Super Micro Computer Inc. (NASDAQ:SMCI)

Inventory Turnover

The inventory turnover ratio generally declined from 3.59 in September 2020 to a low near 2.41 in March 2024, indicating slower inventory movement over this period. There was a notable rebound in late 2024, peaking at 5.07 in September 2024, before declining again to 3.3 by September 2025. This suggests fluctuations in inventory efficiency with periods of both slower and faster turnover.

Receivables Turnover

The receivables turnover ratio showed some volatility, dropping from 10.23 in September 2020 to lows near 5.48 in June 2024, followed by recovery towards 9.97 in September 2025. The pattern indicates varying efficiency in collecting receivables, with prolonged collection periods particularly in mid-2024, though some improvement occurred thereafter.

Payables Turnover

Payables turnover declined from 8.33 in September 2020 to as low as 4.94 in June 2021, then fluctuated with a sharp spike from mid-2024, peaking at 33.19 in September 2024. This indicates a significant acceleration in paying suppliers during that time, reducing payment period substantially. After mid-2025, payables turnover slowed down, showing more regular payment cycles.

Working Capital Turnover

The working capital turnover remained relatively stable around 3.7 to 4.1 from 2020 through early 2023, then gradually declined from 3.76 in September 2023 to around 2.04 by September 2025. This trend points to a decreasing efficiency in using working capital to generate sales over the latter periods.

Average Inventory Processing Period

The average inventory processing days generally increased from 102 days in September 2020 to a peak of 152 days in March 2024, indicating slower inventory movement. A significant reduction followed, reaching as low as 72 days in September 2024, before climbing again to 110 days by September 2025. This pattern mirrors the inventory turnover ratio trends, reflecting variable inventory management efficiency.

Average Receivable Collection Period

The average collection period for receivables lengthened from 36 days in September 2020 to peaks around 67 days in June 2024, signifying slower collections. A moderate improvement occurred afterward, with collection days fluctuating between 37 and 54 days through to September 2025. This volatility suggests challenges in maintaining consistent receivable management.

Operating Cycle

The operating cycle, representing total days to turn inventory and receivables into cash, extended from 138 days in September 2020 to a high of 203 days in March 2024. After this peak, it shortened considerably to around 119 days by June 2025 before increasing again to 154 days in September 2025. The extended cycle indicates slower overall cash conversion at certain periods, with some phases of improved efficiency.

Average Payables Payment Period

The payables payment period lengthened from 44 days in September 2020 to 74 days in June 2021, remaining elevated until early 2023. A marked contraction occurred around late 2024, dropping to as low as 11 days in September 2024, reflecting much quicker payment to suppliers. This was followed by a slight increase back to approximately 25 days by September 2025.

Cash Conversion Cycle

The cash conversion cycle fluctuated between approximately 90 and 115 days over most quarters from 2020 through early 2023. It increased sharply to 163 days in March 2024, denoting a slower cash recovery process, before declining towards 100 days by mid-2025. However, an increase back to 129 days occurred by September 2025. The cycle reflects overall working capital management effectiveness, with notable deterioration followed by partial recovery.

Cost of Sales

The cost of sales exhibited a generally increasing trend over the observed periods, starting from approximately 632 million US dollars and escalating to peaks exceeding 5 billion US dollars in later quarters. Notably, there were substantial rises between the years 2022 and 2024, with significant spikes around mid-2023 and mid-2024. However, some quarters showed a decline or stabilization after peak points, indicating potential fluctuations in sales volume or costs.

Inventories

Inventories increased substantially throughout the periods, beginning at about 774 million US dollars and reaching over 5.7 billion US dollars by the end of the observed timeline. The growth was steady with particularly notable surges from 2022 onwards, peaking around late 2024 and early 2025. This suggests a buildup of stock, which could relate to anticipated demand, supply chain strategies, or slow-moving inventory in certain periods.

Inventory Turnover

The inventory turnover ratio generally declined from close to 3.6 in late 2020 to below 2.5 by mid-2022, reflecting slower inventory movement during that interval. Following this, the ratio fluctuated moderately but showed an upward trend towards early 2024, reaching levels above 5 at some points, which indicates increased efficiency in converting inventory into sales. In more recent periods, turnover decreased slightly again but remained above 3, suggesting a partial stabilization in inventory management efficiency.

Overall Insights

The combined analysis reveals growing inventory levels alongside rising cost of sales, implying continual scaling of operations or stockpiling. Fluctuations in inventory turnover ratios highlight periods of both slower and faster inventory movement, likely influenced by market demand, supply conditions, or internal operational adjustments. The marked increase in inventory towards the latter periods may warrant a closer look at inventory management policies and sales forecasts to avoid potential overstocking risks.

The financial data analyzed reveals several notable trends and patterns in key performance metrics over the observed periods.

Net Sales

Net sales demonstrate an overall upward trajectory from September 2020 through subsequent periods, with some fluctuations. Initially, net sales steadily increased from approximately 762 million to over 1.85 billion by September 2022. This was followed by a significant dip around March 2023 where sales contracted to roughly 1.28 billion. However, from March 2023 onward, net sales rebounded strongly, peaking near 5.93 billion in September 2024, before showing some volatility with declines in later quarters. This pattern indicates a period of robust growth overall, albeit with some short-term volatility.

Accounts Receivable, Net

The accounts receivable balance follows a broadly increasing trend over the analyzed quarters, moving from approximately 323 million at the start to peaks exceeding 3 billion by mid-2024. Notable growth phases include sharp increases particularly from March 2023 forward, suggesting either higher sales on credit terms or elongation in collection periods. Despite seasonal or short-term fluctuations, the upward trend indicates the company’s expanding credit sales or delayed collections.

Receivables Turnover Ratio

The receivables turnover ratio presents a mixed and somewhat volatile pattern with values ranging from about 5.48 to 10.23 over the periods. Initially, turnover ratios are higher around 10, indicating more effective collections relative to credit sales. The ratio declines through mid-2022, reaching lows near 6, suggesting slower collection efficiency or increased credit exposure. The ratio then oscillates, with periods of recovery and decline, reflecting inconsistent collection performance. The lower turnover in some later periods aligns with the rise in accounts receivable balances.

Overall Insights

The simultaneous increase in net sales and accounts receivable with a declining and fluctuating receivables turnover ratio signals growing sales volumes accompanied by extended collection periods or higher credit risk. The sudden drop in net sales around early 2023, followed by a sharp rebound, may point to temporary market disruptions or operational challenges that were subsequently addressed. The variability in receivables turnover ratio warrants attention to credit policies and collection practices, as extended receivable durations can impact cash flow.

The analysis of the quarterly financial data reveals notable fluctuations and trends in the cost of sales, accounts payable, and payables turnover ratios over the observed periods.

Cost of Sales

The cost of sales displays a general upward trajectory from September 2020 through to mid-2024, rising from approximately 632 million USD to a peak exceeding 5 billion USD by June 2024. This growth is characterized by periods of accelerated increases, particularly evident between late 2022 and mid-2024, suggesting significant expansion in production or procurement costs. However, towards the latter part of the series, a decline is observed with the cost of sales reducing to approximately 4.55 billion USD by September 2025, indicating potential changes in operational scale or cost management strategies.

Accounts Payable

Accounts payable figures fluctuate throughout the periods with no consistent trend but a tendency to increase overall from 333 million USD in September 2020 to peaks above 1.68 billion USD by September 2024. Notably, there are sharp rises in late 2023 and early 2024, followed by a significant drop in late 2024 before rising again. The volatility suggests episodic changes in payment terms or supplier activities, possibly driven by changes in purchasing volume or cash flow management policies.

Payables Turnover Ratio

The payables turnover ratio exhibits considerable variability ranging from a low around 4.94 to extraordinarily high values exceeding 33 during late 2024, which is atypical and warrants further investigation. The ratio generally trends downward in the early periods with some recovery in 2022, indicating that the company initially took longer to pay its suppliers but improved payment efficiency at certain points. The extreme spikes in late 2024 and subsequent declines suggest abnormal payment cycles or accounting adjustments. The overall pattern indicates fluctuating efficiency in managing accounts payable, with periods of both accelerated and decelerated payment velocity.

In summary, the company shows substantial growth in cost-related activities alongside volatile accounts payable management. The irregularities and spikes in payables turnover may reflect shifts in operational or financial policies affecting supplier payments. Continued monitoring is recommended to understand the implications of these variations on liquidity and supplier relationships.

Working Capital

The working capital demonstrates an overall increasing trend from approximately 890 million USD at the end of September 2020 to over 10.3 billion USD by the third quarter of 2025. This growth is marked by steady increments in most quarters, with a particularly sharp rise beginning in late 2023 and continuing through 2024. This indicates a substantial accumulation of current assets over current liabilities, suggesting enhanced liquidity and possibly expanded operational scale.

Net Sales

Net sales show a generally upward trajectory over the observed period, starting from about 762 million USD in late 2020 and peaking near 5.75 billion USD around mid-2025. Notably, sales remain volatile with significant fluctuations quarter-to-quarter, including sharp increases in the latter half of 2023 and the first half of 2024, followed by some declines thereafter. This volatility might reflect changes in market demand, seasonal effects, or strategic business shifts affecting revenue generation.

Working Capital Turnover

The working capital turnover ratio initially hovers around values close to 3.7 to 4.1 between 2020 and early 2023, indicating efficient utilization of working capital to generate sales during this period. However, from late 2023 onward, the ratio declines noticeably, dropping to approximately 2.0 by mid-2025. This decreasing trend suggests a relative decrease in sales generation efficiency per unit of working capital, likely due to the rapid growth of working capital outpacing sales growth during this later period.

Summary Insight

Overall, the company has significantly increased its working capital and net sales over time, reflecting business expansion. However, the efficiency of working capital in driving sales has diminished in the most recent quarters, possibly indicating that the company is holding more current assets relative to sales or facing challenges in converting working capital into revenue at the previous rate. Continuous monitoring of this ratio will be important to assess the operational effectiveness and to optimize asset management strategies going forward.

Inventory Turnover

The inventory turnover ratio displays notable fluctuations over the observed periods. Initially, the ratio declined from 3.59 to a low of 2.5 between September 2020 and March 2022, suggesting a slower rate of inventory turnover during that time. Subsequently, there is a recovery and increase peaking at 5.07 by December 2024, indicating more efficient inventory management or stronger sales relative to inventory levels. Following this peak, the turnover ratio decreases again to 3.3 by September 2025. This pattern reflects alternating periods of slower and faster inventory movement.

Average Inventory Processing Period

The average inventory processing period, expressed in days, demonstrates an inverse relationship to the inventory turnover ratio. It increases gradually from 102 days in September 2020 to a peak of 152 days in March 2024, signifying prolonged inventory holding times. After this peak, the period shortens sharply to 72 days by December 2024, aligning with the inventory turnover ratio increase during the same timeframe. Toward the end of the period, the processing days rise again to 110 by September 2025. These changes suggest fluctuations in inventory management efficiency, with some periods experiencing longer inventory retention and others faster turnover.

Overall Trends and Insights

The data shows cyclical behavior in inventory management effectiveness. Prolonged inventory processing periods correspond with reduced turnover ratios, indicating potential slowdowns in sales or overstock situations. Conversely, shorter processing times correspond with higher turnover ratios, reflecting periods of improved liquidity of inventory. The sharp changes near late 2024 imply a strategic adjustment or market condition shift that temporarily enhanced inventory turnover efficiency. Monitoring these metrics can provide insight into operational efficiency and responsiveness to market demand.

Receivables Turnover

The receivables turnover ratio demonstrated a fluctuating trend throughout the periods. Initially, it started at a high level around 10.23 and 10.1 in the last two quarters of 2020, then declined substantially to a low range between 5.48 and 6.88 between mid-2024 and late 2024. The ratio showed intermittent recoveries, reaching peaks close to 9.97 in mid-2025, but generally maintained a downward trajectory from the end of 2020 until mid-2024. Such fluctuations indicate variability in the company's efficiency in collecting receivables during the analyzed period.

Average Receivable Collection Period

The average receivable collection period experienced an inverse pattern relative to the receivables turnover ratio, reflecting increased days outstanding in periods of lower turnover. Beginning with approximately 36 days in late 2020, the collection period extended to its highest point at 67 days around mid-2024. Periods of shorter collection, around 36-44 days, were observed primarily in late 2020 and early 2025. The rise in days outstanding suggests challenges in timely collection during several quarters, particularly from mid-2021 through 2024, which might have impacted cash flow.

Overall Insights

The inverse relationship between the receivables turnover and the average collection period is consistent with typical financial dynamics; as turnover decreases, the collection period lengthens. The data reveals a period marked by less efficient receivable management starting in early 2021 and extending through 2024, characterized by slower collection cycles. The recovery towards the later periods may indicate corrective measures or improved market conditions. Persistent variability in these metrics highlights the need for continued focus on receivables management to optimize working capital.

The analysis of the quarterly financial metrics reveals notable fluctuations and trends in key operational efficiency indicators over the periods examined.

Average Inventory Processing Period

The number of days required to process inventory exhibited a general upward trend from the beginning, starting around 102 days and peaking near 152 days in the earlier years. This increase suggests increasing inventory holding times, potentially indicating slower inventory turnover. However, in more recent periods, there was notable volatility with intermittent decline periods reaching lows around 72 days and subsequent increases again towards 110 days. Overall, the data suggests challenges in maintaining consistent inventory efficiency.

Average Receivable Collection Period

The period for collecting receivables showed variability over time, generally ranging from the mid-30s to upper 50s in number of days. Initial periods were relatively stable around 36 days, followed by gradual increases peaking near 67 days in some quarters. The fluctuations imply varying efficiency in credit and collections management, with some quarters indicating slower collection cycles which could affect liquidity positions. There are periods where the collection period decreased somewhat, suggesting occasional improvements in receivables management.

Operating Cycle

The combined operating cycle, reflecting total days tied up in inventory and receivables, trended upwards initially, rising from approximately 138 days to a peak exceeding 200 days, indicating extended duration to convert resources into cash. Following this peak, a decline occurred bringing the cycle down to near 119 days in some recent quarters, suggesting improved overall efficiency in working capital management. However, subsequent quarters showed increases again up to approximately 154 days, indicating fluctuating effectiveness in managing the full cycle.

In summary, the periods under review reflect a dynamic operational environment with shifts in inventory processing and receivable collection times influencing the overall operating cycle. The initial trend towards longer cycles could imply growing working capital demands or operational bottlenecks, whereas more recent volatility suggests attempts to optimize these processes with mixed results. Continuous monitoring and targeted management actions appear necessary to stabilize and improve these efficiency metrics.

Payables Turnover Trend

The payables turnover ratio demonstrates considerable fluctuation over the analyzed periods. Initially, the ratio decreased from 8.33 to a low of 4.94 within the first year, indicating a slowing in the company’s rate of paying off its payables. Following this decline, a gradual recovery is observed, with the ratio climbing back above 6 in mid-2022 and reaching highs above 9 by early 2023. A notable spike occurs in late 2024 and early 2025, peaking at 33.19 before declining but still remaining elevated compared to early periods.

Average Payables Payment Period Trend

The average payables payment period (in days) shows an inverse relationship with the payables turnover ratio. Initially, the payment period lengthened significantly from 44 days up to 74 days, consistent with the declining turnover ratio. Subsequently, a reduction in payment days is evident, dropping to around 37-40 days in early 2023. However, there is some volatility afterwards, with days increasing again in late 2023, then sharply declining to a minimum of 11-12 days in late 2024 and maintaining relatively low levels thereafter.

Correlation and Interpretations

There is a clear inverse correlation between the payables turnover ratio and the average payables payment period, as expected. Periods of lower payables turnover are accompanied by longer payment cycles, indicating slower payment to suppliers. Conversely, higher turnover ratios correspond with quicker payment cycles. The significant spike in turnover ratio and concurrent drop in payment period in late 2024 suggests a strategic shift or operational change resulting in faster settlement of payables. This could reflect improved liquidity management, changes in supplier terms, or adjustments in working capital strategy during this timeframe.

Overall Insights

The fluctuations in payables turnover and payment period indicate variability in the company’s payment practices and possibly working capital management over the periods reviewed. The trend towards faster payment in the latter periods may imply strengthened cash flow or revised supplier relationships. However, the sharp and unusual spike in turnover ratio in late 2024 warrants further investigation to understand the underlying causes and assess sustainability.

Average Inventory Processing Period

The average inventory processing period shows an overall fluctuating trend with notable increases and decreases over the observed quarters. Starting at 102 days, the period gradually increases to a peak of 152 days in March 2024, indicating slower inventory turnover during this time. Following this peak, there is a decline to 72 days by September 2024, suggesting improved inventory management or faster sales. The period lengthens again toward the end, reaching 110 days in September 2025, reflecting variability in inventory holding duration.

Average Receivable Collection Period

The receivable collection period demonstrates variability without a clear sustained trend. Starting at 36 days, it increases to as high as 67 days in June 2024, reflecting slower collections from customers during mid-periods. There are intermittent decreases, such as down to 37 days in March 2023 and September 2025, which may indicate occasional improvements in receivables management. The fluctuations suggest inconsistent collection efficiency over the quarters.

Average Payables Payment Period

The payable payment period presents a notable decreasing trajectory over the timeframe. From an initial 44 days, it peaks at 74 days in June 2021, indicating extended payment terms or delayed payments early on. Thereafter, the period declines steadily to single-digit days by September 2024 and remains low thereafter, reaching 24 days by September 2025. This suggests a significant shift toward faster payment to suppliers in the latter part of the timeline.

Cash Conversion Cycle

The cash conversion cycle (CCC) exhibits considerable variation and generally elevated levels during the observed periods, starting at 94 days and rising to peaks around 163 days in March 2024. This increase aligns with lengthened inventory and receivables periods combined with shorter payables periods, resulting in more cash tied up in operations. Subsequent quarters show a decrease in CCC to approximately 100 days or below toward mid-2025, implying improved working capital management and more efficient cash flow conversion.