Palo Alto Networks Inc. (NASDAQ:PANW)

Receivables Turnover

The receivables turnover ratio exhibits considerable volatility over the analyzed quarters, fluctuating between lows around 2.57 and highs exceeding 7. The ratio notably declined during mid-2021 and mid-2023 periods, indicating slower collection efficiency during those times. However, sharp increases followed these declines, particularly at the end of 2024 and mid-2025, suggesting periods of improved receivables management or accelerated cash collections.

Payables Turnover

The payables turnover ratio shows fluctuating trends with values ranging roughly from 9.99 to 25.37. Earlier quarters reflected relatively higher turnover ratios, indicating quicker payment to suppliers. This turnover declined in several stretches, such as mid-2021 and early 2024, signaling longer payment periods or extended credit terms. Variability throughout the timeline reflects inconsistent payables management or possibly changing negotiation terms with vendors.

Working Capital Turnover

Data for working capital turnover is sparse, with only limited periods reported. Available values show an increase from 2.15 to 3.52 early in the timeline, but subsequent quarters lack data, limiting trend analysis. The initial rising trend may imply improved efficiency in utilizing working capital during the documented quarters.

Average Receivable Collection Period

The average receivable collection period is marked by significant fluctuations, spanning from a low of around 50 days to a peak exceeding 140 days. Certain periods, notably mid-2021 and mid-2023, indicate substantial increases in collection days, signaling possible delays or challenges in customer payments. Conversely, periods towards the end of 2024 and mid-2025 reflect reduced collection periods, indicating more efficient receivables management or improved customer payment behaviors.

Average Payables Payment Period

The average payables payment period also demonstrates variability, ranging primarily between 14 and 37 days. While earlier quarters reflect shorter payment cycles, certain quarters in 2022 and 2024 show extended payment periods. These variations suggest shifting payment strategies, possibly aimed at managing cash flow or renegotiating supplier terms.

Summary

Overall, the financial ratios display considerable oscillations over the examined period, signaling dynamic changes in cash conversion cycles. Both receivables and payables turnovers fluctuate, reflecting varied efficiency in collection and payment processes. Periods of extended collection and payment days indicate potential cash flow management challenges or strategic adjustments. The irregularity in working capital turnover data restricts comprehensive assessment but hints at early improvements. Continuous monitoring and consistent improvements in these metrics could enhance operational liquidity and financial stability.

The receivables turnover ratio exhibits considerable fluctuation over the observed period. Initially, the ratio demonstrates relative stability, followed by periods of decline and subsequent recovery, indicating shifts in the efficiency of collecting receivables.

Initial Stability & Decline (Oct 31, 2020 – Jul 31, 2021)

The receivables turnover ratio began at 5.30 and increased to 5.65 before decreasing to 3.43. This initial decline suggests a lengthening of the collection period or a potential increase in outstanding receivables relative to revenue during this timeframe. The decrease from 5.20 to 3.43 represents a significant drop in efficiency.

Recovery & Subsequent Fluctuations (Oct 31, 2021 – Jul 31, 2022)

The ratio rebounded to 5.61, then decreased again to 2.57. This suggests a temporary improvement in collection efficiency followed by another period of slower collection. The increase in accounts receivable during this period, as evidenced by the underlying figures, likely contributed to the lower turnover.

Continued Volatility (Oct 31, 2022 – Jul 31, 2023)

The ratio experienced further volatility, moving from 4.70 to 4.82, then decreasing to 2.80. This continued fluctuation indicates inconsistent performance in managing receivables. The substantial increase in accounts receivable during this period is a key driver of the lower turnover ratio.

Recent Trends (Oct 31, 2023 – Jul 31, 2025)

From October 2023 through July 2025, the ratio demonstrates a pattern of decline followed by a sharp increase. It decreased from 5.10 to 3.11, then increased significantly to 7.12. This recent surge suggests a substantial improvement in the speed of collecting receivables, potentially due to more aggressive collection efforts or a change in customer payment terms. The ratio then decreased to 7.12, indicating a possible normalization after the significant increase.

Overall, the receivables turnover ratio demonstrates a lack of consistent performance. While periods of efficient collection are observed, they are interspersed with periods of slower collection, suggesting potential issues with credit policies, collection procedures, or customer payment behavior. The recent increase warrants further investigation to determine its sustainability and underlying causes.

The cost of revenue demonstrates a consistent upward trend over the observed quarters. Starting at $278 million in late 2020, it rises steadily with intermittent minor fluctuations, reaching $679 million by the third quarter of 2025. This indicates a growing expense base related to the company's revenue generation activities, which may reflect either increasing sales volume or rising costs per unit of revenue.

Accounts payable display a more volatile pattern compared to the cost of revenue. Initially, this liability fluctuates between $45 million and $132 million in 2021 and 2022, with occasional spikes, such as $179 million in early 2024 and $212 million in late 2024. Toward the end of the period, accounts payable remain relatively elevated, suggesting variability in payment cycles or supplier credit terms impacting the company's short-term obligations.

The payables turnover ratio, which reflects how quickly the company pays off its suppliers relative to its cost of goods sold, shows considerable variation throughout the time frame. Early values indicate a high turnover ratio around 22 to 25, implying prompt payment practices. However, there is a general decline to lower turnover ratios around 10 to 15 in later periods, especially notable in 2024 and 2025. This downward trend suggests that the company is taking longer to settle its payables, consistent with the increased and more volatile accounts payable balances.

Overall, the data convey a scenario where cost of revenue steadily increases, potentially driven by business expansion or cost factors, while accounts payable and payables turnover ratios indicate a loosening of payment discipline or changing credit arrangements with suppliers over time.

Cost of Revenue Trend

Consistent increase from $278 million to $679 million over five years.

Accounts Payable Behavior

Fluctuates significantly with occasional spikes, indicating variability in short-term liabilities.

Payables Turnover Ratio

Declines from early high levels (~22-25) to lower levels (~10-15), reflecting slower payment cycles.

Interpretation

The company experiences rising costs and extends the period of supplier payments, possibly reflecting strategic or operational shifts in working capital management.

The working capital turnover ratio exhibits considerable fluctuation over the observed period. Initial values indicate a turnover of 2.15 in October 2020, followed by unavailable figures for the subsequent quarter. A significant increase to 3.52 is then noted in April 2021, before again becoming unavailable for July 2021.

Working Capital Trend

Working capital demonstrates a consistently negative balance from January 2021 onwards. The magnitude of the negative working capital increases over time, reaching a peak of -3,069 million in January 2023, before gradually decreasing to -108 million by October 2025. This suggests a growing reliance on financing current operations with liabilities rather than current assets.

Revenue consistently increased throughout the period, rising from 946 million in October 2020 to 2,536 million in July 2025. This growth in revenue occurred concurrently with the negative and increasing working capital balances.

Turnover Ratio Analysis

The intermittent availability of the working capital turnover ratio hinders a comprehensive trend analysis. However, the observed values suggest periods of efficient working capital utilization (e.g., 3.52 in April 2021) interspersed with periods where the ratio is not calculated due to negative working capital. The consistent negative working capital from January 2021 onward prevents the calculation of a meaningful turnover ratio for the majority of the observed timeframe. The lack of a calculated ratio does not necessarily indicate inefficiency, but rather reflects the company’s financial structure.

The combination of increasing revenue and consistently negative working capital suggests the company is effectively managing its cash conversion cycle and potentially leveraging supplier credit or delaying payments to optimize cash flow. Further investigation into the components of working capital (current assets and current liabilities) would be necessary to fully understand the implications of these trends.

Receivables Turnover Ratio

The receivables turnover ratio shows notable fluctuations over the observed periods. Initially, it remains around the mid-5 range, peaking at 5.65 and 5.61 in early 2021 before experiencing a sharp decline to a low near 2.57 in mid-2022. This decline indicates slower collection efficiency during that period. Subsequently, the ratio recovers in a somewhat cyclical pattern, reaching highs near 7.32 and 7.12 in late 2024 and mid-2025, suggesting periods of more effective receivables management. However, intermittent drops to around 3.1 or slightly above indicate persistent variability in collection effectiveness across quarters.

Average Receivable Collection Period

The average receivable collection period inversely reflects the trends observed in turnover. The collection period ranges from a low around 50 days to a high exceeding 140 days. Early periods show moderate collection times near 65 to 70 days, followed by a significant increase exceeding 130 days in mid-2022, indicating a slowdown in receivables collection. Although some quarters register improvement with days falling back near 50 to 64, the overall pattern remains irregular with recurring spikes above 100 days, highlighting inconsistent collection efficiency throughout the timeline.

Insights on Receivables Management

The data reveals considerable volatility in receivables management. Periods of high turnover ratio correspond with low collection days, reflecting efficient credit and collection policies. Conversely, several quarters depict weaker performance with longer collection periods and lower turnover ratios, which may suggest challenges in credit control or customer payment behavior. The cyclical nature of these metrics could indicate external factors affecting receivables or internal operational changes impacting collection effectiveness. Continuous monitoring and investigation into the causes of these fluctuations would be beneficial to stabilize cash flow from receivables.

Payables Turnover

The payables turnover ratio demonstrates a fluctuating pattern over the observed periods. Initially, it started relatively high around 21.85 and peaked at 25.37 early in the timeline. However, it then experienced notable declines and rebounds, dropping as low as 9.99 in one of the later periods. There is no consistent upward or downward trend, indicating variability in how quickly the company is paying its suppliers. The fluctuations suggest changes in payment strategies or supplier terms across quarters, with a tendency toward slower payment in the more recent periods compared to the earlier ones.

Average Payables Payment Period

The average payables payment period inversely complements the payables turnover ratio, showing the number of days taken to pay suppliers. Initially, the payment period was shorter, fluctuating between 14 to 25 days in the early periods. This period lengthened over time, with values exceeding 30 days in some of the more recent quarters, peaking at 37 days. Such an increase reflects a slower payment cycle, indicating that the company may be extending its payment terms or delaying payments to optimize cash flow. The variability corresponds closely with the changes observed in the payables turnover ratio, confirming that payment practices have become more extended and inconsistent across several quarters.