receivables collection.

Overall Insights

The data reveals a general trend of improved operational efficiency from 2017 through 2021. The reduction in the average inventory processing period and the operating cycle are particularly notable, indicating faster turnover and possibly better inventory management. Although the receivable collection period showed some variability, the overall decrease compared to 2017 suggests enhanced credit and collection practices. Together, these trends point towards an increasingly streamlined working capital management process.

Payables Turnover

The payables turnover ratio experienced fluctuations over the analyzed period. Starting at 4.05 in 2017, it increased to a peak of 4.56 in 2018. Subsequently, it showed a slight decline, reaching 4.51 in 2019 and further decreasing to 4.42 in 2020. By the end of 2021, the ratio decreased more markedly to 3.99. This trend suggests a gradual slowdown in the rate at which payables are being paid off, especially in the latter years.

Average Payables Payment Period

The average days taken to settle payables displayed an inverse pattern relative to the payables turnover ratio. It decreased from 90 days in 2017 to a low of 80 days in 2018, indicating faster payment to suppliers during that year. After 2018, the payment period increased slightly to 81 days in 2019 and 83 days in 2020, before rising more sharply to 91 days in 2021. This indicates a tendency towards longer payment terms or slower payments to suppliers in recent periods.

Overall Insights

There is a clear inverse relationship between the payables turnover ratio and the average payment period throughout the years analyzed. The initial improvement in payables turnover in 2018 corresponds with a reduction in payment period, suggesting enhanced efficiency in settling obligations during that time. However, from 2019 onwards, the trends indicate a gradual decline in payment efficiency, with a reduction in turnover ratio accompanied by an increase in payment duration. By 2021, the company appears to be taking longer to pay its suppliers compared to the earlier years, which could affect supplier relations and working capital management.

Average Inventory Processing Period

The average inventory processing period showed a slight upward trend from 97 days in 2017 to 102 days in both 2018 and 2019. Subsequently, it decreased notably to 86 days in 2020 and remained relatively stable at 87 days in 2021. This indicates improved efficiency in inventory management starting in 2020 compared to previous years.

Average Receivable Collection Period

The average receivable collection period generally decreased over the period under review. Beginning at 35 days in 2017, it declined steadily to 27 days by 2019. A slight increase was observed in 2020 to 32 days, followed by a small reduction to 30 days in 2021. The overall pattern suggests improved effectiveness in collecting receivables, despite a minor setback during 2020.

Average Payables Payment Period

The average payables payment period initially decreased from 90 days in 2017 to 80 days in 2018, then remained fairly constant around 81-83 days in 2019 and 2020. In 2021, it increased sharply to 91 days, exceeding the starting value in 2017. This trend reflects a tendency to extend payment terms to suppliers, particularly in the most recent year.

Cash Conversion Cycle

The cash conversion cycle exhibited a declining trend, moving from 42 days in 2017 to 26 days in 2021. There was an increase in 2018 to 53 days, with gradual decreases thereafter: 48 days in 2019, 35 days in 2020, and 26 days in 2021. This downward trajectory indicates enhanced overall operational liquidity and improved working capital management over the analyzed period.