Palo Alto Networks Inc. (NASDAQ:PANW)

The analysis of the provided financial ratios and periods reveals several notable trends in receivables turnover, payables turnover, working capital turnover, and related collection and payment periods.

Receivables Turnover

The receivables turnover ratio exhibits significant fluctuations throughout the periods. Initially, in late 2019 to early 2020, data is missing, but from mid-2020 onwards, the ratio generally ranges between approximately 2.5 and 7.3. Notably, the ratio peaks at 7.32 in early 2024, indicating an increased efficiency in collecting receivables at that time. Conversely, the ratio dips to low points around 2.57 and 2.8 in late 2021 and mid-2023, respectively, suggesting periods of slower receivables collection. Overall, the pattern does not show a consistent upward or downward trend but rather a series of peaks and troughs indicating variable efficiency in receivables management over time.

Payables Turnover

The payables turnover ratio also shows variability, fluctuating roughly between 9.99 and 25.37 during the observed periods. The highest turnover occurs around mid-2020, with values above 20, indicating faster payment to suppliers during that time. After mid-2020, the ratio decreases and oscillates around mid to low teens for several periods, suggesting a slower payment pace. In later periods, particularly from late 2023 through mid-2025, the ratio returns to levels below 20, even reaching values near 10, implying extended payment periods to suppliers in these intervals.

Working Capital Turnover

Data for working capital turnover is sparse and discontinuous. Available values indicate an increasing trend from 1.4 in mid-2020 to 3.52 by late 2020, which suggests improving efficiency in using working capital to generate sales during that interval. However, the absence of data in subsequent periods prevents a more comprehensive temporal analysis.

Average Receivable Collection Period

The average receivable collection period mirrors the fluctuations of receivables turnover with values ranging from approximately 50 to over 140 days. Lower values around 50–70 days coincide with higher receivables turnover ratios, confirming quicker collections. Periods with collection days exceeding 100, such as late 2020 and late 2021, suggest slower receivable collections and potential liquidity implications. The pattern underscores variable effectiveness in accounts receivable management over time.

Average Payables Payment Period

The average payables payment period ranges broadly from roughly 14 to 37 days. Shorter payment periods (around 14–17 days) appear intermittently, particularly in early to mid-2020, indicating faster settlements with suppliers. However, there are consistent intervals where payment periods extend above 25 days and even surpass 30 days in later years, notably from 2023 onwards, pointing to a trend of delayed payments that may affect supplier relationships or working capital management.

In summary, the financial data reveals volatility in the efficiency of managing receivables and payables. Receivables turnover and the associated collection period suggest irregular success in converting credit sales into cash, with some periods indicating delays. Payables turnover and payment period trends similarly show changes in supplier payment behavior, with periods of both swift and delayed payments. The working capital turnover improved notably in mid-2020 but lacks sufficient data for a full evaluation beyond that point. These fluctuations may reflect changing operational conditions, credit policies, or external economic factors impacting the company’s cash flow management over time.

The revenue displays a consistent upward trend over the observed periods, starting from approximately $772 million and reaching about $2.54 billion by the latest quarter. This growth indicates steady expansion in the company's sales or service income, with occasional periods of accelerated increase, notably from mid-2022 onward.

Accounts receivable, net of allowance for credit losses, shows considerable fluctuations across quarters. Initially, the values range from around $499 million to $1.03 billion, with a noticeable spike to over $2.14 billion in mid-2022. Subsequent quarters exhibit significant volatility with steep increases and declines, culminating in a value close to $2.97 billion in the last quarter reported. This pattern suggests variations in billing cycles, collection efficiency, or credit terms extended to customers.

The receivables turnover ratio, which reflects the efficiency of the company in collecting its outstanding receivables, varies substantially throughout the periods. The ratio ranges roughly from 2.57 to 7.32 times per year, indicating inconsistent collection performance. Lower ratios correspond generally to periods with higher accounts receivable balances, implying slower collections, while higher turnover ratios align with lower receivables, implying more rapid cash collection.

Summary of Key Observations

1. Revenue exhibits strong and continuous growth, signaling effective business expansion and possibly increasing market demand.

2. Accounts receivable values are volatile, with sudden increases that may reflect delayed collections or extended payment terms, possibly impacting cash flow.

3. The receivables turnover ratio fluctuates notably, indicating variable efficiency in receivables collection, which may warrant further analysis of credit policies and collection processes.

The cost of revenue exhibits a general upward trajectory over the analyzed periods, indicating increasing expenses associated with generating revenue. Starting from approximately 217.7 million USD in October 2019, this value rises with some fluctuations, reaching a peak close to 679 million USD by October 2024. Notably, there are occasional dips, such as the decline around October 2022 to January 2023, but the long-term trend remains upward.

Accounts payable figures show significant fluctuations throughout the periods. Initially, payables decrease from 74.7 million USD in October 2019 to a low around 44.7 million USD in January 2021. After this period, there is considerable volatility, with peaks reaching 234.8 million USD in April 2025 and troughs around 57 million to 69 million USD in mid-2020 and early 2023. This variability may suggest irregularities in the company's payment cycles or changes in supplier credit terms.

The payables turnover ratio, where provided, demonstrates considerable variability without a consistent pattern of increase or decrease. Values start at approximately 15.72 in July 2020, spike to 25.37 in October 2020, and then oscillate between ranges roughly from 9.99 to 20.69 over subsequent periods. Lower turnover ratios in the later periods imply slower payment to suppliers, whereas higher ratios indicate faster payment cycles. The irregularity in this ratio aligns with the fluctuations observed in accounts payable balances.

Cost of Revenue

Consistent growth trend with occasional minor declines, more than tripling over the observation window.

Accounts Payable

Marked by significant variability, with periods of both substantial increase and decrease, indicating possible changes in payment policies or operational cycles.

Payables Turnover

Fluctuates widely without a clear trend, reflecting inconsistent payment velocity towards suppliers, corresponding to volatile accounts payable balances.

The analyzed quarterly financial data reveals several important trends in working capital, revenue, and working capital turnover ratio over the span from late 2019 through mid-2025.

Working Capital

Working capital exhibits significant volatility with an overall downward trend. Starting at a positive level of approximately $1.6 billion at the end of 2019, the values fluctuate sharply in subsequent quarters, including both positive and negative figures. Notably, there is a steep decline beginning in early 2021, where working capital turns negative and remains largely negative through the majority of the timeline, reaching lows beyond -$3 billion in early 2023. Although some quarters show less negative values, the overall condition of working capital remains negative toward the later periods, indicating potential liquidity challenges or changes in working capital management.

Revenue

Revenue demonstrates a consistent upward trajectory throughout the entire period analyzed. Starting just below $0.8 billion in late 2019, revenue steadily increases each quarter, reaching over $2.5 billion by mid-2025. The growth appears generally uninterrupted and accelerates particularly from early 2022 onward, where quarterly revenues regularly exceed $1.5 billion and then consistently approach doubling by the end of the timeline. This trend suggests strong demand and business expansion during this period.

Working Capital Turnover Ratio

Data for the working capital turnover ratio is sparse and only reported for a few periods in 2020, showing values ranging from 1.4 to 3.52. This limited data prevents conclusive trend analysis but suggests efficiency improvements in the utilization of working capital during that year. However, the absence of data in subsequent periods hampers the ability to relate turnover efficiency directly to the significant working capital fluctuations and growing revenue.

In summary, while revenue growth is robust and sustained, the working capital position shows considerable stress with persistent negative values and volatility after early 2021. The limited turnover ratio data indicates there may have been periods of efficiency gains, but missing data impedes detailed correlation. The divergence between rising revenues and declining working capital could indicate increased investment in operations, potential payables or receivables management issues, or other structural financial changes. Monitoring liquidity and operational cash flows closely will be important moving forward given the weakening working capital despite strong top-line growth.

The analysis of the receivables turnover and average receivable collection period over multiple quarterly periods reveals notable fluctuations and cyclical patterns in the company's collection efficiency.

Receivables Turnover

The receivables turnover ratio exhibits significant variability across the observed quarters, ranging from a low of approximately 2.57 to a high of 7.32. Periods with higher turnover ratios, such as those around Oct 31, 2024 (7.32), indicate an increased efficiency in collecting receivables. Conversely, lower turnover values, for example around Oct 31, 2022 (2.57), suggest slower collection processes.

Overall, the ratio does not demonstrate a consistent upward or downward trend but rather oscillates, reflecting fluctuations in the company’s ability to convert receivables into cash promptly. Some quarters show a rebound following periods of decline, which may align with operational or market factors impacting receivables' management.

Average Receivable Collection Period

The average collection period, expressed in days, inversely correlates with the receivables turnover ratio as expected. It moves between approximately 50 days and 142 days over the timeline, with longer collection periods observed during quarters such as Oct 31, 2022 (142 days) and Oct 31, 2023 (130 days).

Shorter collection intervals coincide with higher turnover ratios, as seen near Jan 31, 2025 (50 days), highlighting periods of enhanced cash flow efficiency. Nonetheless, the metric similarly reflects a non-linear trend with noticeable swings rather than gradual change, indicating periodic variability in the speed of customer payments.

Relationship Between Metrics

The inverse relationship between these two metrics is consistent throughout the periods. When receivables turnover increases, the average collection period decreases and vice versa, underscoring the connection between collection efficiency and cash conversion cycles.

These alternating cycle patterns suggest that the company experiences variable payment behaviors or potentially adjusts credit policies intermittently, impacting how quickly receivables are collected.

In summary, the data portrays a pattern of fluctuating receivables management performance over the periods analyzed, with intermittent improvements in turnover and collection times followed by declines. This variability might indicate challenges in maintaining steady collection processes or could reflect changes in the business environment affecting customer payment patterns.

The payables turnover ratio demonstrates notable fluctuations throughout the periods observed. After a missing initial data phase, it commenced at 15.72, followed by a sharp increase peaking at 25.37. Subsequent values show a pattern of volatility, with several rises and declines, reaching lows around 9.99 and highs near 22.41. This irregular behavior suggests variations in the efficiency of accounts payable management or changes in purchasing terms over time.

Correspondingly, the average payables payment period, measured in days, exhibits an inversely related pattern relative to the payables turnover ratio in many instances. Starting at 23 days, the period decreases to a minimum near 14 days before increasing up to approximately 37 days in later periods. These variations indicate changes in the timing of payments to suppliers, possibly reflecting shifts in company cash management strategies or supplier negotiations.

The alternating trends between the two metrics imply a dynamic approach to managing payables, where periods of quicker payments (shorter average payment days) align with higher payables turnover ratios, and longer payment periods correspond with lower turnover ratios. The irregularity and variability over the time frame suggest that there may not be a consistent payables policy but rather adjustments in response to operational or market conditions.