Texas Instruments Inc. (NASDAQ:TXN)

Inventory Turnover

The inventory turnover ratio increased from 2.66 to 3.18 during 2020, indicating an improvement in inventory management and sales efficiency. However, from 2021 onwards, there is a consistent and notable decline, dropping to 1.44 by the first quarter of 2025. This decline suggests a slower movement of inventory, which could imply excess stock or reduced sales velocity over the period.

Receivables Turnover

The receivables turnover ratio fluctuated moderately around an average close to 10 from 2020 onward. It peaked slightly above 10.7 in late 2020 and early 2021 but experienced some declines thereafter, reaching around 8.63–9.1 in the later quarters of 2024 and early 2025. This trend points to a mild deterioration in the efficiency of collecting accounts receivable over time, indicating customers may be taking longer to settle their accounts.

Payables Turnover

Payables turnover showed a downward trend from 12.51 in early 2020 to around 7.78–8.19 between late 2023 and early 2025, with some volatility in 2023 and 2024 including a peak at 11.89 in the third quarter of 2023. The general decline reflects a lengthening of payment terms or slower payments to suppliers, suggesting stronger supplier financing or liquidity management adjusting payables schedules.

Working Capital Turnover

The working capital turnover remained relatively stable, fluctuating between 1.21 and 1.87 from 2020 through 2025. A mild downward shift is noted after 2021, reaching lows around 1.21 in early 2024 before a slight recovery to 1.51. This indicates that the company’s efficiency in using working capital to support sales slightly decreased during the period but showed some improvement by early 2025.

Average Inventory Processing Period

This metric exhibits a clear increasing trend, rising from 137 days in early 2020 to 254 days by the first quarter of 2025. The elongation of the inventory processing period aligns with the declining inventory turnover and points to slower inventory movement and possibly challenges in inventory management or demand fluctuations.

Average Receivable Collection Period

The receivable collection period remained mostly stable, fluctuating between 34 and 43 days with no significant long-term trend. The stability indicates consistent collection practices, though slight increases in some periods may suggest minor delays in customer payments.

Operating Cycle

The operating cycle extended from 173 days in early 2020 to 296 days by the first quarter of 2025. This significant lengthening reflects the combined effects of slower inventory turnover and relatively stable but slightly worsening receivables collection, indicating that cash is tied up longer in operating activities.

Average Payables Payment Period

The average payables payment period generally increased from 29 days in early 2020 to a peak near 55 days in late 2022, then showed some volatility, reducing to around 31 days at the end of 2022 before fluctuating again in the 40-48 day range. This pattern suggests a more extended payment period during 2021-2022 followed by variable supplier payment practices.

Cash Conversion Cycle

The cash conversion cycle grew markedly from 144 days in early 2020 to approximately 249 days by early 2025. This extended cycle reflects slower inventory turnover, longer operating cycles, and changes in payables payment periods, leading to a longer duration before cash is recovered from invested resources. The rising cash conversion cycle may impact liquidity and working capital management.

The data reveal a progressive increase in the cost of revenue (COR) over the observed periods, starting from 1,241 million US dollars in the first quarter of 2020 and reaching 1,756 million US dollars by the first quarter of 2025. There are fluctuations within this upward trend, with peaks and troughs observable within the quarters, yet the overall trajectory is rising.

Inventories exhibit a consistent upward trend as well, beginning at 2,003 million US dollars in March 2020 and rising steadily to 4,687 million US dollars by March 2025. The increase in inventory levels is relatively steady, with a notable acceleration observed from approximately the first quarter of 2022 onward, where the inventory balance grows at a faster pace.

An examination of the inventory turnover ratio shows a declining trend over time. Starting from a ratio of 2.66 in December 2020, the inventory turnover decreases progressively to a low of 1.44 by March 2025. This downward trend indicates that the company is turning over its inventory less frequently as time progresses.

Cost of Revenue

Shows a generally increasing pattern with some quarterly fluctuations, indicating rising expenses related to production or procurement over the five-year period.

Inventories

Exhibit a steady and marked increase, suggesting accumulation of stock or slower sales relative to replenishment, particularly from early 2022 onward.

Inventory Turnover

Declines consistently, implying that inventory is held longer before being sold, which may reflect changes in demand, production scheduling, or supply chain dynamics.

Overall, the financial data indicate increasing operational scale as reflected in higher costs and inventory levels. However, the declining inventory turnover ratio could signal potential inefficiencies or changes in the market environment that affect how quickly inventory is converted into sales. Monitoring these trends is important for assessing inventory management effectiveness and cost control measures in upcoming periods.

The revenue figures exhibit general fluctuations over the periods analyzed, with an overall trend of growth from early 2020 through mid-2022, followed by a decline and variable recovery attempts. Initial revenue increased from $3,329 million in March 2020 to a peak of $5,241 million in September 2022. After this peak, revenue declined sharply to $4,670 million in December 2022 and further dropped to $4,077 million by December 2023. Subsequent quarters show moderate variability, with revenue between approximately $3,661 million and $4,151 million, ending at $4,069 million in March 2025.

The accounts receivable balance follows a somewhat similar pattern, increasing from $1,316 million in March 2020 to a peak of $2,190 million in June 2022. After this peak, it generally trends downward, with intermittent fluctuations, reaching $1,860 million by March 2025. This suggests some tightening or normalization of receivables relative to the company's revenue after mid-2022.

The receivables turnover ratio, which reflects the efficiency of collecting accounts receivable, demonstrates variability without a clear consistent trend. It started at a ratio of 10.23 (date unspecified due to missing data) and generally moved within a range from approximately 8.44 to 10.78 over the periods presented. Notably, the ratio declined around the time revenue peaked and accounts receivable were highest (mid-2022), indicating a slower collection process during that period. Later periods show some recovery in turnover ratio, although still fluctuating, with values mostly below 10 from mid-2023 onward, suggesting moderate collection efficiency.

Overall, the period depicts growth in revenue and receivables up to mid-2022, followed by a decline and partial stabilization in both metrics. The receivables turnover ratio's fluctuations suggest changes in credit and collection conditions, likely impacted by external or operational factors affecting the company’s ability to collect receivables promptly.

Revenue Trend

Growth from early 2020 to mid-2022 reaching $5,241 million, followed by a decline and variable recovery to $4,069 million by March 2025.

Accounts Receivable Trend

Increase from $1,316 million in March 2020 to $2,190 million in June 2022, then a general decline to $1,860 million by March 2025, reflecting possible normalization in receivables management.

Receivables Turnover Ratio

Fluctuated between 8.44 and 10.78, with a decline during peak receivables indicating slower collections; modest recovery thereafter but below previous peaks, indicating moderate collection efficiency.

The cost of revenue (COR) for the company displays a fluctuating but generally upward trend over the observed periods. Starting at $1,241 million in March 2020, it experiences minor fluctuations with several increases peaking around December 2024 at approximately $1,693 million, followed by a slight rise to $1,756 million in March 2025. Notably, after December 2021, COR shows a consistent upward movement despite short-term variability.

Accounts payable reveal a varied pattern across the same timeframe. Initially at $363 million in March 2020, the figure increases sharply to $653 million by December 2021, indicating growing liabilities or extended credit terms. Following this peak, accounts payable present a more volatile pattern, oscillating between lower values like $551 million in September 2024 and higher values approaching $866 million in March 2025. This volatility suggests fluctuations in payment cycles or supplier terms during the later periods.

The payables turnover ratio, available from December 2020 onwards, indicates significant variation. Starting at 12.51 in December 2020, it declines steadily through 2021 and 2022, reaching a low around 6.63 in March 2023. This lower turnover implies that the company is taking longer to settle its accounts payable. After this trough, the ratio rebounds in mid-2023, peaking again at 11.89 in March 2024 before declining to values near 7.78 by March 2025. The ratio's fluctuations suggest changes in the company's operational efficiency or shifts in vendor payment policies.

In summary, while the cost of revenue consistently trends upward, indicating potentially increasing production or sales volume, accounts payable and payables turnover show more volatility. The initial increase in accounts payable combined with a declining payables turnover ratio suggests extended payment terms or slower payments to suppliers up to early 2023. Subsequent recovery in turnover ratio reflects a possible tightening of payment practices or improved liquidity management, although late-period values indicate continued variability in payment dynamics.

The working capital exhibited a generally upward trend from March 2020 through March 2023, increasing steadily from 5,929 million US dollars to a peak of 12,803 million US dollars. Following this peak, there was a decline observed through December 2023 and into March 2025, with working capital reducing to 10,597 million US dollars by the end of the period. Despite fluctuations, the overall trajectory suggests a significant accumulation of current assets relative to current liabilities over the longer term, yet indicating tighter working capital management or changes in operational needs in the most recent periods.

Revenue demonstrated a growth pattern from March 2020 to June 2022, rising from 3,329 million US dollars to 5,241 million US dollars. This growth was followed by a notable contraction, dropping to 4,670 million US dollars by December 2022 and fluctuating subsequently, with a downward bias ending at 4,069 million US dollars in March 2025. This indicates an initial expansion phase, likely supported by increased demand or market conditions, succeeded by a period of declining sales or market challenges during the latter quarters.

The working capital turnover ratio, which measures how effectively the company utilizes its working capital to generate revenue, was available from December 2020 onwards. It showed values primarily ranging between approximately 1.2 and 1.8. Initially, turnover was relatively high, around 1.8 in early periods, indicating efficient use of working capital. A declining trend began in mid-2023, reaching lows near 1.21, reflecting a reduction in revenue generated per unit of working capital. Toward the end of the timeline, a slight recovery in turnover ratio to 1.51 was observed, suggesting some improvement in working capital efficiency. Overall, the ratio's decrease corresponds with the reduction in revenue and the increased working capital in recent quarters, pointing to less efficient utilization of resources.

In summary, while working capital increased substantially during the initial part of the period under review, revenue growth peaked mid-period and subsequently diminished. The working capital turnover ratio indicates a decline in operational efficiency related to working capital investment in the latter part of the series. These trends suggest operational or market challenges affecting sales and working capital management effectiveness in the most recent quarters.

The analysis of the quarterly financial data reveals notable trends in inventory management efficiency over the observed periods. From the latter part of 2020 and throughout 2021, there is a visible improvement in inventory turnover ratios, climbing from 2.66 to a peak of 3.18. This suggests that the company was able to manage its inventory more efficiently and convert stock into sales more rapidly during this time frame.

Concurrently, the average inventory processing period, measured in days, correspondingly decreased from 137 to 115 days, reinforcing the conclusion of enhanced inventory turnover efficiency at that point.

However, starting from early 2022, there is a consistent downward trend in inventory turnover ratios, falling from around 3.12 down to 1.44 by the first quarter of 2025. This decline indicates that the rate at which inventory is sold and replenished slowed significantly in the latter periods.

In line with this, the average inventory processing period has increased sharply from 117 days in early 2022 to 254 days by the first quarter of 2025. The longer processing period suggests inventory is remaining on hand for an extended duration before being sold, which may point to overstocking or weaker demand.

Overall, the data illustrates a transition from a period of improved inventory efficiency through 2020 and 2021 to a reversal marked by prolonged inventory holding periods and reduced turnover from 2022 onward. These trends could have implications for working capital management and operational efficiency, warranting further investigation into underlying causes such as market conditions, supply chain disruptions, or changes in sales dynamics.

Inventory Turnover Ratio

Improved from 2.66 to 3.18 between 2020/2021, followed by a steady decline to 1.44 by early 2025.

Average Inventory Processing Period

Decreased from 137 to 115 days through 2020/2021, then increased significantly to 254 days by early 2025.

Interpretation

Initial efficiency gains were reversed in later periods, indicating slower inventory movement and potential challenges in demand or inventory management.

The analysis of the quarterly financial data reveals discernible trends in the receivables turnover ratio and the average receivable collection period over the observed periods.

Receivables Turnover Ratio

Starting from a ratio of 10.23 in the first available quarter, the receivables turnover ratio demonstrates a fluctuating but generally declining pattern towards the later periods. It peaks marginally at 10.78 before experiencing a decline to 8.63 in the last reported quarter. This trend suggests a potential decrease in the frequency of receivables being collected during the fiscal cycle.

Average Receivable Collection Period

The average number of days for receivable collection initially hovers around 34 to 37 days but later increases, reaching as high as 43 days in one of the last quarters. This increase in collection time coincides inversely with the declining receivables turnover ratio, indicating a slower pace in collecting receivables over time.

Overall Insight

The inverse relationship observed between the receivables turnover ratio and the average receivable collection period suggests a possible weakening in the efficiency of the credit and collection policies or external factors affecting customer payment behaviors. Monitoring these metrics closely in subsequent periods is advisable to determine if these trends persist and if operational adjustments are necessary to enhance cash flow management.

The analysis of the quarterly financial data reveals notable trends in the company's inventory management, receivable collection, and overall operating cycle metrics.

Average Inventory Processing Period

This metric demonstrates a consistent upward trend from the first recorded period. Starting at 137 days, it gradually shortened to a low of 115 days by the end of 2020. However, from early 2021 onward, the inventory processing period showed a steady increase, reaching 254 days by the first quarter of 2025. This suggests increasing difficulty or delays in inventory turnover over time.

Average Receivable Collection Period

The receivable collection period remained relatively stable in the initial periods, fluctuating between 34 and 37 days through 2021. Starting from 2022, it exhibited moderate variability, reaching a peak of 43 days in the third quarter of 2024 before slightly declining to 40 and 42 days in subsequent quarters. Overall, the collection period is lengthening slightly, indicating a minor slowdown in cash inflows from receivables.

Operating Cycle

The operating cycle, which combines inventory processing and receivable collection periods, followed a rising trend throughout the timeframe examined. Initially, it decreased from 173 days to 149 days by the end of 2020, reflecting operational efficiencies. Post-2020, however, the cycle extended progressively, from 151 days in early 2021 to 296 days by the first quarter of 2025. This increase correlates with the elongation of both inventory and receivable periods, signifying a lengthening of the company's cash conversion cycle and potentially greater working capital tied up in operations.

In summary, the data indicate that while the company initially improved its operational efficiency towards the end of 2020, challenges have emerged since that period, leading to longer times for inventory processing and receivable collection. The resultant expansion of the operating cycle may impact liquidity and capital management strategies going forward.

The payables turnover ratio exhibits a general downward trend from the beginning of the observed period through March 2025. Initially reported values start at a high of 12.51 and gradually decline with some fluctuations to a value of 7.78 at the end of the period. This declining trend indicates a lengthening in the time taken to settle payables relative to purchases, suggesting a slowdown in payment velocity.

Correspondingly, the average payables payment period shows an upward trend, increasing from 29 days to 47 days over the same timeframe. This increase in the number of days corroborates the decline in the payables turnover ratio and further indicates that payables are being paid over more extended periods as time progresses.

Notably, during the quarters from March 2023 to December 2023, there is a temporary improvement reflected by a rise in the payables turnover ratio to a peak of 9.03 and a reduction in the average payment period to 40 days, signaling a brief acceleration in the rate of settling payables. However, this is followed by a renewed decline and subsequent fluctuations through to the end of the timeline.

Overall, the data reflect a tendency toward more extended payable cycles over the years, accompanied by variability that may suggest changes in payment strategy, supplier terms, or cash flow management policies within the firm during certain quarters.

The quarterly financial data reveals several key trends in working capital management metrics over the analyzed periods.

Average Inventory Processing Period

This metric shows a clear upward trend starting from the first available data point. Initially recorded at 137 days, it declines gradually to a low of 115 days by the end of 2020. However, from 2021 onward, there is a consistent increase, peaking at 254 days by the first quarter of 2025. This suggests that inventory is being held for increasingly longer periods, which might indicate slower inventory turnover or changes in inventory management policies.

Average Receivable Collection Period

The average time to collect receivables remains relatively stable throughout the periods, fluctuating mostly between 34 and 43 days. Minor variations occur, but no significant long-term trend is evident. Occasional increases around mid-2022 and mid-2024 may reflect temporary changes in payment collection efficiency or customer payment behavior.

Average Payables Payment Period

The payables payment period shows variability over time. Beginning at 29 days in early observations, it rises to around 55 days by the end of 2022, indicating a lengthening in payment terms or delayed payments to suppliers. This peak is followed by a decline to approximately 31 days by the end of 2023, before fluctuating again in the subsequent quarters and stabilizing around mid-40s days through early 2025. This pattern suggests occasional strategic adjustments in managing supplier payments.

Cash Conversion Cycle

The cash conversion cycle (CCC), which combines the inventory processing, receivables collection, and payables payment periods, shows a generally increasing trend over the timeline. After starting at 144 days, it decreases slightly to a low around 112 days at the end of 2020 before embarking on a continuous upward trajectory. By the first quarter of 2025, the CCC reaches nearly 250 days, reflecting a significant increase. This indicates that the overall cycle from cash outlay to cash recovery is extending, potentially impacting liquidity and operational efficiency.

In summary, the firm exhibits a lengthening inventory processing period and cash conversion cycle, which could suggest challenges in inventory management or slower cash turnover. Receivables collection remains stable, portraying consistent credit control practices. Payables payment periods vary, showing some strategic flexibility in supplier payment timing. The combined effect leads to a substantial increase in the cash conversion cycle, signifying a longer process to convert investments in working capital back into cash.