Qualcomm Inc. (NASDAQ:QCOM)

The analysis of the financial ratios and periods over the six-year span reveals several key trends related to Qualcomm Inc.'s operational efficiency and working capital management.

Inventory Turnover

The inventory turnover ratio has generally declined from 6.14 in 2019 to a low of 2.47 in 2023, with a slight recovery to 2.66 in 2024. This downward trend indicates a slowdown in how quickly inventory is sold and replaced, suggesting potential increases in inventory levels or slower sales.

Receivables Turnover

This ratio exhibits volatility, dropping significantly from 23.21 in 2019 to 8.76 in 2020, then recovering to 15.16 in 2021, with fluctuations thereafter. The trend points to inconsistent collections efficiency, with a notable decline in 2020 possibly due to external factors, followed by partial recovery and slight instability.

Payables Turnover

The payables turnover ratio fell from 6.29 in 2019 to 4.12 in 2020, increased to 8.3 in 2023, and then decreased to 6.6 in 2024. The higher ratio in 2023 suggests quicker payment to suppliers, whereas the lower values indicate longer payment cycles.

Working Capital Turnover

Working capital turnover declined from 3.1 in 2019 to 2.39 in 2020, peaked at 4.99 in 2022, then fell again to 2.65 in 2024. The spike in 2022 suggests more efficient use of working capital in generating revenue during that year, but the subsequent decrease points to reduced efficiency.

Average Inventory Processing Period

The average inventory processing period increased from 59 days in 2019 to a high of 148 days in 2023 before slightly improving to 137 days in 2024. This increasing trend confirms the slowdown observed in inventory turnover, indicating longer holding of inventory before sale.

Average Receivable Collection Period

The receivable collection period doubled from 16 days in 2019 to 42 days in 2020, improved to 20 days in 2023, and slightly increased again to 22 days in 2024. Despite improvement after 2020, the period remains above earlier levels, reflecting a somewhat slower collection process compared to the start of the timeframe.

Operating Cycle

The operating cycle lengthened considerably from 75 days in 2019 to a peak of 168 days in 2023 before slightly decreasing to 159 days in 2024. This elongation indicates that the combined process of inventory turnover and receivables collection has slowed down, impacting cash flow timing.

Average Payables Payment Period

The payables payment period expanded from 58 days in 2019 to 89 days in 2020, then contracted to 44 days in 2023, followed by a small increase to 55 days in 2024. The fluctuations imply varying supplier payment strategies, from extended payment terms in 2020 to quicker payments in recent years.

Cash Conversion Cycle

The cash conversion cycle increased significantly from 17 days in 2019 to 124 days in 2023, with a moderate decrease to 104 days in 2024. This metric reflects the time lag between outlay of cash and recovery from sales; the extension is indicative of slowed cash flow recovery and suggests potential liquidity management challenges.

Overall, the data highlight a trend toward longer durations in inventory management and cash conversion, with fluctuating efficiency in receivables and payables management. The extended cash conversion cycle over the period suggests increased capital tied up in operations, which could affect liquidity and operational flexibility. The slight improvements in the most recent year may indicate initial steps toward addressing these issues.

Cost of Revenues

The cost of revenues exhibited a generally increasing trend from 2019 through 2022, rising from 8,599 million US dollars to a peak of 18,635 million in 2022. However, there was a notable decline in 2023 to 15,869 million, followed by a moderate increase in 2024 to 17,060 million. This pattern indicates variability in production or procurement costs, with a significant surge until 2022, a reduction in 2023, and a partial recovery thereafter.

Inventories

Inventories more than quadrupled over the span from 2019 to 2024, beginning at 1,400 million US dollars and increasing steadily each year, reaching 6,423 million by 2024. The most dramatic increases occurred between 2020 and 2022, reflecting either increased production, accumulation of stock, or changes in inventory management strategies.

Inventory Turnover Ratio

The inventory turnover ratio declined significantly from 6.14 in 2019 to a low point of 2.47 in 2023, before slightly improving to 2.66 in 2024. This trend indicates that the company took longer to sell its inventory over time, suggesting a slowdown in inventory movement or potentially larger inventory holdings relative to sales. The slight rebound in the last period may signal some improvement in inventory efficiency.

Revenue Trends

Revenues displayed an overall upward trajectory from 2019 to 2024, despite some fluctuations. Starting at $24,273 million in 2019, revenues experienced a slight decline in 2020 to $23,531 million. A significant increase occurred in 2021, reaching $33,566 million, followed by a peak in 2022 at $44,200 million. However, revenues decreased again in 2023 to $35,820 million, before rising moderately in 2024 to $38,962 million. This pattern suggests volatility with substantial growth peaks and intermittent declines.

Accounts Receivable, Trade, Net

The net accounts receivable values exhibited notable variability over the period. Starting at $1,046 million in 2019, the figure more than doubled to $2,687 million in 2020, before decreasing to $2,214 million in 2021. It then surged to $4,175 million in 2022, representing the highest value in the data set. Subsequently, accounts receivable dropped significantly to $1,923 million in 2023 and rose again to $2,347 million in 2024. These fluctuations may indicate changing credit policies, collection efficiency, or sales mix impacts over time.

Receivables Turnover Ratio

The receivables turnover ratio, an indicator of how quickly receivables are collected, showed considerable variation throughout the years. It was highest in 2019 at 23.21, indicating efficient collection relative to sales. A sharp decline occurred in 2020 to 8.76, suggesting slower collections or increased credit sales. The ratio then partially recovered to 15.16 in 2021, followed by a decrease to 10.59 in 2022. Improvement was observed in 2023, reaching 18.63, before a slight decline to 16.6 in 2024. This oscillating pattern reflects changes in the company's receivables management or sales terms.

Overall Insights

The data reveal a complex relationship between revenues and accounts receivable and turnover metrics. Revenue spikes tend to correspond with increases in accounts receivable, notably in 2022. However, the receivables turnover ratio does not consistently improve with rising revenues, implying that increased sales volumes may be associated with extended credit terms or collection challenges during some periods. The volatility in these financial indicators suggests that the company may be experiencing shifts in its operational or credit management strategies over the analyzed timeframe.

Cost of revenues

The cost of revenues displayed a general upward trend over the analyzed periods, starting from 8,599 million USD in 2019 and reaching a peak of 18,635 million USD in 2022. This was followed by a decline to 15,869 million USD in 2023, and then a moderate increase to 17,060 million USD in 2024. The initial increase may indicate growth in production or sales volume, while the dip observed in 2023 suggests a possible operational adjustment or cost optimization before costs rose again in 2024.

Trade accounts payable

Trade accounts payable showed considerable fluctuations. Beginning at 1,368 million USD in 2019, the value surged to 3,796 million USD in 2022, indicating potentially extended credit terms or increased supplier purchases. However, this was followed by a sharp decline to 1,912 million USD in 2023, before rising again to 2,584 million USD in 2024. These changes suggest variability in working capital management or supplier payment strategies across the years.

Payables turnover ratio

The payables turnover ratio, which measures the efficiency in paying suppliers, decreased significantly from 6.29 in 2019 to a low of 4.12 in 2020, indicating slower payments to suppliers or extended payment terms. It then improved to 5.19 in 2021 and marginally declined to 4.91 in 2022. In 2023, a sharp increase to 8.3 occurred, suggesting accelerated payments or reduced payables. The ratio decreased again to 6.6 in 2024, indicating a moderation in payment speed. Overall, the ratio exhibits volatility, reflecting changing dynamics in cash management and supplier relations.

Working Capital

Working capital displayed an overall upward trend from 2019 to 2024, increasing from $7,830 million in 2019 to $14,727 million in 2024. While there was a slight dip in 2021 to $8,124 million from the 2020 figure of $9,847 million, the subsequent years showed consistent growth, culminating in the highest recorded value in 2024.

Revenues

Revenues exhibited a fluctuating pattern over the period under review. Starting at $24,273 million in 2019, revenues saw a minor decline in 2020 to $23,531 million. This was followed by a strong increase in 2021 and 2022, peaking at $44,200 million in 2022. However, revenue dipped again in 2023 to $35,820 million before a moderate recovery to $38,962 million in 2024.

Working Capital Turnover

The working capital turnover ratio experienced significant variability throughout the years. Beginning at 3.1 in 2019, the ratio diminished to 2.39 in 2020, then sharply increased to 4.13 in 2021 and further to 4.99 in 2022. This suggested more efficient use of working capital during these years. Nevertheless, the ratio decreased notably in the last two periods, resting at 2.79 in 2023 and slightly declining further to 2.65 in 2024, indicating a reduction in efficiency relative to the peak years.

Summary Insights

Overall, working capital has expanded steadily, especially in the last two years, which may indicate increased liquidity or investment in short-term assets. Revenues peaked significantly in 2022 but showed volatility before and after that year, possibly reflecting changes in market conditions or operational factors. The working capital turnover ratio's peak in 2022 indicates the company operated more efficiently in generating sales from its working capital during that time, but the subsequent decline raises questions about operational effectiveness or changes in working capital structure after 2022.

Inventory Turnover

The inventory turnover ratio exhibits a clear declining trend from 6.14 in 2019 to a low of 2.47 in 2023, indicating a decreasing frequency in inventory being sold and replaced. Although there is a slight improvement to 2.66 in 2024, the ratio remains significantly below 2019 levels. This decline suggests either slower sales, increased inventory levels, or potential challenges in inventory management over the observed period.

Average Inventory Processing Period

The average inventory processing period has generally increased over the years, moving from 59 days in 2019 to a peak of 148 days in 2023. This rise indicates a lengthening duration to convert inventory into sales, complementary to the decline in inventory turnover. In 2024, there is a marginal decrease to 137 days, but the period remains substantially elevated compared to earlier years. This extended processing time could imply inefficiencies or changes in inventory strategy.

Summary of Trends

Overall, the trends in inventory turnover and average inventory processing period present an inverse relationship: as the turnover ratio declines, the processing period increases. This dynamic points to slower inventory movement and potentially heightened inventory holding risks. The minor positive movement in 2024 suggests a possible beginning of adjustment or recovery, but the company still faces challenges in optimizing inventory levels and turnover speed compared to the starting point in 2019.

The analysis of the given financial ratios related to receivables over the six-year timeline reveals several fluctuations and trends that merit attention.

Receivables Turnover Ratio

The receivables turnover ratio exhibited notable variability between 2019 and 2024. Starting at a high level of 23.21 in 2019, it dropped sharply to 8.76 in 2020. The ratio partially recovered to 15.16 in 2021 but decreased again to 10.59 in 2022. Subsequently, it increased to 18.63 in 2023, before slightly declining to 16.6 in 2024. This pattern indicates inconsistency in how efficiently receivables have been collected, with periods of both improvement and deterioration observed throughout the period.

Average Receivable Collection Period

The average receivable collection period, measured in number of days, displayed an inverse relationship with the turnover ratio, as expected. Starting at a low of 16 days in 2019, it increased significantly to 42 days in 2020, indicating slower collection. It then improved to 24 days in 2021 but increased again to 34 days in 2022. The collection period shortened considerably to 20 days in 2023 before slightly increasing to 22 days in 2024. These fluctuations confirm that the company experienced varying efficiency in converting receivables to cash over the years.

Overall, the data suggests that receivables management has faced challenges with consistency. The significant drop in turnover and spike in collection days in 2020 stand out as an area of concern, likely reflecting external or operational disruptions during that period. The subsequent partial recoveries point to efforts to improve receivables efficiency, although the ratios have yet to stabilize at consistently strong levels. Continued monitoring and possibly augmenting credit and collection policies may be warranted to maintain favorable receivables turnover and collection periods.

Average Inventory Processing Period

The average inventory processing period showed considerable fluctuations over the analyzed timeframe. Starting at 59 days in 2019, it increased sharply to 102 days in 2020. This was followed by a moderate decline to 83 days in 2021. Subsequently, there was a significant rise to 124 days in 2022, reaching the peak of 148 days in 2023. In 2024, a slight reduction to 137 days was observed. Overall, this indicates a trend towards longer inventory holding times in recent years, suggesting potential challenges in inventory turnover or changes in inventory management practices.

Average Receivable Collection Period

The average receivable collection period exhibited variability without a consistent trend. From a low of 16 days in 2019, it rose steeply to 42 days in 2020, indicating a slower collection of receivables. This period contracted to 24 days in 2021, then increased again to 34 days in 2022. The subsequent years saw improvements with reductions to 20 days in 2023 and a slight increase to 22 days in 2024. These fluctuations may reflect changes in credit policies or customer payment behaviors.

Operating Cycle

The operating cycle, representing the combined duration of inventory processing and receivables collection, followed a pattern similar to the inventory period. It was 75 days in 2019, nearly doubled to 144 days in 2020, and then decreased to 107 days in 2021. It escalated sharply to 158 days in 2022 and peaked at 168 days in 2023, before declining modestly to 159 days in 2024. This overall increasing trend suggests a lengthening of the cash conversion period, potentially impacting working capital efficiency.

Payables Turnover

The payables turnover ratio exhibits notable fluctuations over the six-year period. It started at 6.29 in 2019, declined significantly to 4.12 in 2020, indicating slower payment activity or possibly extended credit terms from suppliers. The ratio recovered to 5.19 in 2021 and slightly decreased to 4.91 in 2022. A marked increase occurred in 2023, reaching 8.3, suggesting a faster payment cycle or improved management of payables. This was followed by a decrease to 6.6 in 2024, though it remained higher than most previous years except 2023.

Average Payables Payment Period

Reflecting the inverse behavior of the payables turnover ratio, the average payables payment period started at 58 days in 2019, increased sharply to 89 days in 2020, indicating longer payment durations. It improved in 2021 and 2022 with periods of 70 and 74 days respectively, but decreased significantly to 44 days in 2023, aligning with the increased turnover ratio indicating quicker payments. In 2024, the payment period extended again to 55 days, suggesting a moderate lengthening of payment cycles but still shorter than the initial 2019 and peak 2020 levels.

Overall Trends and Insights

The data reveals that payment management underwent significant changes during the observed years. The sharp increase in payment period and corresponding decrease in turnover in 2020 could be attributed to external pressures or strategic decisions to optimize cash flow by delaying payments. The subsequent improvement in 2023, with a high payables turnover and low payment period, indicates a reversal towards quicker supplier payments, which may reflect improved liquidity or operational efficiency. The slight movement back towards longer payment periods in 2024 suggests a rebalancing between cash flow management and supplier relationships. Overall, the company demonstrates flexibility in its payables strategy, adjusting payment cycles in response to varying financial conditions or operational priorities.

Average inventory processing period

The average inventory processing period shows an overall upward trend from 59 days in 2019 to a peak of 148 days in 2023, followed by a slight decrease to 137 days in 2024. This indicates that inventory turnover has generally slowed, with inventory remaining in the system for a longer duration over the period considered.

Average receivable collection period

The average receivable collection period exhibits some volatility but no clear long-term trend. It increased sharply from 16 days in 2019 to 42 days in 2020, then decreased to 24 days in 2021. It rose again to 34 days in 2022, dropped to 20 days in 2023, and slightly increased to 22 days in 2024. This fluctuation suggests variability in the efficiency of collecting receivables over the years.

Average payables payment period

The average payables payment period increased significantly from 58 days in 2019 to 89 days in 2020, then declined progressively to 44 days in 2023 before increasing again to 55 days in 2024. This pattern indicates changing terms or practices in the timing of payments to suppliers, with a general movement towards shorter payment periods after 2020, though a modest increase occurred in the last year.

Cash conversion cycle

The cash conversion cycle displays a rising trend from 17 days in 2019 to a high of 124 days in 2023, followed by a decline to 104 days in 2024. This metric’s increase suggests a lengthening of the time between cash outflows and inflows, which could imply reduced liquidity efficiency during this period. The partial improvement in 2024 reflects some recovery in operational cash flow timing.