Super Micro Computer Inc. (NASDAQ:SMCI)

Inventory Turnover

The inventory turnover ratio shows a declining trend from 4.48 in September 2018 to a low of around 2.41 in March 2024, indicating slower inventory movement over time. However, after March 2024, there is a noticeable recovery, with the ratio increasing again to 5.07 by September 2024, suggesting improved efficiency in inventory management during the latest period.

Receivables Turnover

Receivables turnover fluctuates between roughly 6.16 and 10.23, with peaks mostly observed toward the end of 2020 and mid-2023. Despite the variability, the general pattern shows slight volatility without a clear upward or downward trend, implying inconsistent collection efficiency over the periods.

Payables Turnover

This ratio shows significant variation, rising as high as 33.19 in March 2025, which is a sharp increase compared to prior periods where values oscillated between about 4.94 and 9.76. The substantial spike near the latest date may indicate quicker payments to suppliers or changes in credit terms.

Working Capital Turnover

The working capital turnover decreases gradually from about 4.29 in September 2018 to roughly 1.86 in June 2024, highlighting a reduction in how effectively the company uses working capital to generate sales. Though there is some recovery post mid-2024, the ratio remains below earlier levels.

Average Inventory Processing Period

Inventory days increase steadily from 81 days in September 2018 to a peak of 152 days in March 2024, reflecting slower inventory processing over time. A subsequent decline to 72 days by September 2024 indicates a marked improvement in inventory turnover speed toward the end of the data series.

Average Receivable Collection Period

Receivable collection days show moderate fluctuation, generally ranging between 36 and 67 days. There is an observable increase reaching peaks around 59-67 days at multiple points (late 2021, early 2023), suggesting periods of slower collections, followed by reductions during some quarters, indicating an irregular but somewhat stable collection pattern.

Operating Cycle

The operating cycle lengthens from 122 days in September 2018 to a maximum of 203 days in March 2025, showing that the time taken from inventory acquisition to cash collection is generally increasing, which may indicate operational inefficiencies or extended processing and collection times over the period.

Average Payables Payment Period

Payables payment period fluctuates, initially increasing from 44 days to a peak around 74 days in late 2020, then showing a general decline with a sharp drop to 11-12 days in early 2025. The most recent steep decrease implies faster payments to suppliers or revised payment policies near the end of the timeline.

Cash Conversion Cycle

The cash conversion cycle extends from 78 days to a high of 163 days in mid-2024, reflecting longer durations before cash inflows are realized post expenditures. A decline towards 107 days by September 2024 suggests some improvement in overall cash flow efficiency, though the cycle remains longer than initial periods.

The data reveals notable trends in cost of sales, inventories, and inventory turnover over the observed periods. Overall, both cost of sales and inventories exhibit an increasing trajectory, albeit with fluctuations, while inventory turnover ratios generally show a declining pattern with intermittent rises.

Cost of Sales

Cost of sales figures demonstrate a steady rise from the initial period through the mid-2022 period, increasing from approximately 848 million USD to over 1.5 billion USD by late 2022. After that, the data indicates pronounced volatility, with sharp increases and decreases, particularly evident in the periods ending 2023 and 2024. For instance, after reaching 3.1 billion USD by December 2023, costs decreased substantially in subsequent quarters, reflecting significant variability in operational expenses or production activity.

Inventories

The inventory levels largely parallel the upward trend observed in cost of sales, increasing from around 821 million USD in late 2018 to peaks exceeding 4.9 billion USD by late 2024. Notably, there is a sharp rise from early 2023 onward, suggesting aggressive inventory accumulation or stockpiling. This pattern includes some periods of reduced inventory levels, such as in mid-2022 and mid-2023, indicating potential inventory optimization or demand fluctuations. Despite the overall increase, the substantial inventory build-up in the later years may raise concerns about inventory management efficiency and capital tied up in stock.

Inventory Turnover Ratio

Inventory turnover ratios are available from March 31, 2019, onwards and initially show a declining trend from 4.48 to around 2.5 by mid-2022, implying that inventory is turning over more slowly relative to prior periods. This reduction aligns with the increasing inventory balances and indicates potential challenges in clearing stock or adjusting production to demand. However, intermittent rises in turnover during certain quarters, such as reaching above 4.0 during parts of 2022 and 2023, suggest occasional improvements in inventory management or sales efficiency. Toward the end of the series, a notable increase in turnover ratio to over 5.0 is observed, which may represent a substantial improvement in inventory utilization or a decrease in inventory levels relative to sales.

In summary, the company's cost of sales and inventories have trended upward over the period, with significant expansion in inventory levels that have outpaced the growth of cost of sales at certain points, potentially impacting liquidity or asset management. The inventory turnover ratio's downward movement over several years highlights a lengthening inventory cycle, counterbalanced by sporadic recoveries indicating variable operational performance. These dynamics suggest the need for close monitoring of inventory policies and production planning to maintain efficient working capital management.

The analysis of the quarterly financial data reveals distinct trends and fluctuations across the provided periods, particularly in net sales, accounts receivable, and receivables turnover ratios.

Net Sales

Net sales exhibit a generally upward trajectory with notable volatility. The period starting in September 2018 shows net sales at approximately 971 million US dollars, declining through early 2019 before recovering significantly by mid-2021 and continuing to increase sharply into 2024. The highest net sales are recorded in the quarters of late 2023 and early 2024, with amounts exceeding 5 billion US dollars. This strong growth phase contrasts with earlier periods of lower sales, suggesting cyclical influences or increases in demand and operational capacity.

Accounts Receivable, Net of Allowance for Credit Losses

Accounts receivable values follow a broadly upward pattern similar to sales but with greater fluctuations. Starting near 451 million US dollars in late 2018, the figures demonstrate increases in tandem with sales growth, peaking in early 2025 at over 3 billion US dollars. The decline in accounts receivable during some quarters, such as in late 2020, correlates with corresponding falls in net sales, indicating effective collection periods during those times. The rising receivables in later periods suggest extended credit sales or slowed collections accompanying the surge in revenues.

Receivables Turnover Ratio

The receivables turnover ratio offers insight into the efficiency of cash collections against net sales. Early data in 2019 reveals generally high turnover ratios ranging from approximately 8.9 to 10.2, indicating rapid collections relative to sales at that time. There is a noticeable decline beginning in late 2021 and continuing sporadically through 2024, with ratios dropping to as low as about 5.5. This decrease in turnover suggests a lengthening in the collection period, likely related to the increase in accounts receivable and possibly reflecting more lenient credit terms or slower customer payments during periods of rapid sales growth.

Overall, the data indicate a phase of substantial growth in net sales and accounts receivable beginning in 2021, accompanied by a reduction in receivables turnover efficiency. The company may be expanding its credit sales approach or facing challenges in collections during periods of increased sales volume. This evolving dynamic warrants monitoring to balance growth with liquidity and credit risk management.

The cost of sales displayed notable fluctuations over the analyzed quarters. From September 2018 to December 2018, there was a slight decline followed by a significant drop by March 2019. Subsequently, this metric experienced multiple increases and decreases, with a marked upward trajectory starting June 2021 reaching a peak around December 2023. After this peak, a decrease was observed towards September 2024.

Accounts payable showed variability throughout the periods but demonstrated an overall increasing trend over time. Starting from roughly 466 million US dollars in September 2018, accounts payable gradually increased with intermittent fluctuations, peaking around December 2023 near 1.68 billion US dollars before dropping considerably by the last recorded quarter in September 2024.

The payables turnover ratio presented changing dynamics which impact assessment of how quickly accounts payable are paid off. It ranged broadly from approximately 4.94 to 9.76 in most quarters. However, there was an anomalous surge in payables turnover ratio in the final quarters recorded (March to September 2024), reaching extremely high levels above 29, which suggests substantially faster payment cycles or reporting inconsistencies in those periods.

Overall, the upward trend in cost of sales combined with a rising level of accounts payable until late 2023 may indicate growing business activity or higher input costs. The sharp increases in payables turnover in the final quarters could reflect changes in payment policies or operational adjustments. The subsequent decline in both cost of sales and accounts payable toward the last quarter suggests a possible reduction in scale or shift in operational management.

Working Capital

The working capital demonstrates a general upward trend over the reported periods. Starting from approximately 757 million USD in September 2018, it shows steady growth quarter over quarter, reaching over 1.7 billion USD by September 2022. Notably, there is a substantial increase beginning in December 2023, where working capital leaps sharply from around 2.9 billion USD to above 8 billion USD by March 2025. This marked rise suggests a significant expansion in current assets relative to current liabilities during the latter periods.

Net Sales

Net sales exhibit considerable variability throughout the quarters analyzed. Initially fluctuating in the 700 to 900 million USD range from 2018 to early 2021, net sales show a gradual upward trajectory, peaking near 2.2 billion USD in June 2023. However, following that peak, there is a sharp increase in sales reaching over 5.9 billion USD at the end of 2024, before seeing a notable decline to approximately 4.6 billion USD by March 2025. The data indicates periods of volatile sales performance, with a major surge near the end of the timeframe, possibly reflecting market expansion or significant new contracts.

Working Capital Turnover

Working capital turnover ratios are only provided starting in March 2019. From that time, the ratio remains relatively stable, fluctuating between 3.7 and 4.3, reflecting consistent efficiency in the use of working capital to generate sales. However, from December 2023 onward, the turnover ratio declines markedly, dropping to below 2 by December 2023 and only rising slightly to about 2.7 by March 2025. This suggests that while working capital increased substantially in this later period, sales growth did not scale proportionately, leading to reduced efficiency in working capital utilization.

Summary

Overall, the data reveals a company experiencing steady growth in working capital and periodic fluctuations in net sales. A major expansion in working capital from late 2023 to early 2025 is observed, coinciding with a significant spike in net sales but also a notable decline in working capital turnover, hinting at capacity or operational adjustments affecting efficiency. The historical trend reflects the company's evolving capital structure and sales operations, with more recent periods characterized by rapid expansion and transitional dynamics in working capital management.

The inventory turnover ratio exhibits a generally declining trend from September 2018 through the first half of 2022, starting around 4.48 and decreasing to approximately 2.5–2.8 by mid-2022. This indicates a slowing rate at which inventory is sold and replaced during that period. From late 2022 onwards, the ratio shows increased volatility with some recovery, peaking around 5.07 by March 2025, suggesting a renewed efficiency in managing inventory turnover toward the end of the series.

Correspondingly, the average inventory processing period, expressed in days, shows an inverse relationship to the inventory turnover ratio. Initially stable around 81 days, it gradually lengthens, reaching a peak of 146 days by mid-2022. This lengthening period reflects slower inventory movement and increased holding times. After peaking, the processing period decreases markedly to approximately 72 days by March 2025, consistent with the rebound in inventory turnover.

Inventory turnover ratio

Initially high, the ratio declines steadily up to mid-2022, implying reduced efficiency in converting inventory into sales. After mid-2022, a recovery phase is observed with increased fluctuations, culminating in a significant improvement by early 2025.

Average inventory processing period

Shows an extended holding period over time until mid-2022, indicative of slower inventory movement and possible overstocking. The notable reduction in days thereafter signifies enhanced inventory management and faster turnover.

The inverse trends of these two metrics over the analyzed quarters illustrate a clear pattern of deteriorating inventory efficiency in the earlier periods, followed by a strong turnaround in more recent quarters. This may reflect changes in operational strategies, market demand, or supply chain dynamics affecting the company's ability to manage inventory effectively.

The analysis of the receivables turnover ratio over the observed periods indicates fluctuating efficiency in the company's collection processes. Initially, from September 2018 through early 2019, data is not available. Starting in mid-2019, the ratio demonstrates variability with values mostly between 6 and 10. The highest turnover rates appear around December 2019 and December 2020, reaching slightly above 10, which suggests relatively rapid collection of receivables during these quarters.

However, periods like March 2023, September 2023, and some subsequent quarters show notable declines, with turnover ratios falling below 7. This trend points to a slower collection of receivables in these times, indicating potential challenges in accounts receivable management or changes in customer payment behaviors.

In complementary fashion, the average receivable collection period, measured in days, reflects an inverse relationship with the turnover ratio. Early data starting in mid-2019 shows collection periods ranging from 36 to 44 days, oscillating slightly but generally stable. Nonetheless, from late 2021 onward, there is a marked increase in the collection period, peaking up to 67 days in September 2024.

This upward trend in the average collection period suggests that customers are taking longer to pay, which could impact cash flow. The periods with lower turnover ratios correspond to longer collection days, underscoring the connection between these two metrics.

Overall, the company experienced fluctuations in receivables management effectiveness over the period, with phases of efficient collection followed by deteriorations. The recent trend indicates a lengthening in the collection period and diminished turnover ratio, signaling a need for attention to credit policies and collection procedures to maintain healthy working capital.

Average Inventory Processing Period

The average inventory processing period shows a general upward trend from 81 days in September 2018 to a peak of 152 days in December 2023. There are some fluctuations, notably a decrease to 90 days in September 2023 before rising again. The most recent data points for March and June 2025 indicate a reduction to 72 and 74 days, respectively, suggesting a possible improvement in inventory turnover efficiency.

Average Receivable Collection Period

The average receivable collection period exhibits variability within a range of 36 to 67 days over the observed timeline. The pattern includes periods of increase, such as a peak of 67 days in March 2024, and decreases, with recent values around the mid-40s days in mid-2025. This indicates some inconsistency in the company's collection efficiency, with potential challenges in managing accounts receivable promptly during certain periods.

Operating Cycle

The operating cycle, which combines inventory processing and receivable collection periods, generally extends over time. Starting at 122 days in September 2018, it increases to a high of 203 days in December 2023. Thereafter, a downward trend is evident, with the operating cycle reducing to 126 days by March 2025 and further to 119 days by June 2025. This trend suggests that despite prior lengthening, the company has recently enhanced its overall operational efficiency by shortening the cash conversion cycle.

The analysis of the payables turnover ratio and the average payables payment period over the presented quarters reveals significant fluctuations and some notable trends in the company's payment behavior and short-term financial management.

Payables Turnover Ratio

Starting from the data available in "Sep 30, 2019," the payables turnover ratio shows variability, generally fluctuating between approximately 5.0 and 9.8 times per period. Early in the sequence, the ratio decreased from 8.51 in "Dec 31, 2018" down to a low of 4.94 by "Jun 30, 2020," indicating a slower rate of payables turnover during this period.

After this decline, there is a rebound with the ratio climbing back above 6.0 in the latter part of 2020 and reaching peaks above 9.0 towards the end of 2022 and early 2023, suggesting improved efficiency in settling payables.

However, an extraordinary surge occurs in the last two quarters, "Mar 31, 2025" and "Jun 30, 2025," where the turnover ratio jumps dramatically to 33.19 and 29.76 respectively. This represents a notable, unusual spike that exceeds prior values by a wide margin, possibly indicating an exceptional acceleration in payments during these quarters or an operational anomaly.

Average Payables Payment Period

This metric, measured in days, inversely corresponds to the payables turnover ratio. The data from "Sep 30, 2019" onwards shows the payment period initially increasing from 44 days to a peak of 74 days by "Jun 30, 2021," indicating that the company took longer to pay its suppliers during this time frame.

Post-peak, the payment period declines steadily, dropping to as low as 37 days in "Mar 31, 2023," before increasing again mildly towards "Dec 31, 2023." This suggests a return to more rapid payments after a period of extended payment cycles.

The most striking change occurs in the final reported quarters, with the payment period drastically decreasing to 11 days in "Mar 31, 2025" and 12 days in "Jun 30, 2025," which aligns with the spike observed in the payables turnover ratio. This reflects a significant acceleration in payment timing during the latest periods.

Overall Trends and Insights

The interplay between the two metrics shows expected inverse movements, confirming internal consistency. The period from mid-2019 to mid-2021 was characterized by slower payables turnover and longer payment periods, suggesting either strategic prolongation of payables or cash flow constraints.

From late 2021 through early 2023, the metrics indicate a move towards quicker payment cycles, enhancing supplier relations or possibly reflecting improved liquidity.

The exceptional spike in turnover ratio and concomitant drop in payment days in 2025 indicate a fundamental shift in payment practice or extraordinary circumstances affecting payables management. This might warrant further investigation to clarify whether it results from operational changes, accounting adjustments, or one-time events.

The financial data reveals notable dynamics in the company's working capital management over the analyzed periods. The metrics examined include average inventory processing period, average receivable collection period, average payables payment period, and the cash conversion cycle, all expressed in days.

Average Inventory Processing Period

This period demonstrates a general upward trend from 81 days in September 2018 to a peak of 152 days in March 2024. After reaching this high point, there is a marked decline to 72 days by March 2025. The lengthening inventory period up to early 2024 may indicate increased stock levels or slower inventory turnover, which could signal challenges in sales velocity or supply chain management. The subsequent drop suggests improvements in inventory efficiency or adjustments in procurement and sales strategies.

Average Receivable Collection Period

The collection period fluctuates considerably, ranging from a low of 36 days in December 2020 and March 2020, rising to peaks of 67 days in March 2025. The data shows variability but generally hovers between the high 30s and mid-50s days throughout most quarters. The increases toward the later periods indicate potential difficulties in collecting payments promptly, which could impact cash flow.

Average Payables Payment Period

Payables payment period exhibits irregular movements, starting at 44 days in September 2018 and generally increasing to mid-60s days during 2021 and early 2023, before sharply dropping to as low as 11 and 12 days in the last two recorded quarters. This suggests that earlier in the timeline, the company was taking advantage of longer payment terms, improving short-term liquidity, but more recently it has expedited payments, possibly to maintain supplier relationships or due to changes in credit terms.

Cash Conversion Cycle (CCC)

The CCC, representing the net time between outlay for inventory and receipt of cash from sales, remains relatively stable between approximately 78 and 115 days for most of the timeline, with fluctuations consistent with changes in inventory and receivables periods. Notably, the CCC spikes to 163 days in March 2024, coinciding with the peak inventory days and elevated receivable days. After this peak, the CCC declines but remains above earlier levels, ending at 107 days in March 2025. This elevated cycle later in the dataset suggests longer cash tied up in operations, which could stress liquidity.

Overall, the observed trends point to periods of increased operational inefficiency and liquidity constraints, particularly surrounding early 2024. The recent reductions in inventory days and quicker payments hint at active measures to optimize working capital cycles. Persistent volatility in receivable collections and payables payments underscores ongoing challenges in managing cash flow timing.