Texas Instruments Inc. (NASDAQ:TXN)

Inventory Turnover

The inventory turnover ratio exhibits a declining trend over the analyzed periods, starting from 2.66 and decreasing steadily to approximately 1.45. This suggests a gradual slowdown in the frequency with which inventory is sold and replaced, indicating potential inventory accumulation or reduced sales velocity over time.

Receivables Turnover

The receivables turnover ratio fluctuates modestly between approximately 8.6 and 10.8 throughout the timeline. Notably, there is a decline from a peak of around 10.78 to values closer to 8.6 in the later periods, reflecting a lengthening in the collection period for accounts receivable and potentially less efficient credit management.

Payables Turnover

The payables turnover ratio shows considerable variability, with values ranging initially around 12.5 down to approximately 7.3-7.9 in later periods. The ratio decreases significantly around mid-series, indicating the company is taking longer to settle its payables, which may be a strategic decision to optimize cash flows or reflect changes in supplier payment terms.

Working Capital Turnover

Working capital turnover remains relatively stable, fluctuating between approximately 1.2 and 1.9. A subtle downward trend is noted in certain intervals, suggesting a slight decrease in the efficiency of using working capital to generate sales, though the changes are moderate and do not indicate severe operational issues.

Average Inventory Processing Period

The average inventory processing days increase steadily from around 137 days up to over 250 days at the end of the period. This lengthening implies slower inventory movement and possible build-up of stock, potentially tying up capital and increasing holding costs.

Average Receivable Collection Period

The average collection period remains mostly stable around mid-30s to low 40s, with occasional increases to roughly 43-42 days towards the later periods. This indicates a consistent, though slightly lengthening, time to collect payments from customers, which may affect cash inflows.

Operating Cycle

The operating cycle experiences a distinct lengthening trend, rising from approximately 149 days to nearly 300 days by the period's end. This longer cycle reflects the combined effect of slower inventory turnover and slightly longer receivable collection, signaling reduced operational efficiency in managing the cash conversion loop.

Average Payables Payment Period

The average payment period for payables fluctuates between roughly 29 and 55 days, with occasional spikes and declines. Notably, increases in the payment period suggest the company is extending the time it takes to pay suppliers, which may improve short-term liquidity but could affect supplier relationships.

Cash Conversion Cycle

The cash conversion cycle extends significantly from approximately 112 days to around 249 days, aligning with the trends observed in the operating cycle and inventory processing periods. This lengthening implies that cash is tied up for longer durations within business operations, potentially impacting liquidity and working capital requirements.

The data reveals several important trends related to the cost of revenue, inventories, and inventory turnover ratios over the examined periods.

Cost of Revenue (COR)

The cost of revenue shows a generally increasing trend from March 31, 2020, through June 30, 2025. Starting at $1,241 million in early 2020, it experienced fluctuations but mostly increased, reaching $1,873 million by the middle of 2025. There are periods of both moderate increases and occasional slight decreases; for instance, some small reductions occurred in late 2020 and late 2023. Nevertheless, the overall trajectory points to rising cost structures over time, indicating growing expenses linked to generating revenue.

Inventories

Inventory levels exhibit a steady upward trend throughout the period, beginning with $2,003 million at the start of 2020 and rising consistently to $4,812 million by the second quarter of 2025. The growth is particularly notable from 2021 forward, with incremental increases almost each quarter. This indicates an accumulation of stock, which may reflect expectations of higher sales, precautionary supply chain management, or slower inventory movement.

Inventory Turnover Ratio

The inventory turnover ratio shows a declining pattern over the observed quarters where data is available. Starting at 2.66 in the first measured quarter in 2020, it increased to a peak of 3.18 by the end of 2020 but subsequently declined steadily to 1.45 by mid-2025. This trend reflects that the company is turning over its inventory less frequently over time. The declining turnover despite rising inventory levels and increasing cost of revenue may suggest slower sales relative to inventory holdings or changes in management policies regarding stock.

In summary, the company has experienced rising costs of revenue and steadily increasing inventory balances but a decreasing inventory turnover ratio. This combination suggests that while costs and stock levels have increased, the speed at which inventory is sold and replaced has slowed considerably. This may warrant further investigation to assess inventory management efficiency, sales performance, and supply chain strategies to better align inventory with demand and control costs effectively.

The revenue over the observed periods displays a generally upward trajectory from March 31, 2020, reaching a peak around June 30, 2022. After this peak, a notable decline is visible through to December 31, 2023, followed by some recovery into mid-2025. This pattern suggests fluctuations likely influenced by external market conditions or company-specific factors impacting sales volume or pricing strategies.

Accounts receivable, net of allowances, show consistent growth from March 31, 2020, through June 30, 2022, with a slight dip thereafter until around December 31, 2023. Subsequently, the figures fluctuate moderately, reflecting some variability in credit sales or collection efficiency. The peaks and troughs appear to follow or slightly lag the revenue trends, indicating a close relationship between sales on credit and revenue generated.

Receivables turnover ratio, available from December 31, 2020, onwards, demonstrates relative stability with values fluctuating around the 9 to 10 range. Early in the period, this ratio encounters a slight decline, followed by fluctuating increases and decreases. The downward trend observed towards mid-2025 suggests a lengthening average collection period or loosening credit terms over time, which may increase credit risk or impact cash flow management.

Revenue

Growth from approximately $3.3 billion in early 2020 to a high near $5.2 billion by mid-2022.

Revenue declines after the peak, dropping to near $4.1 billion by late 2023, followed by a recovery trend to about $4.4 billion by mid-2025.

Accounts Receivable, Net

Growth trends mirror revenue, rising from about $1.3 billion in early 2020 to over $2.1 billion by mid-2022.

After mid-2022, accounts receivable decline and stabilize around $1.7-1.9 billion, suggesting improved collection or tighter credit policies in some periods.

Receivables Turnover Ratio

Ranges mostly between 8.5 and 10.8, with a general pattern of decline in late periods.

The lower turnover ratios towards the end of the timeline imply slower collection cycles or potentially higher receivables levels relative to sales.

Overall, the financial data indicates a period of expansion in revenue and receivables through mid-2022, followed by contraction and partial recovery. The receivables turnover trends suggest evolving credit management practices or changing customer payment behavior, warranting attention to cash flow implications and credit risk assessments in future periods.

Cost of Revenue (COR)

The cost of revenue exhibited fluctuations over the reported periods. It started at 1241 million USD in March 2020 and saw a general rising trend, with occasional decreases. Notably, it peaked multiple times, reaching 1873 million USD by June 2025. Periods such as from June 2023 to September 2023 and March 2025 to June 2025 showed appreciable increases. Despite some variability, the overall pattern indicates a gradual increase in cost of revenue across the nearly five-year span.

Accounts Payable

Accounts payable figures presented notable variability across quarters. Starting from 363 million USD in March 2020, the value rose sharply to 653 million USD in December 2020, followed by continuous growth reaching 952 million USD in March 2023. Subsequently, a decline is observed until September 2023, followed by volatile movements, with accounts payable reported at 881 million USD in June 2025. This indicates fluctuating short-term liabilities within the periods under review.

Payables Turnover Ratio

The payables turnover ratio was measured starting only at December 2020 with a value of 12.51, followed by a gradual decline through to March 2023, reaching as low as 6.63. After this, the ratio experienced mild fluctuations, including a temporary spike to 11.89 in September 2023, before stabilizing in the range of approximately 7.7 to 8.2 by mid-2025. This reduction and subsequent stabilization may suggest changes in payment efficiency or negotiated payment terms over time.

Summary of Trends and Insights

Overall, the cost of revenue has generally increased throughout the periods, indicating either expanding operational scale or rising input costs. Accounts payable has shown considerable volatility with an upward trend in earlier quarters, followed by intermittent decreases, reflecting potential changes in working capital management or supplier credit terms. The payables turnover ratio declining from above 12 to a lower and more stable range suggests a lengthening of payment cycles or less frequent settlement of payables over time. Together, these trends denote evolving operational and financial dynamics impacting cash flow and cost management.

Working Capital

The working capital exhibited a generally increasing trend from March 2020 through June 2021, rising from 5,929 million USD to a peak of 11,172 million USD in September 2021. After this peak, it fluctuated moderately, reaching a high of 12,803 million USD in June 2023 before declining to 11,992 million USD by June 2025. Despite these fluctuations, the overall trajectory showed growth in working capital, with some intermittent decreases during the later periods.

Revenue

Revenue displayed a rising trend from March 2020, starting at 3,329 million USD, and peaking at around 5,241 million USD in September 2022. Following this peak, revenue experienced a notable downward correction, dropping to 4,077 million USD in December 2023. Subsequently, revenue somewhat stabilized but remained lower than its peak, fluctuating between 3,661 million USD and 4,448 million USD in the subsequent quarters up to June 2025. This pattern suggests a period of growth followed by market or operational challenges impacting sales volumes or prices.

Working Capital Turnover

Working capital turnover ratios were available from December 2020 onwards, showing initial values between 1.57 and 1.87 through the end of 2022. These ratios generally declined from around 1.81 in early 2023 to lows near 1.21–1.22 by mid-2024. A modest recovery occurred thereafter, with the ratio reaching roughly 1.51 by June 2025. This downward trend in turnover ratio indicates a reduced efficiency in utilizing working capital to generate revenue during the mid-to-late period, possibly due to increased working capital or declining revenue impacting turnover positively.

Overall Insights

Over the observed period, the firm demonstrated initial growth in both working capital and revenue, followed by fluctuations and a modest decline in revenue after its peak in late 2022. The working capital turnover ratio's decline suggests that the efficiency in converting working capital to sales decreased in recent years, pointing to potential operational or market challenges. The stabilization of both revenue and working capital turnover in the most recent quarters may indicate attempts to adjust or improve operational efficiency. Monitoring these trends going forward would be critical for understanding the firm's liquidity management and sales performance relative to its capital base.

Inventory turnover ratio

The inventory turnover ratio shows a declining trend over the analyzed periods. Starting from a value of 2.66 in the first available quarter (March 31, 2020), it increased to a peak of 3.18 by December 31, 2020, indicating an initial improvement in inventory efficiency. However, from this point onward, the ratio steadily decreased, reaching 1.45 by June 30, 2025. This decline suggests that the company is turning over its inventory less frequently over time, potentially indicating slower sales or overstocking issues.

Average inventory processing period

The average inventory processing period, measured in days, inversely mirrors the inventory turnover ratio. Beginning at 137 days in March 31, 2020, this metric decreased initially to 115 days by December 31, 2020, indicating quicker inventory processing. Subsequently, there is a consistent increase, peaking at 254 days by September 30, 2024, followed by a slight improvement to 251 days by June 30, 2025. This upward trend implies a lengthening of the time inventory remains on hand, which may reflect reduced sales velocity or operational inefficiencies in inventory management.

Overall trends and insights

The combined analysis of these two metrics reveals a notable shift in inventory management dynamics over the analyzed quarters. The initial period shows efficient inventory turnover with reduced processing days. However, the sustained decline in turnover ratio alongside the increasing inventory processing days suggests growing challenges in inventory control. This shift could be driven by factors such as changing market demand, supply chain disruptions, or strategic decisions impacting stock levels. Monitoring these trends is essential for identifying the root causes and implementing corrective actions to enhance operational efficiency and financial performance.

The receivables turnover ratio demonstrates some fluctuations over the observed periods. Starting from a value of 10.23, it experienced a slight decrease to 9.74, followed by a rise to 10.54 and further to 10.78, indicating periods of more efficient receivables management. However, a noticeable decline followed, reaching as low as 8.44 in the third quarter of 2024. Towards the end of the timeline, the ratio stabilizes around 8.6 to 9.1 but does not regain the earlier higher values above 10. This trend suggests a moderate decrease in the frequency of receivables being collected during the later periods compared to the earlier ones.

The average receivable collection period, measured in days, moves inversely to the receivables turnover ratio as expected. Initially, the collection period ranges between 34 to 37 days, indicating a relatively swift collection process. A significant increase is observed reaching up to 41 days in the third quarter of 2021, coinciding with the lower turnover during that period. Subsequently, the collection period fluctuates, sometimes decreasing back to 35 days but also rising again, peaking at 43 days in the third quarter of 2024. The data at the end of the series shows days outstanding generally in the 40 to 42 range, indicating a lengthening in the time taken to collect receivables compared with the initial periods.

Overall, the trends suggest that the efficiency in managing receivables has declined slightly in the latest periods relative to the earlier ones. The longer collection periods and lower turnover ratios may impact the company's liquidity and working capital management, potentially requiring attention in credit policy or collection efforts.

Average Inventory Processing Period

The average inventory processing period displayed a declining trend initially from 137 days to 115 days between March 31, 2020, and December 31, 2020. Following this reduction, the period increased consistently over the subsequent quarters, reaching 254 days by September 30, 2024, before a slight decrease to 251 days by March 31, 2025. This indicates that the company experienced a gradual lengthening in the time inventory remains on hand after the initial improvement in early 2020.

Average Receivable Collection Period

The average receivable collection period showed moderate fluctuations throughout the observed timeframe. Starting at 36 days in March 31, 2020, the period slightly oscillated around the mid-to-high 30s range. It peaked at 43 days in June 30, 2024, and showed a minor decline back to 42 days by March 31, 2025. The general pattern suggests relatively stable credit collection durations with intermittent mild extensions.

Operating Cycle

The operating cycle length initially contracted from 173 days in March 31, 2020, to 149 days in December 31, 2020. Subsequently, it exhibited a steady upward trajectory, increasing to a high of 296 days by September 30, 2024. A slight reduction followed, with the cycle narrowing to 293 days by March 31, 2025. This trend reflects an overall elongation of the period between cash outflow for inventory and cash inflow from receivables, potentially indicating slower asset turnover as time progressed.

Payables Turnover Ratio

The payables turnover ratio, reported from March 2021 onwards, shows an overall declining trend with some fluctuations. Beginning at 12.51 in March 2021, the ratio decreases steadily over the next several quarters, reaching a low of 6.63 by March 2023. This downward movement suggests that the company is taking longer to pay its suppliers or possibly purchasing on longer credit terms. After March 2023, the ratio presents some volatility, increasing to 9.03 in June 2023, then declining again, and peaking at 11.89 in March 2024. Thereafter, a gradual decline resumes, ending near 7.94 by June 2025. This variation indicates inconsistent payment behavior during the period analyzed.

Average Payables Payment Period (Days)

The average payment period in days shows an inverse pattern relative to the payables turnover ratio, which aligns with financial theory since higher turnover corresponds with shorter payment periods. Starting at 29 days in March 2021, the payment period lengthens consistently through 2022 and into early 2023, peaking at 55 days in March 2023. This suggests the company took more time to settle its payables during this timeframe. Following this peak, the payment period shortens notably to 40 days by June 2023 and fluctuates thereafter, rising and falling between 31 and 53 days but generally trending towards approximately 45-47 days towards mid-2025, indicating a somewhat stabilized payment timeframe, yet longer than the initial period.

Overall Insights

The inverse relationship between the payables turnover ratio and the average payment period is evident throughout the period analyzed. The initial part of the timeline shows increasing payment delays, peaking around early 2023, which might reflect changing supplier terms, cash flow management strategies, or operational factors influencing payment timing. After this peak, payment practices appear to stabilize with shorter periods and more fluctuating payables turnover ratios. The variations observed suggest possible adjustments in working capital management or responses to external financial pressures during these years.

Inventory Processing Period

The average inventory processing period shows a clear upward trend from March 31, 2021, through June 30, 2025. Starting at 137 days in early 2021, it gradually increases with slight fluctuations, reaching a peak of 254 days by September 30, 2025, and slightly decreasing to 251 days by June 30, 2025. This indicates a lengthening time for inventory turnover, suggesting slower inventory movement over the observed quarters.

Receivable Collection Period

Throughout the timeline, the average receivable collection period exhibits moderate variability but remains relatively stable in the range of mid-30s to low 40s days. Notable increases occur around September 30, 2022 (41 days) and June 30, 2024 (43 days), reflecting slightly extended customer payment times. However, the values revert near prior levels afterward, indicating a generally consistent collection efficiency with minor fluctuations over the periods analyzed.

Payables Payment Period

The average payables payment period gradually increases from 29 days at the start of the data points to values generally between 40 and 55 days in subsequent quarters. A notable rise occurs from December 31, 2021 (37 days) onward, peaking at 55 days at March 31, 2023, followed by variations around the mid-40 day range through June 30, 2025. This suggests a tendency to extend payment terms or timing to vendors over time, with some quarter-to-quarter volatility.

Cash Conversion Cycle (CCC)

The cash conversion cycle shows a marked upward trend from 144 days in March 31, 2021, to a maximum around 249 days by September 30, 2025. The CCC deteriorates consistently with minor short-term decreases, reflecting that the overall cash tied up in operational cycles is increasing. The extended inventory processing and receivables collection periods contribute notably to this increase. The elevated CCC points to elongated cash flow cycles, which may impact liquidity and working capital efficiency.