Texas Instruments Inc. (NASDAQ:TXN)

The analysis of the financial ratios over the specified periods reveals notable trends in the company’s operational efficiency and liquidity management.

Inventory Turnover

The inventory turnover ratio exhibits a declining trend from 2.88 in early 2021 to around 1.52 by late 2025. Correspondingly, the average inventory processing period increases significantly from 127 days to approximately 240 days over the same horizon. This suggests a slower movement of inventory, potentially indicating overstocking issues or decreased sales velocity.

Receivables Turnover

The receivables turnover ratio shows fluctuation but generally declines from a peak near 10.78 in late 2021 to approximately 8.37 in the latter periods. The average receivable collection period lengthens from around 34 days to about 44 days, indicating a trend of slower collections which may affect cash flows.

Payables Turnover

The payables turnover ratio varies, initially declining from about 9.6 to a low near 6.63 in early 2023, accompanied by an increase in the average payables payment period from roughly 38 days to 55 days. Subsequent periods show some recovery and volatility, with the payables turnover ratio moving back up near 9.42 and the payment period decreasing. The extended payment period suggests the company is taking longer to pay suppliers, possibly to manage liquidity.

Working Capital Turnover

The working capital turnover ratio fluctuates between approximately 1.21 and 1.87, with a notable dip from mid-2023 onwards followed by a modest recovery by late 2025. This indicates a variable efficiency in generating sales from working capital employed.

Operating Cycle

The operating cycle lengthens substantially over the period, extending from around 149 days to nearly 296 days. This is consistent with lengthening inventory and receivable periods, reflecting overall slower asset utilization and longer cash recovery times.

Cash Conversion Cycle

Similarly, the cash conversion cycle extends from roughly 111 days to 245 days, indicating significantly longer durations between cash outflows and inflows. The lengthened cash conversion cycle could imply increasing pressure on the company’s liquidity and working capital management.

In summary, the data indicate operational challenges characterized by slower inventory turnover and extended collection periods, which together prolong the operating and cash conversion cycles. The company appears to be taking advantage of extended payable periods, possibly to mitigate liquidity strains. The overall trend points to reduced efficiency in managing working capital and longer cash holding periods as time progresses.

The analyzed quarterly financial data reveals several notable trends in the company's cost of revenue, inventories, and inventory turnover ratios over multiple fiscal periods.

Cost of Revenue (COR)

The cost of revenue generally exhibits a fluctuating upward trend over the observed quarters. Starting near 1,492 million USD, it experiences moderate increases with some peaks around mid to late 2023 and early 2024, culminating in a notable rise to over 2,000 million USD by the most recent quarter. This pattern indicates increasing expenditures associated with producing goods or services, which may reflect growth in sales volume or rising input costs.

Inventories

The inventory levels show a consistent and substantial increase across the periods reviewed. Initial values near 1,890 million USD climb steadily, with acceleration from late 2021 through 2025, eventually reaching nearly 4,830 million USD by the last quarter. This growth suggests accumulation of stock, potentially driven by anticipation of higher demand, supply chain adjustments, or strategic inventory buildup.

Inventory Turnover Ratio

The inventory turnover ratio displays a clear downward trend throughout the reported periods, dropping from approximately 2.88 at the start to around 1.52 by the end. This decline indicates that inventories are being converted into sales more slowly over time, which might point to reduced sales efficiency, overstocking, or market saturation.

Overall, the data illustrates increasing inventory investment alongside rising costs of revenue, accompanied by a declining inventory turnover ratio. This convergence suggests that while output and related costs increase, the efficiency of inventory utilization is deteriorating, which could have implications for working capital management and operational efficiency going forward.

The financial data reveals several notable trends in revenue, accounts receivable, and receivables turnover ratios over the reported periods.

Revenue Trends

Revenue exhibited a generally fluctuating pattern across the quarters. Starting at $4,289 million in March 2021, it increased steadily until reaching a peak of $5,241 million in September 2022. Following this peak, a downward trend is observed through December 2023, with amounts decreasing to $4,077 million. However, revenue then stabilizes and begins to moderately rise again from March 2024 through September 2025, reaching $4,742 million by that point. The fluctuations likely indicate shifts in market demand or operational factors impacting sales volumes during the periods.

Accounts Receivable, net of Allowances

Accounts receivable amounts generally increased over the timeframe, starting from $1,584 million in March 2021 and reaching a high of $2,190 million in June 2022. Subsequently, there was a decrease through December 2023, dropping to $1,787 million, followed by some variability but generally an upward trend resumes into 2024 and beyond. The increase in receivables, especially during mid-2022, may suggest extended credit terms or increased sales on credit, while later fluctuations could reflect collection efficiency or changes in sales structure.

Receivables Turnover Ratio

The receivables turnover ratio shows variability, hovering mostly between approximately 8.3 and 10.7. Starting at 9.74 in March 2021, the ratio peaked at 10.78 in December 2021, indicating more efficient collection relative to sales at that time. However, post-2021, this ratio generally declined, reaching lows near 8.37 by September 2025. The downward trend in turnover ratio suggests a slower collection process or an increase in credit sales relative to accounts receivable balance, which could impact cash flow negatively if not managed closely.

Overall, the data depicts a dynamic environment where revenue growth is not consistently sustained, accounts receivable have increased over time with some compression periods, and collection efficiency measured by the turnover ratio has decreased. These patterns indicate a need for focused management on receivables to maintain liquidity and optimize working capital amidst fluctuating sales performance.

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

Cost of Revenue (COR)

The cost of revenue demonstrates variability but generally follows an upward trajectory towards the later periods. Starting at $1,492 million in March 2021, it experiences moderate fluctuations, peaking at $1,717 million in September 2023, before slightly declining and then increasing again to reach $2,019 million by September 2025. This gradual increase indicates rising production or operational expenses over time.

Accounts Payable

The accounts payable balance shows significant fluctuations without a consistent directional trend. Initially, it increases from $567 million in March 2021, reaching a high of $952 million by March 2023. Afterward, there is a sharp drop to $551 million in March 2024, followed by alternating rises and declines. The variability suggests changes in payment cycles or supplier terms, possibly reflecting management's strategic adjustments or variations in procurement volumes.

Payables Turnover Ratio

The payables turnover ratio illustrates considerable oscillations throughout the period. Starting at 9.6 in March 2021, the ratio declines to a low of 6.63 by March 2023, indicating slower payments to suppliers or extended credit terms during that time. Subsequently, it rebounds to 11.89 in March 2024, suggesting much quicker payments, then fluctuates between approximately 7.62 and 9.42 in the last periods. This volatility highlights changing payment practices, potentially influenced by cash flow management strategies or shifts in working capital policy.

In summary, the data presents an overall increase in cost of revenue, while accounts payable and payables turnover reflect dynamic management of supplier payments. The payables turnover ratio's wide range suggests varying liquidity conditions or operational priorities across the periods analyzed.

The analysis of the quarterly financial metrics reveals several noteworthy trends and fluctuations in working capital, revenue, and working capital turnover ratios over the examined periods.

Working Capital

Working capital demonstrated a generally fluctuating pattern with episodes of increase followed by declines. Starting at a moderate level, it rose until late 2021, reaching a peak in March 2022, then experienced a decrease through to the end of 2022. The first quarter of 2023 saw a resurgence, climb to the highest levels in the periods following, peaking around March 2024. However, after this peak, a gradual decline was observed through to September 2025, with intermittent rises, indicating variability in short-term liquidity management.

Revenue

Revenue displayed more pronounced fluctuations over the quarters. Initially increasing through 2021, revenue peaked late in 2021 and early 2022 before dropping significantly in the last quarter of 2022 and the first quarter of 2023. Revenue then experienced periods of recovery and decline but generally remained below the prior peak levels observed in early 2022. The trend indicates volatility potentially reflective of market conditions affecting sales or operational factors influencing income generation.

Working Capital Turnover

The working capital turnover ratio exhibited a downward trend during the periods from early 2021 to approximately early 2024. Initial ratios suggested efficient use of working capital relative to revenue, but the decline over time implied reduced efficiency in generating revenue from working capital resources. However, towards mid-2024 and into 2025, there was a noticeable improvement in the turnover ratio, suggesting a potential recovery in operational efficiency or stronger revenue performance relative to working capital levels during those quarters.

Overall, the data suggests that while working capital levels have experienced variability, the efficiency of working capital in generating revenue declined for an extended period before showing signs of adjustment and improvement. Revenue volatility throughout the quarters highlights challenges in maintaining consistent sales growth, influencing both the liquidity and operational metrics of the company.

The analysis of the quarterly inventory metrics reveals a distinct trend over the observed periods, indicating changes in inventory management efficiency and operational dynamics.

Inventory Turnover Ratio

The inventory turnover ratio demonstrated a generally declining pattern from early 2021 through 2025. Starting at a ratio of 2.88 in the first quarter of 2021, the metric peaked slightly in the third quarter of 2021 at 3.18 before entering a consistent downtrend. By the first quarter of 2024, the ratio had decreased to approximately 1.6 and continued to hover around this lower range through 2025, with minor fluctuations. This declining trend suggests a reduced frequency of inventory renewal, implying slower sales or increased inventory holdings relative to cost of goods sold over time.

Average Inventory Processing Period

The average inventory processing period exhibited an inverse relationship to the inventory turnover ratio, with values increasing progressively across the quarters. Beginning at 127 days in the first quarter of 2021, the period extended steadily, reaching a high of 254 days in the third quarter of 2025 before slightly decreasing to 240 days at the end of the observed timeline. This elongation indicates that inventory remains on hand for substantially longer periods, suggesting either slower movement of goods, accumulation of stock, or challenges in liquidation efficiency.

Overall, the data indicates a gradual slowdown in inventory turnover accompanied by an extended inventory processing period. This combination points to a potential buildup of inventory and less efficient inventory management. The trend raises considerations regarding demand forecasts, supply chain management, and sales pace, warranting strategic review to optimize inventory levels and improve turnover rates moving forward.

Receivables Turnover Ratio

The receivables turnover ratio exhibited fluctuating behavior over the analyzed periods. Starting at 9.74 in March 2021, it increased to a peak of 10.78 by December 2021, indicating improved efficiency in collecting receivables during that time frame. However, a decline followed through mid-2022, reaching a low near 8.95 in June 2022, suggesting slower collections. There was a subsequent recovery toward the end of 2022 and early 2023, with values around 10.57 and 10.39, respectively. Yet, from mid-2023 onwards, the turnover ratio slowly trended downward again, reaching approximately 8.37 by September 2025, pointing to a gradual deterioration in receivables management efficiency over the latter periods.

Average Receivable Collection Period

The average collection period showed an inverse trend relative to the turnover ratio, as expected. Initially, it improved from 37 days in March 2021 to 34 days by September and December 2021, indicating faster receivables collection during that period. Starting in early 2022, the collection period lengthened notably, reaching 41 days in June 2022. This deterioration was partially reversed toward the end of 2022 and early 2023, decreasing back to approximately 35 days. However, from mid-2023 forward, the collection period demonstrated a steady lengthening trend, increasing to about 44 days by September 2025. This suggests a growing lag in converting receivables to cash, possibly reflecting changes in customer payment behavior or credit policies.

Overall Insights

The data reflects cyclical variations in receivables efficiency, with marked improvements in late 2021 and early 2023 but general declines across 2022 and the latter half of the period through 2025. The declining receivables turnover combined with increasing collection periods in recent quarters may warrant a review of credit risk management and collection processes to mitigate potential impacts on cash flow. Monitoring these trends is advisable to maintain effective working capital management.

The data reflects a clear upward trend across the average inventory processing period, average receivable collection period, and operating cycle over the analyzed quarters.

Average Inventory Processing Period

There is a consistent increase in the inventory processing duration, starting at 127 days in the first quarter of 2021 and reaching a peak of 254 days by the third quarter of 2025. Notably, the increase accelerates from late 2021 onward, indicating that inventory is being held for progressively longer periods over time.

Average Receivable Collection Period

This metric exhibits more variability but still demonstrates a general upward tendency. Beginning at 37 days in the first quarter of 2021, it fluctuates but ultimately ascends to 44 days by the third quarter of 2025. The collection period experiences intermittent increases and decreases, but the overall trend points toward slower collection of receivables.

Operating Cycle

The operating cycle, a combination of inventory processing and receivable collection periods, mirrors the upward trends seen in its components. Starting at 164 days in early 2021, it elongates substantially to a high of 296 days in the third quarter of 2025. This indicates that the company’s total cash conversion cycle is lengthening, potentially implying slower movement of inventory and cash conversion from sales.

Overall, the data suggests a gradual elongation in cash conversion efficiency, with both inventory turnover and receivables collection taking more time. This could signal potential challenges in working capital management that may warrant further investigation or strategic adjustments to improve operational liquidity.

Payables Turnover Ratio

The payables turnover ratio demonstrates a general declining trend from early 2021 through mid-2023, falling from 9.6 in March 2021 to a low of 6.63 in March 2023. This indicates that the company is taking longer to pay its suppliers during this period.

Subsequently, there is notable fluctuation with an increase in the ratio peaking at 11.89 in March 2024, suggesting a temporary acceleration in payment speed. However, following this peak, the ratio falls again and oscillates between 7.62 and 9.42 through to September 2025, reflecting variability but overall somewhat improved payment efficiency compared to the low point in early 2023.

Average Payables Payment Period (Number of Days)

This metric corroborates the payables turnover ratio trend, showing an increasing number of days taken to pay suppliers from 38 days in March 2021 to a peak of 55 days in March 2023. This indicates progressively slower payment practices during this time frame.

After this peak, the payment period briefly decreases sharply to 31 days by March 2024, paralleling the spike in the payables turnover ratio. Following this, the period returns to a range of approximately 39 to 48 days, evidencing some stabilization though still higher than the early 2021 levels.

Analysis Summary

Throughout the observed timeframe, there is a clear inverse relationship between the payables turnover ratio and the average payables payment period, as expected. The trends suggest that the company extended its payment cycle significantly in late 2022 and early 2023, likely reflecting changes in cash management or negotiating payment terms with suppliers.

The temporary improvement in payment turnover and reduction in days payable in early 2024 could indicate strategic efforts to normalize supplier payments or adjust working capital policies. However, variability from mid-2024 onwards suggests ongoing adjustments and lack of a consistent steady state in payables management.

Overall, while the company experienced periods of slower payable turnover, it has shown capacity to accelerate payments when needed, but a stable, consistent pattern has not yet been established by the end of the observed periods.

The analysis of the provided financial time series data reveals noteworthy trends in the company's working capital management metrics over multiple consecutive quarters.

Average Inventory Processing Period

This metric shows a general upward trend throughout the analyzed timeline. Starting at 127 days, it fluctuates slightly in early periods but consistently increases from 161 days at the end of 2022 to a peak of 254 days in the third quarter of 2025, before a slight decline to 240 days in the last period. This indicates a progressively longer duration for inventory turnover, potentially reflecting slower inventory movement or accumulation over time.

Average Receivable Collection Period

The receivable collection period remains relatively stable with minor fluctuations. Values oscillate mostly between 34 and 44 days, suggesting the company has maintained a consistent credit collection policy. A slight increase can be observed in the latter periods, indicating marginally longer times to collect receivables.

Average Payables Payment Period

The payables payment period displays more variability. Initial values near 38 days increase steadily, reaching 55 days by the first quarter of 2023, suggesting extended payment terms or slower payment to suppliers. A notable decline occurs around mid-2023 with a low of 31 days, followed by a moderate rebound to the mid to high 40s range. This fluctuation suggests possible strategic changes in managing payment obligations.

Cash Conversion Cycle

The cash conversion cycle overall shows an increasing trend, rising from 126 days at the start to a high range between 239 and 249 days in the latest quarters. A peak of 249 days is observed in the third quarter of 2025, followed by a marginal decrease. The elongation of this cycle mainly corresponds to the lengthening inventory period and, to some extent, the oscillations in receivable and payable days. This indicates that the company takes progressively longer to convert resources into cash.

In summary, the growing inventory holding time combined with relatively stable yet slightly increased receivable collection intervals and fluctuating payable durations have contributed to a prolonged cash conversion cycle. This pattern suggests potential challenges in operational efficiency or changes in working capital policies that may require further investigation to assess their impact on liquidity and overall financial health.