Walgreens Boots Alliance Inc. (NASDAQ:WBA)

The financial data presents a detailed view of key operational efficiency ratios and periods over multiple quarters from late 2014 to mid-2020. The trends in inventory turnover, receivables turnover, payables turnover, and related cycle periods provide insight into the company's working capital management and operational dynamics.

Inventory Turnover

Inventory turnover ratio shows a generally upward trend over the period. Starting from 8.58 in November 2014, the ratio experienced fluctuations but maintained growth, reaching a peak around 11.53 by May 2020. This suggests improving efficiency in inventory management, with the company turning over its inventory more times per period, indicating potentially better sales or inventory controls.

Receivables Turnover

Receivables turnover ratio reveals an overall improvement from a low of 12.05 in early 2015 to values generally above 18 from late 2016 onwards, with a slight increase to near 19.87 by May 2020. This progression points to enhanced effectiveness in collecting receivables, thus improving cash flow from customers.

Payables Turnover

Payables turnover exhibited a decline from 10.77 in late 2014 to a range mostly between 6.7 and 8.7 throughout the subsequent years, stabilizing around 7.3 to 7.8 by mid-2020. A lower payables turnover suggests the company is taking longer to pay its suppliers, which might aid in cash retention but could also reflect changes in supplier terms or payment strategy.

Working Capital Turnover

Working capital turnover experienced significant volatility, with a peak at 98.02 in August 2017, interrupted by some missing data in the later periods. Such a spike indicates unusually high sales relative to working capital at that time, but subsequent data gaps prevent a clear long-term assessment.

Average Inventory Processing Period

Days in inventory decreased from 43 days in late 2014 to around 32 days by mid-2020. This shortening cycle complements the increasing inventory turnover ratio, indicating faster inventory movement and potentially reduced holding costs.

Average Receivable Collection Period

The average collection period declined from 30 days early in 2015 to about 18-20 days in the latter years. This improvement reflects quicker collection of customer payments, enhancing liquidity.

Operating Cycle

The operating cycle contracted from as high as 86 days in early 2015 to approximately 50 days by mid-2020. The decreasing trend shows more efficient overall management of production, sales, and receivables processes.

Average Payables Payment Period

There was an increase in the payables payment period from 34 days in late 2014 up to a peak in the low 50s during 2017-2019, before easing slightly to 46 days by mid-2020. This pattern implies the company extended its payable terms for a time before moderating payment pace.

Cash Conversion Cycle

The cash conversion cycle improved notably, decreasing from around 26 days at the start of the series to values as low as 2-4 days by mid-2020. This indicates the company shortened the time between cash outflows and inflows, reflecting enhanced working capital management and improved cash efficiency.

In summary, the data reflects consistent improvements in turnover ratios and cycle periods, emphasizing enhanced efficiency in inventory management, receivables collection, and cash flow operations. The company appears to have optimized its working capital utilization significantly over the five and a half years, reducing the cash conversion cycle and improving liquidity and operational effectiveness.

Cost of Sales

The cost of sales exhibited a general increasing trend over the observed periods. Starting at approximately 14,258 million USD, the value rose sharply in the early quarters, reaching over 28,000 million USD by mid-2020. The data indicates periodic fluctuations but overall reflects growth in the cost base, with some quarters showing slight declines or stabilization following peaks.

Inventories

Inventory levels demonstrated variability without a clear consistent upward or downward trend. Values fluctuated between around 6,500 million USD at the beginning and roughly 9,500 to 10,500 million USD in later periods. There were intermittent dips and recoveries, suggesting adjustments in inventory management or responses to changing demand and supply conditions.

Inventory Turnover Ratio

The inventory turnover ratio displayed a gradual improvement over the quarters. Initially at 8.58, the ratio increased with some variances and reached highs above 11 in recent periods. This pattern signifies more efficient inventory usage, implying faster cycling of stock relative to cost of sales. Periodic fluctuations were present, but the overall trend points toward enhanced operational efficiency in managing inventories.

Summary of Trends and Insights

The financial data reveals an expanding scale of operations, as evidenced by rising cost of sales. Inventory levels showed responsive adjustments rather than steady growth, which alongside an increasing inventory turnover ratio, suggests improved inventory management efficiency. The elevation in turnover ratio indicates the company is progressively optimizing its stock levels relative to sales, potentially reducing holding costs and responding effectively to market demand shifts.

The analysis of the quarterly financial data reveals several key trends and patterns in the company's sales, accounts receivable, and receivables turnover over the examined periods.

Sales

Sales figures exhibit a general upward trend with seasonal fluctuations. Starting from approximately $19.6 billion at the end of 2014, sales increased significantly to a peak of around $36 billion by early 2020. Despite minor dips in some quarters, the data suggests consistent growth in sales revenue over the period, reflecting positive operational performance and market demand.

Accounts Receivable, Net

The net accounts receivable values show an increasing trend initially, rising from roughly $3.6 billion at the end of 2014 to a peak near $7.8 billion by early 2019. After this peak, the amounts display some volatility, with a slight decrease towards mid-2020, ending around $7 billion. This pattern indicates the company's expanding credit sales or extended payment terms up until 2019, followed by efforts to optimize receivables management or changes in credit policy.

Receivables Turnover Ratio

The receivables turnover ratio declines sharply from 21.69 in late 2014 to a low near 12.05 in early 2015, possibly indicating slower collection of receivables or growth in credit sales without proportional collection improvements. Subsequently, there is a gradual recovery and stabilization, with ratios mostly fluctuating between 17 and 20 from 2016 onward. This suggests improved efficiency in collecting receivables compared to the low in 2015, but with some variations over time.

Overall, the data indicate that while sales have generally increased, accounts receivable have also expanded, leading to an initial decrease in receivables turnover efficiency. Later, the turnover ratio stabilizes, reflecting enhanced collection practices or adjustments in credit terms to manage the growing receivables balance. The fluctuating nature of these metrics emphasizes the dynamic management of working capital in response to sales growth and external factors impacting collections.

The analysis of the quarterly financial data reveals several notable trends in the company’s cost of sales, trade accounts payable, and payables turnover over the examined period.

Cost of Sales

The cost of sales generally exhibits an increasing trend from November 2014 through May 2020. Starting at approximately $14.3 billion, it rises sharply during the initial quarters, reaching over $21 billion by mid-2015. The cost then fluctuates slightly but maintains an overall upward trajectory, peaking around $28.3 billion in early 2020. Minor declines are observed in some quarters, but these are generally short-lived within the broader growth pattern.

Trade Accounts Payable

Trade accounts payable also show a significant increase over time, generally rising from about $5.2 billion in late 2014 to a peak above $15.4 billion in early 2020. The trend includes periodic increases and decreases but is characterized by a clear long-term upward movement. Notably, payables surged initially by nearly double from late 2014 to early 2015 and continue to experience growth with some volatility through 2020.

Payables Turnover Ratio

The payables turnover ratio demonstrates considerable variability across the periods measured. Initially high at 10.77 in late 2014, the ratio declines sharply to under 6.0 in early 2015. Following this, it moves within a moderate range between approximately 6.7 and 8.8, showing occasional dips and recoveries. The overall trend suggests some fluctuation in the speed with which the company settles its trade payables, potentially reflecting changes in payment policies, supplier negotiations, or operational cash management. The ratio remains relatively stable between 6.7 and 7.8 from late 2015 onwards, with no consistent long-term upward or downward pattern.

In summary, the company’s cost of sales and trade accounts payable have increased substantially over the observed period, indicating growth in operational scale or purchasing volume. Meanwhile, the payables turnover ratio presents fluctuations without a definite directional trend, suggesting variability in payment cycles or credit terms with suppliers.

The quarterly financial data reveals distinct trends in working capital, sales, and the working capital turnover ratio over the analyzed periods.

Working Capital

Working capital shows significant volatility across the periods, with values initially high at 13,403 million US dollars but then sharply declining to negative figures starting in late 2017. From November 2017 onward, working capital remains negative, reflecting a reduction from -836 million to levels near -9,890 million in the final periods. This persistent negative working capital suggests increased current liabilities relative to current assets in recent years, potentially signaling liquidity pressures or strategic changes in operational financing.

Sales

Sales demonstrate a generally upward trajectory over the timeline. Starting around 19,554 million US dollars, sales increase steadily, peaking at 35,820 million in the second quarter of 2020. Despite minor fluctuations, the overall sales trend reflects growth in revenue generation, indicating stable or expanding market demand and successful sales execution over the years.

Working Capital Turnover

The working capital turnover ratio exhibits extreme variability and incompleteness, with initial values fluctuating between approximately 5.79 and 33.64 in earlier periods. Notably, a large spike to 98.02 appears in August 2017, possibly connected to the sharp reduction in working capital at that time. Data beyond this point is missing, limiting comprehensive analysis. Such volatility suggests changes in efficiency concerning the use of working capital to support sales, possibly impacted by the transition from positive to negative working capital.

Overall, the data indicates a period of growing sales accompanied by deteriorating working capital positions, transitioning to negative values in recent years. This combination may warrant further examination of liquidity and operational efficiency, as well as implications for cash flow management. The limited working capital turnover data restricts a full assessment of capital utilization efficiency, but observed anomalies coincide with the shifts in working capital levels.

The analysis of the quarterly inventory management metrics reflects notable trends over the evaluated period. The inventory turnover ratio exhibits a general upward trajectory, indicating an improvement in the efficiency with which inventory is sold and replaced. Starting from a ratio of 8.58, it dips to a low of 6.57 but then progressively rises, reaching a peak of 11.53 in the latest quarter. This upward trend suggests enhanced operational performance in inventory management.

Complementing the inventory turnover ratio, the average inventory processing period demonstrates a decreasing pattern over time. Beginning at 43 days, the inventory processing period increases temporarily to 56 days but subsequently declines steadily, reaching as low as 32 days in the most recent data points. This reduction in days signifies a faster conversion of inventory into sales, aligning with the increased turnover ratio.

Inventory Turnover Ratio

Initial decrease from 8.58 to 6.57, followed by a consistent upward trend to 11.53.

Indicates improving efficiency in stock management and sales turnover.

Average Inventory Processing Period

Fluctuated initially, peaking at 56 days, then exhibiting a steady decline to 32 days.

Represents quicker inventory cycles and improved operational cadence.

Overall, the complementary movement of these two metrics suggests a positive evolution in inventory management practices, with the company effectively reducing the time inventory remains on hand while simultaneously increasing turnover rates. This improvement potentially contributes to enhanced liquidity and operational agility.

The analysis of the quarterly financial data reveals several trends in the accounts receivable management over the observed periods.

Receivables Turnover Ratio

The receivables turnover ratio exhibits significant fluctuations initially, starting at a high of 21.69 and dropping sharply to 12.05 within three months. Following this decline, the ratio gradually improves, showing an upward trend through the subsequent quarters, reaching around 20 by early 2019. This indicates a general improvement in the frequency of collections, suggesting enhanced efficiency in managing receivables over time. However, some variability persists, with minor dips and rises in the later quarters, peaking notably at 20.01 in August 2018.

Average Receivable Collection Period

Corresponding to the turnover ratio, the average collection period starts at 17 days, increases to 30 days shortly after, and then steadily declines. This pattern inversely mirrors the turnover ratio’s trend, reflecting initially slower collection followed by progressively quicker collections as the average days decrease back to around 18-20 days in recent periods. Despite this improvement, the collection period hovers close to three weeks in most quarters, indicating a stable but not exceptionally fast conversion of receivables to cash.

Overall Insights

Overall, the trends suggest the company faced some initial challenges in receivables collection efficiency early in the timeframe but managed to improve substantially. The convergence of the receivables turnover ratio back toward higher levels and the reduction in collection days signals a positive development in credit and collection policies or operational effectiveness. Nevertheless, the fluctuations and periodic increases in collection periods indicate potential seasonal or market-driven influences affecting credit cycles.

The analysis of the quarterly financial data reveals notable trends in the company's operational efficiency as measured by inventory processing, receivable collection, and the overall operating cycle over the observed periods.

Average Inventory Processing Period

The average inventory processing period demonstrates a general downward trend from 43 days at the end of 2014 to 32 days by May 2020. Initial fluctuations occurred in early periods, with a peak reaching 56 days in February 2015, followed by a consistent reduction. This declining pattern suggests improvements in inventory management efficiency, enabling quicker turnover and potentially reduced holding costs.

Average Receivable Collection Period

The average receivable collection period shows moderate variability but remains relatively stable around 20 days throughout the timeframe. Starting at 17 days in November 2014, it peaked at 30 days by February 2015 and then stabilized between 18 and 22 days during subsequent quarters. This stability indicates consistent effectiveness in credit management and cash collection practices.

Operating Cycle

The operating cycle, which combines the inventory processing and receivable collection periods, mirrors the trends observed in its components. It fluctuates from 60 days at the end of 2014 up to a peak of 86 days in February 2015, then trends downward to 50 days by May 2020. The reduction in the operating cycle signifies enhancements in overall operational efficiency, reflecting faster conversion of inventory into cash.

In summary, the company has demonstrated a measurable improvement in operational metrics over the period, particularly in reducing inventory processing time and, consequently, the operating cycle. The receivable collection period has remained relatively stable, supporting consistent cash flow management. These trends collectively suggest heightened operational efficiency and resource utilization during the observed periods.

The analysis of the payables turnover ratio over the observed periods reveals notable fluctuations, reflecting changes in the company's efficiency in managing its payables. Initially, there is a significant drop from 10.77 to 5.99, followed by a gradual recovery and stabilization between approximately 6.7 and 8.7. During the early periods, the ratio decreases substantially but then shows a tendency to stabilize in the mid to high 7s range, with minor variations up to the latest period, indicating a relatively consistent approach to payables management in recent quarters.

In parallel, the average payables payment period, expressed in number of days, exhibits an inverse trend relative to the payables turnover. The payment period starts at 34 days, increases sharply to a peak around 61 days shortly after, and subsequently oscillates mostly between 42 and 54 days. This suggests that the company took longer to settle its payables during several quarters but managed to maintain a moderate payment cycle overall. The fluctuations demonstrate some adjustments in working capital management strategies, possibly influenced by changes in supplier terms or operational cash flow considerations.

Payables Turnover Ratio

Sharp initial decline followed by a gradual stabilization near the 7 to 8 range over several quarters.

Minor fluctuations in later periods suggest a consistent payables management approach.

Average Payables Payment Period

Initial increase from 34 to around 61 days, indicating extended payment durations.

Stabilization mostly between 42 and 54 days, reflecting controlled but flexible payment timing.

Relationship Between Metrics

Inverse correlation observed: as payables turnover decreases, average payment period increases, consistent with the expected financial behavior.

The company appears to balance payment timing to optimize liquidity and supplier relations.

Overall, the trends suggest the company underwent adjustments in payables management, initially extending payment terms before adopting a more stabilized payment practice. The observed fluctuations may reflect efforts to optimize working capital efficiency in response to market and operational factors.

The analysis of the financial turnover ratios over the reported periods reveals several notable trends in the operational efficiency concerning inventory management, receivables, payables, and the overall cash conversion cycle.

Average Inventory Processing Period

The average duration of inventory holding exhibited a general declining trend from late 2014 through mid-2020. Starting at 43 days near the end of 2014, it fluctuated over the subsequent quarters but demonstrated a gradual reduction, reaching approximately 32 days by May 2020. This downward movement suggests an improvement in inventory turnover efficiency, indicating faster inventory movement and potentially lower holding costs over time.

Average Receivable Collection Period

The time taken to collect receivables showed a modest but consistent decrease throughout the period. Initially at 17 days, it rose sharply to 30 days early in 2015 but then steadily declined, stabilizing around the 18 to 21-day range in the later years. This pattern reflects tighter credit control and perhaps improved collection processes, enhancing liquidity by reducing the cash conversion time from sales made on credit.

Average Payables Payment Period

The average period for paying suppliers exhibited more volatility and an overall increasing trend in the early periods—from 34 days end of 2014 to peaks above 50 days in many quarters during 2017 and 2018—before slightly retreating toward the end of the timeframe. A longer payables period may indicate an effort to optimize working capital by delaying outflows without jeopardizing supplier relationships, though persistent high values could also imply payment deferrals.

Cash Conversion Cycle

The cash conversion cycle decreased significantly, highlighting enhanced operational efficiency. From a relatively high 26 days at the end of 2014, it progressively dropped to single-digit figures by 2017 and maintained a low range around 2 to 6 days thereafter. A shorter cash conversion cycle reflects the company's better management of the time taken between outlay of cash and cash collection, translating to quicker cash recovery and improved liquidity position.

Overall, the data indicates steady improvements in operational management, with faster inventory turnover, accelerated receivable collections, and an optimized cash conversion period. These changes suggest enhanced working capital management that likely supports better cash flow and financial health.