Qualcomm Inc. (NASDAQ:QCOM)

The analysis of the financial ratios over the given quarterly periods reveals several notable trends in the company's operational efficiency and liquidity management.

Inventory Turnover

The inventory turnover ratio exhibits a declining trend over most of the analyzed periods. Starting at around 6.14 in late 2018 and early 2019, the ratio decreases steadily to approximately 2.47 by late 2023, indicating slower inventory movement relative to cost of goods sold. However, a mild recovery is observed from early 2024 onwards, climbing back above 3.0 by the last reported period, suggesting some improvement in inventory management efficiency.

Payables Turnover

The payables turnover ratio demonstrates significant fluctuations throughout the timeline. It initially declines from about 6.29 to lower levels around 4.0 to 5.0 during 2019 to early 2022, then spikes sharply starting late 2022, reaching values as high as 12.5 in early 2023. Subsequently, the ratio decreases but remains elevated relative to earlier years, stabilizing around 6 to 7 by mid to late 2024. This volatility suggests changes in the company's payment policies or supplier terms, possibly reflecting strategic adjustments in managing accounts payable.

Working Capital Turnover

The working capital turnover ratio shows considerable variability. After an initial rise during 2019 (from approximately 3.1 to above 5.8), it generally declines throughout 2022 and 2023, reaching lows near 2.4 to 2.5 towards the end of the data. There is a slight uptick towards the last periods, but overall, the decreasing trend might indicate less efficient use of working capital to generate sales over time.

Average Inventory Processing Period

Conversely, the average inventory processing period (measured in days) increases steadily from under 60 days in early 2019 to a peak above 140 days by late 2023, implying that inventory is being held longer before sale. A modest improvement is noted towards the latest periods with the days decreasing back to around 120, indicating some effort to reduce inventory holding times.

Average Payables Payment Period

The average payables payment period initially lengthens, moving from around 58 days in early 2019 to a high near 89 days around 2020, then dramatically shortens, reaching approximately 29 days in early 2023. This suggests that the company was taking longer to pay suppliers initially, then reversed to quicker payments in the subsequent periods. The payment period gradually extends again to about 53-57 days later in the timeline.

Overall, the data reflects a deterioration in the company's inventory management efficiency and working capital utilization over the earlier years, with some signs of recovery in the most recent periods. The fluctuations in payables turnover and payment periods suggest strategic shifts in supplier payment practices, potentially balancing cash flow considerations with supplier relationships. The extended inventory holding times coupled with lower inventory turnover ratios could indicate challenges in sales or supply chain management that may require ongoing monitoring.

The analysis of the quarterly financial data reveals several key trends regarding cost of revenues, inventories, and inventory turnover over the observed periods.

Cost of Revenues

The cost of revenues shows a general upward trend from late 2018 through early 2025. Initially, values hovered around the 2,100 million US$ mark, with some fluctuations in early periods. Starting from September 2020, there is a noticeable increase, peaking at 4,868 million US$ in September 2022. Following this peak, the cost declines somewhat but remains elevated above 4,000 million US$ in subsequent quarters, with the highest values recorded towards the end of the timeline, suggesting increased production or operations costs in recent years.

Inventories

Inventories also display a clear increasing trajectory throughout the period. Beginning at approximately 1,698 million US$ in December 2018, inventories gradually escalate with some intermittent accelerations noticeable particularly from mid-2020 onwards. The inventory rose substantially from around 3,133 million US$ in June 2021 to a peak of 6,932 million US$ in December 2022. Thereafter, inventories exhibit a slight decline but still maintain levels above 6,000 million US$ towards early 2025, indicating a buildup of stock or slower inventory turnover in the later periods.

Inventory Turnover

The inventory turnover ratio exhibits a declining trend over the periods it is reported. Starting at a higher range above 5 around 2019, the ratio gradually declines to approximately 2.47 by December 2023. Small recoveries occur in the last quarters, reaching up to about 3.02 by March 2025. This decline suggests that the company is turning over its inventory less frequently over time, potentially indicating slower sales velocity or accumulation of inventory relative to cost of goods sold.

Overall, the data suggests increasing operational scale as reflected by rising cost of revenues and inventory levels. However, the declining inventory turnover ratio points to rising inventory holding periods, which could imply challenges in sales pace or management of inventory efficiency as the company grows.

The analysis of the quarterly financial data reveals several notable trends and fluctuations in key financial metrics over the reported periods.

Cost of Revenues

The cost of revenues exhibits a general upward trend across the periods analyzed. Starting at 2,188 million USD in late 2018, this metric shows a gradual increase punctuated by some fluctuations, reaching a peak of 5,161 million USD in late 2024 before slightly declining to 4,937 million USD by the first quarter of 2025. Early periods reflect relative stability with values around 2,100 to 2,300 million USD, while from 2020 onward, particularly beginning in late 2020, there is a marked rise indicating increased cost pressures or expanded operations. The highest increases are observed roughly from late 2021 through 2024.

Trade Accounts Payable

Trade accounts payable also increase over time but with more volatility. Beginning at 1,422 million USD in December 2018, the amount peaks and troughs more noticeably than cost of revenues, reaching a high of 3,796 million USD in late 2022 before declining sharply to 1,430 million USD by early 2023. Subsequent quarters show recovery toward approximately 2,500 million USD in 2024, then slightly pulling back at the latest date reported. This indicates variability in payment cycles or supplier credit terms, with a substantial decrease observed in early 2023 which may suggest rapid payment or reduced procurement during that period.

Payables Turnover Ratio

The payables turnover ratio, available from mid-2019, indicates the company's efficiency in paying its suppliers. The ratio starts around 6.29 and gradually decreases to about 4.12 to 4.38 through 2019 and 2020, suggesting slower payment rates or increasing credit durations during that period. From late 2021 onwards, the ratio rises with fluctuations, peaking sharply at 12.5 in early 2023, which aligns with the notable decrease in trade accounts payable at the same time. This increase signifies an acceleration in the payment of obligations or possibly a reduction in payables outstanding. Post this peak, the ratio declines and stabilizes in the range of approximately 6.3 to 7.5 till early 2025, reflecting a normalization in payment behavior.

In summary, the observed increases in cost of revenues suggest growing operational scale or rising costs, while trade accounts payable volatility alongside payables turnover ratio dynamics reflect changing credit management and payment strategies. The spike in payables turnover in early 2023 corresponds with a drop in payables, indicating expedited payments or shifts in supplier arrangements, with partial reversion to more moderate turnover levels thereafter.

The working capital demonstrated a generally increasing trend over the observed periods, rising from approximately $5.7 billion in late 2018 to over $16.5 billion by early 2025. Notable increments occurred in several quarters, including a marked increase between mid-2019 and late 2019 and a steady rise from late 2021 through early 2025. Occasional dips were present, such as the decline around early 2020 and mid-2022, but the overall trajectory remained upward.

Revenues showed a more variable pattern without a strong consistent trend. Initial revenue values hovered around $4.8 to $5 billion but then exhibited notable peaks and troughs. There was a significant spike in mid-2019, with revenues reaching nearly $9.6 billion, which was followed by a sharp decline in the subsequent quarter. From 2020 onward, revenues fluctuated between approximately $7.9 billion and $11.2 billion, with some quarters experiencing noticeable surges such as late 2021 and late 2024. However, certain periods reflected declines, including mid-2023 and early 2025.

The working capital turnover ratio, which relates revenues to working capital, displayed considerable variability over the timeline. Initially, turnover ratios were relatively high, peaking above 4.5 and even approaching nearly 6 in some quarters between 2021 and 2022. This suggested efficient utilization of working capital in generating revenues during those times. However, from late 2022 onwards, the turnover ratio generally declined, falling below 3 and remaining relatively stable but lower compared to prior peaks. This trend could indicate a reduction in operational efficiency or increasing working capital relative to revenues in the more recent periods.

In summary, working capital steadily increased over time, indicating growth in the company's current assets relative to current liabilities. Revenues exhibited volatility with high peaks and troughs but did not follow the same steady growth as working capital. The working capital turnover ratio's initial high values followed by a declining trend suggest that while the company increased its working capital base, it faced challenges in maintaining proportional revenue growth relative to that capital in recent quarters.

Working Capital

Overall upward trend from $5.7 billion to $16.5 billion with some fluctuations.

Revenues

Volatile pattern with peaks near $9.6 billion and troughs around $4.8 billion; no steady growth matching working capital's increase.

Working Capital Turnover

High initial ratios indicating efficient use of capital, followed by a decline to lower but stable levels, suggesting reduced efficiency or greater capital intensity.

The inventory turnover ratio exhibits a clear declining trend over the observed periods. Starting from a higher level above 6 in late 2019, the ratio steadily decreases to approximately 2.5 by early 2023. This decline continues with minor fluctuations, reaching around 2.8 to 3.0 in the latest data points of 2024 and early 2025. Such a pattern indicates a slower rate at which inventory is being sold and replenished, suggesting potential challenges in inventory management or changing demand dynamics.

Correspondingly, the average inventory processing period shows an inverse trend to inventory turnover. Beginning near 60 days in late 2019, this period lengthens consistently over time, peaking above 140 days in early 2023. More recently, there is a slight decrease, bringing the processing period back down to around 120 days by early 2025. This increase in days indicates that inventory remains on hand longer, aligning with the falling turnover ratio and pointing to increased inventory holding times or slower sales cycles during the period observed.

The inverse relationship between inventory turnover and average inventory processing period is typical and well-demonstrated within this dataset. The early periods with higher turnover imply more efficient inventory management and quicker sales. The subsequent decline and elongation of processing days suggest a shift toward greater inventory accumulation or slower consumption rates, which could be influenced by market conditions, supply chain constraints, or changes in company strategy.

Overall, the trends highlight a significant change in inventory efficiency over time, with notable deterioration beginning in 2019 and only modest signs of improvement as of 2024-2025. This pattern warrants attention to inventory management practices and potential interventions to optimize stock levels and turnover rates.

Inventory Turnover Ratio

Declined steadily from above 6 in late 2019 to near 2.5 by early 2023, with minor recoveries reaching around 3.0 by early 2025.

Average Inventory Processing Period

Increased from approximately 60 days in late 2019 to over 140 days by early 2023, then slightly reduced to about 120 days by early 2025.

Insights

There is a clear inverse correlation between the two measures, indicating slower inventory turnover and longer holding periods over the timeframe. This may reflect changes in sales velocity, supply chain efficiency, or inventory management strategies that should be examined further.

The data on payables turnover and average payables payment period over several quarters reveals notable fluctuations and certain evolving trends.

Payables Turnover

The payables turnover ratio shows an initial range around 6.29 to 4.12 between late 2018 and the end of 2019, suggesting some variability in how frequently payables are settled. From 2020 through early 2022, the ratio fluctuates moderately between approximately 4.28 and 5.19, indicating a relatively stable payables management period during this timeframe. However, beginning in late 2022, there is a significant spike reaching a peak of 12.5 in early 2023, followed by a gradual decline observed through 2024 with ratios declining back into the 6 to 7 range. This peak suggests a period of accelerated payments or a possible strategic shift in payables processing, after which the turnover normalizes but remains somewhat elevated relative to earlier years.

Average Payables Payment Period

The average payables payment period inversely corresponds with the turnover ratio, ranging from about 58 days at the end of 2018, lengthening to approximately 89 days by late 2019, which suggests a slowing in payment speed. This period generally decreases steadily from early 2020 to mid-2022, moving from the high 80s down to mid-70s and then abruptly dropping to 51 days by late 2022. Subsequently, the payment period declines sharply to a low of 29 days in early 2023, which aligns with the spike in payables turnover, before increasing again to fluctuate between 38 and 57 days through 2024. The drop to lower payment periods followed by a partial rebound implies an intentional acceleration in paying suppliers within early 2023, possibly due to operational or market factors, with a gradual shift back toward more typical payment durations in the following quarters.

Overall, these patterns suggest a dynamic approach to payables management, with periods of extended payment intervals followed by strategic acceleration, possibly reflecting changing liquidity conditions, supplier negotiations, or internal cash flow management priorities.