Roper Technologies Inc. (NASDAQ:ROP)

Inventory Turnover

The inventory turnover ratio demonstrated an overall upward trend from 10.02 in 2018 to 14.55 in 2022, with a slight dip in 2019 before consistently increasing through 2022. This suggests enhanced efficiency in managing inventory over the period.

Receivables Turnover

The receivables turnover ratio decreased from 7.41 in 2018 to a low point of 6.4 in 2020, then recovered to 7.41 by 2022. This fluctuation indicates initial challenges in collecting receivables that improved by the end of the period.

Payables Turnover

The payables turnover ratio generally increased, moving from 11.57 in 2018 to 13.21 in 2022. This indicates the company accelerated payments to suppliers or had changes in payment terms over time.

Working Capital Turnover

Working capital turnover is reported only for 2018 at 31.95, with no data available for subsequent years, preventing trend analysis for this indicator.

Average Inventory Processing Period

The average inventory processing period showed a downward trend from 36 days in 2018, slightly fluctuating but decreasing sharply to 25 days in 2022. This improvement aligns with the increased inventory turnover, reflecting faster inventory movement.

Average Receivable Collection Period

The average receivable collection period increased from 49 days in 2018 to 57 days in 2020, then decreased back to 49 days by 2022. This pattern aligns with the receivables turnover ratio, indicating variability in collection efficiency that ultimately improved.

Operating Cycle

The operating cycle lengthened from 85 days in 2018 to 93 days in 2020 before declining to 74 days in 2022. This reflects the combined effects of inventory and receivables management improvements, with the most recent years showing a more efficient overall cash flow cycle.

Average Payables Payment Period

The average payables payment period showed a slight decreasing trend from 32 days in 2018 to 28 days in 2022, suggesting quicker payments to suppliers over time.

Cash Conversion Cycle

The cash conversion cycle increased from 53 days in 2018 to a peak of 61 days in 2019, then gradually declined to 46 days by 2022. This indicates that despite some early inefficiencies, the company improved its cash flow management significantly towards the end of the period.

Cost of Sales

The cost of sales exhibits a generally downward trend from 2018 to 2022. Starting at $1,911,700 thousand in 2018, it shows a slight increase to $1,939,700 thousand in 2019 and continues to rise to $1,984,100 thousand by 2020. However, from 2020 onwards, the cost of sales decreases more substantially, reaching $1,860,400 thousand in 2021 and dropping further to $1,619,000 thousand by 2022. This suggests a reduction in production costs or a shift in business activity leading to lower costs over the last two years analyzed.

Inventories, Net

Net inventories remained relatively stable between 2018 and 2020, with minor fluctuations from $190,800 thousand to $198,600 thousand and $198,400 thousand respectively. In 2021, inventories decreased noticeably to $176,100 thousand and saw a more pronounced reduction in 2022, falling to $111,300 thousand. This significant decline could indicate improved inventory management, faster turnover, or potential changes in inventory policy or demand reduction.

Inventory Turnover Ratio

The inventory turnover ratio, which measures how efficiently inventory is managed by comparing cost of sales to average inventory levels, initially decreased slightly from 10.02 in 2018 to 9.77 in 2019. It then modestly increased to 10.00 in 2020 and further to 10.56 in 2021, showing incremental improvements in inventory efficiency. In 2022, the ratio surged to 14.55, representing a substantial enhancement in inventory turnover. This sharp increase aligns with the observed sharp decrease in inventory levels, suggesting that the company significantly accelerated the rate at which it converted inventory into sales during this period.

The financial data reveals several notable trends over the five-year period examined.

Net Revenues

Net revenues showed a consistent increase from 2018 through 2021, growing from approximately $5.19 billion to nearly $5.78 billion. This represents an aggregate growth of about 11.3% over four years. However, in 2022, net revenues declined to approximately $5.37 billion, indicating a decrease of around 7% compared to the previous year. This reversal may suggest market challenges or reduced sales during the latest period.

Accounts Receivable, Net

Accounts receivable net values increased steadily from $700.8 million in 2018 to a peak of $863 million in 2020. After reaching this peak, there was a slight decline to $839.4 million in 2021 and a more significant reduction to $724.5 million in 2022. This trend indicates effective management of receivables or possibly a tightening of credit terms aligned with the drop in revenues in the final year.

Receivables Turnover Ratio

The receivables turnover ratio decreased from 7.41 in 2018 to a low of 6.4 in 2020, reflecting a slower pace of collecting receivables or extending credit terms during that period. The ratio improved to 6.88 in 2021 and returned to the 2018 level of 7.41 in 2022. The fluctuation suggests that collection efficiency weakened initially but recovered by the end of the observed timeframe, coinciding with the reduction in accounts receivable amounts.

Cost of sales

The cost of sales exhibited a fluctuating trend over the five-year period. It increased moderately from 1,911,700 thousand US dollars in 2018 to a peak of 1,984,100 thousand US dollars in 2020. However, there was a notable decline thereafter, falling to 1,860,400 thousand US dollars in 2021 and further to 1,619,000 thousand US dollars by the end of 2022. This downward trend in the last two years indicates potential improvements in cost efficiency or reduced sales volume.

Accounts payable

Accounts payable showed a generally declining pattern throughout the period. Starting at 165,300 thousand US dollars in 2018, it slightly decreased to 162,000 thousand in 2019, then rose somewhat to 177,800 thousand in 2020 before declining significantly in the last two years to 150,800 thousand in 2021 and 122,600 thousand in 2022. This reduction in accounts payable may reflect a strategic shift towards faster payment cycles or reduced credit purchases.

Payables turnover ratio

The payables turnover ratio demonstrated a generally increasing trend over the timeframe, indicating an acceleration in the rate at which payables are being settled. The ratio moved from 11.57 in 2018 to 11.97 in 2019, declined slightly to 11.16 in 2020, and then increased notably in the subsequent years to 12.34 in 2021 and 13.21 in 2022. The rising ratio in the recent years corroborates the observation of decreasing accounts payable balances and suggests a tightening in payment practices or improved liquidity management.

Working Capital

The working capital experienced a significant decline over the observed period. Starting at a positive 162,500 thousand US dollars at the end of 2018, it turned negative in 2019 with -397,900 thousand US dollars. This negative trend continued and deepened, reaching -692,100 thousand US dollars in 2020, -700,700 thousand US dollars in 2021, and further declining to -960,100 thousand US dollars by the end of 2022. This pattern indicates increasingly strained short-term liquidity and suggests growing challenges in meeting current obligations using current assets.

Net Revenues

Net revenues showed an upward trend from 2018 through 2021, rising steadily from 5,191,200 thousand US dollars in 2018 to a peak of 5,777,800 thousand US dollars in 2021. However, in 2022, net revenues declined to 5,371,800 thousand US dollars, reflecting a reduction compared to the previous year but still above the 2018 baseline. The overall increase over the period, followed by a recent decrease, may suggest market fluctuations or operational impacts influencing sales performance.

Working Capital Turnover

Working capital turnover was only reported for the year ending 2018, with a ratio of 31.95. Subsequent years lack data for this metric, limiting the ability to analyze turnover trends. The high initial turnover ratio suggests efficient use of working capital relative to net revenues in 2018, yet given the subsequent negative working capital figures, this efficiency likely deteriorated.

Inventory Turnover

The inventory turnover ratio exhibited a fluctuating yet overall increasing trend between 2018 and 2022. Starting at 10.02 in 2018, it slightly decreased to 9.77 in 2019, then recovered to 10 in 2020. From 2020 onwards, the ratio showed continuous growth, reaching 10.56 in 2021 and surging significantly to 14.55 in 2022. This final value indicates a notable enhancement in the frequency at which inventory is sold and replaced.

Average Inventory Processing Period

The average inventory processing period generally declined over the observed years, denoting an improvement in inventory management efficiency. It began at 36 days in 2018, increased marginally to 37 days in 2019, then reverted to 36 days in 2020. From 2020, the period progressively shortened each year—to 35 days in 2021—and then markedly decreased to 25 days by 2022. This decreasing timeframe aligns with the rising inventory turnover, illustrating a more rapid conversion of inventory into sales.

Overall Analysis

The combined trends in inventory turnover and average inventory processing period suggest enhanced operational efficiency in inventory handling. The steep increase in turnover and the significant reduction in inventory days in 2022 indicate a potential strategic improvement or operational adjustment that led to quicker inventory cycles. This could reflect better demand forecasting, supply chain optimization, or more effective inventory control measures implemented during this period.

Receivables Turnover

The receivables turnover ratio exhibited a generally stable pattern over the observed period, starting at 7.41 in 2018, dipping to its lowest point of 6.40 in 2020, and then recovering to return to the initial level of 7.41 by the end of 2022. This indicates a slight decline in the efficiency of collecting receivables up to 2020, followed by a gradual improvement in subsequent years.

Average Receivable Collection Period

Complementary to the receivables turnover, the average collection period increased from 49 days in 2018 to a peak of 57 days in 2020, reflecting slower collection during this time. Thereafter, it decreased back to 49 days by 2022, suggesting an improvement in the collection speed and a return to earlier efficiency levels.

Overall Analysis

The trends in both ratios consistently mirror each other, demonstrating a period of reduced collection efficiency around 2020, with recovery in the following years. This may imply operational or market conditions that temporarily impacted receivables management but were subsequently addressed. By 2022, the company appears to have restored its receivables turnover and collection period to levels comparable to those in 2018, indicating regained stability in working capital management.

Average Inventory Processing Period

The average inventory processing period remained relatively stable from 2018 to 2021, fluctuating slightly between 35 and 37 days. However, in 2022, there was a notable decrease to 25 days, indicating a significant improvement in inventory turnover efficiency during that year.

Average Receivable Collection Period

The average receivable collection period demonstrated an upward trend from 49 days in 2018 to a peak of 57 days in 2020. Following this peak, the period decreased to 53 days in 2021 and further down to 49 days in 2022, returning to the initial level observed in 2018. This suggests a deterioration in receivables management during 2019-2020 followed by improvements in the subsequent two years.

Operating Cycle

The operating cycle increased steadily from 85 days in 2018 to a high of 93 days in 2020, reflecting longer periods tied up in inventory and receivables. After 2020, the operating cycle shortened to 88 days in 2021 and further decreased to 74 days in 2022, indicating enhanced overall operational efficiency, particularly influenced by the sharp reduction in the inventory processing period in 2022.

Payables Turnover

The payables turnover ratio exhibited fluctuations over the five-year period. Starting at 11.57 in 2018, it increased slightly to 11.97 in 2019, followed by a decline to 11.16 in 2020. Subsequently, the ratio rose to 12.34 in 2021 and further climbed to 13.21 in 2022. This pattern indicates an overall improvement in the efficiency with which the company settles its payables, particularly notable in the last two years.

Average Payables Payment Period

The average payables payment period, measured in days, shows an inverse relationship to the payables turnover ratio. It started at 32 days in 2018 and decreased to 30 days in 2019. There was a slight increase to 33 days in 2020, which then dropped back to 30 days in 2021 and further declined to 28 days in 2022. This decreasing trend in days indicates the company has progressively shortened the duration for settling its payables, reflecting an improvement in payment timeliness toward the end of the period.

Overall Insight

Over the analyzed period, the company demonstrated a general trend toward more efficient management of payables. Despite minor fluctuations, payables turnover increased and the payment period decreased, which suggests enhanced liquidity management and a strategic focus on quicker settlement of obligations. This could positively impact supplier relations and potentially the credit terms available to the company.

Average Inventory Processing Period

The average inventory processing period remained relatively stable from 2018 to 2021, fluctuating slightly between 35 and 37 days. However, in 2022, there was a notable decrease to 25 days, indicating a significant improvement in inventory turnover and efficiency in processing inventory.

Average Receivable Collection Period

The average receivable collection period showed an increasing trend from 49 days in 2018 to a peak of 57 days in 2020, suggesting a slower collection of receivables during this period. After 2020, the period shortened, decreasing to 53 days in 2021 and returning to 49 days by 2022, aligning with the 2018 level and indicating improved effectiveness in collecting receivables towards the end of the period.

Average Payables Payment Period

The average payables payment period experienced minor fluctuations with an initial decrease from 32 days in 2018 to 30 days in 2019. It then increased slightly to 33 days in 2020 before declining again to 30 days in 2021 and further to 28 days in 2022. Overall, this reflects a trend towards quicker payment to suppliers over the period analyzed.

Cash Conversion Cycle

The cash conversion cycle increased from 53 days in 2018 to a peak of 61 days in 2019, then declined gradually through 2020 and 2021, reaching 58 days and ultimately dropping significantly to 46 days in 2022. This trend indicates an overall improvement in operating efficiency, as the company has been able to reduce the time between outlay of cash and cash recovery.