Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Short-term Activity Ratios (Summary)
Based on: 10-Q (reporting date: 2020-05-31), 10-Q (reporting date: 2020-02-29), 10-Q (reporting date: 2019-11-30), 10-K (reporting date: 2019-08-31), 10-Q (reporting date: 2019-05-31), 10-Q (reporting date: 2019-02-28), 10-Q (reporting date: 2018-11-30), 10-K (reporting date: 2018-08-31), 10-Q (reporting date: 2018-05-31), 10-Q (reporting date: 2018-02-28), 10-Q (reporting date: 2017-11-30), 10-K (reporting date: 2017-08-31), 10-Q (reporting date: 2017-05-31), 10-Q (reporting date: 2017-02-28), 10-Q (reporting date: 2016-11-30), 10-K (reporting date: 2016-08-31), 10-Q (reporting date: 2016-05-31), 10-Q (reporting date: 2016-02-29), 10-Q (reporting date: 2015-11-30), 10-K (reporting date: 2015-08-31), 10-Q (reporting date: 2015-05-31), 10-Q (reporting date: 2015-02-28), 10-Q (reporting date: 2014-11-30), 10-K (reporting date: 2014-08-31), 10-Q (reporting date: 2014-05-31), 10-Q (reporting date: 2014-02-28), 10-Q (reporting date: 2013-11-30).
The financial data reveals several noteworthy trends in inventory, receivables, payables, and overall working capital management ratios over the periods presented. These observations are outlined below:
- Inventory Turnover
- The inventory turnover ratio shows an overall increasing trend from the earliest available figure of 6.57 up to 11.53 in the latest period. This improvement suggests enhanced efficiency in managing inventory levels and faster movement of goods. Some fluctuations occurred, with a slight dip around mid-period, but the general trajectory is upward indicating better inventory control.
- Receivables Turnover
- Receivables turnover starts at 12.05 and rises to around 19.87 by the most recent data point. This trend signals improvements in the speed of collecting receivables. It shows a peak, followed by some moderate volatility, but the overall increase suggests an enhanced ability to convert sales into cash more rapidly over time.
- Payables Turnover
- The payables turnover ratio decreases from 12.71 initially to a range fluctuating between approximately 6.99 and 7.86 in later periods. This indicates that the company is taking more time to pay its suppliers relative to earlier periods, thus potentially managing cash outflows more conservatively.
- Working Capital Turnover
- Working capital turnover values exhibit volatility, with some periods showing very high ratios (e.g., 98.02) and others showing much lower ratios. The inconsistency and missing data in later quarters suggest variability in the efficiency of working capital usage or possibly changes in working capital structure or reporting.
- Average Inventory Processing Period
- The days required for inventory processing generally decreased from 56 days to around 32 days in later periods. This corresponds with the rising inventory turnover ratio, further confirming improvements in inventory management and quicker turnover times.
- Average Receivable Collection Period
- The number of days for receivables collection fluctuated somewhat, starting as high as 30 days and declining towards the high teens and low twenties. The shortening collection period aligns with the rising receivables turnover rate, indicating efficiency gains in collecting payments from customers.
- Operating Cycle
- The operating cycle, total days required to convert inventory to cash, shows a decreasing trend from a peak around 86 days down to approximately 50 days. This reduction reflects overall improvements in inventory processing and receivables collection efficiency.
- Average Payables Payment Period
- The average period for paying suppliers increased from about 29 days to over 50 days in several periods, showing a tendency towards delaying payments. This strategy could be a measure to manage cash flow more effectively by extending payable terms.
- Cash Conversion Cycle
- The cash conversion cycle improved markedly from about 26 days down to figures as low as 2 to 4 days. This indicates superior working capital management, with the company shortening the time between cash outflows and inflows, enhancing liquidity.
In summary, the company demonstrates a consistent trend toward more efficient working capital management through faster inventory turnover and receivables collection, coupled with longer payable periods. The decline in operating and cash conversion cycles confirms improved operational efficiency and cash flow management over the reported intervals.
Turnover Ratios
Average No. Days
Inventory Turnover
May 31, 2020 | Feb 29, 2020 | Nov 30, 2019 | Aug 31, 2019 | May 31, 2019 | Feb 28, 2019 | Nov 30, 2018 | Aug 31, 2018 | May 31, 2018 | Feb 28, 2018 | Nov 30, 2017 | Aug 31, 2017 | May 31, 2017 | Feb 28, 2017 | Nov 30, 2016 | Aug 31, 2016 | May 31, 2016 | Feb 29, 2016 | Nov 30, 2015 | Aug 31, 2015 | May 31, 2015 | Feb 28, 2015 | Nov 30, 2014 | Aug 31, 2014 | May 31, 2014 | Feb 28, 2014 | Nov 30, 2013 | |||||||||
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Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||||||||||||
Cost of sales | 28,193) | 28,307) | 27,076) | 26,726) | 27,138) | 26,774) | 26,152) | 25,867) | 26,554) | 24,925) | 23,399) | 22,809) | 22,973) | 21,885) | 21,385) | 21,481) | 22,065) | 22,317) | 21,614) | 21,257) | 21,314) | 19,691) | 14,258) | 13,730) | 13,961) | 13,955) | 13,177) | ||||||||
Inventories | 9,563) | 9,652) | 10,536) | 9,333) | 9,874) | 10,188) | 10,976) | 9,565) | 9,889) | 10,316) | 10,010) | 8,899) | 8,681) | 9,230) | 10,039) | 8,956) | 8,931) | 9,025) | 9,884) | 8,678) | 8,764) | 9,379) | 6,518) | 6,076) | 6,439) | 7,213) | 7,729) | ||||||||
Short-term Activity Ratio | |||||||||||||||||||||||||||||||||||
Inventory turnover1 | 11.53 | 11.32 | 10.22 | 11.44 | 10.73 | 10.34 | 9.43 | 10.53 | 9.88 | 9.12 | 9.10 | 10.01 | 10.11 | 9.41 | 8.69 | 9.77 | 9.77 | 9.58 | 8.49 | 8.82 | 7.87 | 6.57 | 8.58 | 9.02 | — | — | — | ||||||||
Benchmarks | |||||||||||||||||||||||||||||||||||
Inventory Turnover, Competitors2 | |||||||||||||||||||||||||||||||||||
Costco Wholesale Corp. | 12.70 | 11.63 | 9.73 | 11.66 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||
Target Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||
Walmart Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
Based on: 10-Q (reporting date: 2020-05-31), 10-Q (reporting date: 2020-02-29), 10-Q (reporting date: 2019-11-30), 10-K (reporting date: 2019-08-31), 10-Q (reporting date: 2019-05-31), 10-Q (reporting date: 2019-02-28), 10-Q (reporting date: 2018-11-30), 10-K (reporting date: 2018-08-31), 10-Q (reporting date: 2018-05-31), 10-Q (reporting date: 2018-02-28), 10-Q (reporting date: 2017-11-30), 10-K (reporting date: 2017-08-31), 10-Q (reporting date: 2017-05-31), 10-Q (reporting date: 2017-02-28), 10-Q (reporting date: 2016-11-30), 10-K (reporting date: 2016-08-31), 10-Q (reporting date: 2016-05-31), 10-Q (reporting date: 2016-02-29), 10-Q (reporting date: 2015-11-30), 10-K (reporting date: 2015-08-31), 10-Q (reporting date: 2015-05-31), 10-Q (reporting date: 2015-02-28), 10-Q (reporting date: 2014-11-30), 10-K (reporting date: 2014-08-31), 10-Q (reporting date: 2014-05-31), 10-Q (reporting date: 2014-02-28), 10-Q (reporting date: 2013-11-30).
1 Q3 2020 Calculation
Inventory turnover
= (Cost of salesQ3 2020
+ Cost of salesQ2 2020
+ Cost of salesQ1 2020
+ Cost of salesQ4 2019)
÷ Inventories
= (28,193 + 28,307 + 27,076 + 26,726)
÷ 9,563 = 11.53
2 Click competitor name to see calculations.
The quarterly financial data reveals distinct trends in cost of sales, inventories, and inventory turnover over the reviewed period.
- Cost of Sales
- The cost of sales displays a general upward trajectory from November 2013 to May 2020, rising from 13,177 million to 28,193 million US dollars. This trend, however, features some periods of fluctuation. Notably, there is a significant increase between November 2014 and February 2015, where the cost jumps from 14,258 million to 19,691 million, suggesting a substantial change possibly related to volume, pricing, or operational adjustments. After this sharp increase, the cost of sales continues to climb steadily but with smaller incremental changes quarter over quarter.
- Inventories
- Inventories exhibit more volatility within the same timeframe. Beginning at 7,729 million in November 2013, there is a decline until August 2014, reaching a low of 6,076 million. From February 2015 onwards, inventories fluctuate between approximately 8,600 million and 10,500 million, without a clear pronounced trend upward or downward. The fluctuations may indicate adjustments in stock management or supply chain policies. The rise and fall patterns in inventories do not always correspond directly to the changes in cost of sales, indicating that inventory levels and sales costs are managed with some degree of independent drivers.
- Inventory Turnover
- Inventory turnover is recorded starting from November 2014. It initially shows a decrease from 9.02 to 6.57 by May 2015, implying slower movement of inventory despite the earlier noted increase in cost of sales. From mid-2015 onward, the ratio generally improves, reaching values above 10.0 multiple times, including peaks at 11.44 and 11.53 in November 2019 and May 2020 respectively. The increasing turnover ratio in the latter periods suggests enhanced efficiency in converting inventories into sales, possibly through better inventory management, demand forecasting, or sales execution.
Overall, the data depicts a company experiencing growth in cost of sales with variable inventory levels and a progressively improving ability to manage inventory turnover towards the end of the observed period. This combination may indicate operational adjustments aiming to balance stock levels with rising cost pressures and improving sales execution strategies.
Receivables Turnover
May 31, 2020 | Feb 29, 2020 | Nov 30, 2019 | Aug 31, 2019 | May 31, 2019 | Feb 28, 2019 | Nov 30, 2018 | Aug 31, 2018 | May 31, 2018 | Feb 28, 2018 | Nov 30, 2017 | Aug 31, 2017 | May 31, 2017 | Feb 28, 2017 | Nov 30, 2016 | Aug 31, 2016 | May 31, 2016 | Feb 29, 2016 | Nov 30, 2015 | Aug 31, 2015 | May 31, 2015 | Feb 28, 2015 | Nov 30, 2014 | Aug 31, 2014 | May 31, 2014 | Feb 28, 2014 | Nov 30, 2013 | |||||||||
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Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||||||||||||
Sales | 34,631) | 35,820) | 34,339) | 33,954) | 34,591) | 34,528) | 33,793) | 33,442) | 34,334) | 33,021) | 30,740) | 30,149) | 30,118) | 29,446) | 28,501) | 28,636) | 29,498) | 30,184) | 29,033) | 28,522) | 28,795) | 26,573) | 19,554) | 19,057) | 19,401) | 19,605) | 18,329) | ||||||||
Accounts receivable, net | 6,982) | 7,572) | 7,435) | 7,226) | 7,239) | 7,828) | 7,144) | 6,573) | 7,159) | 7,281) | 6,858) | 6,528) | 6,339) | 5,674) | 6,138) | 6,260) | 6,508) | 6,733) | 6,821) | 6,849) | 6,899) | 7,017) | 3,579) | 3,218) | 3,029) | 2,774) | 2,727) | ||||||||
Short-term Activity Ratio | |||||||||||||||||||||||||||||||||||
Receivables turnover1 | 19.87 | 18.32 | 18.48 | 18.94 | 18.84 | 17.39 | 18.84 | 20.01 | 17.91 | 17.03 | 17.56 | 18.11 | 18.41 | 20.46 | 19.03 | 18.75 | 18.01 | 17.31 | 16.56 | 15.10 | 13.62 | 12.05 | 21.69 | 23.74 | — | — | — | ||||||||
Benchmarks | |||||||||||||||||||||||||||||||||||
Receivables Turnover, Competitors2 | |||||||||||||||||||||||||||||||||||
Costco Wholesale Corp. | 104.44 | 77.92 | 88.41 | 97.30 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||
Walmart Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
Based on: 10-Q (reporting date: 2020-05-31), 10-Q (reporting date: 2020-02-29), 10-Q (reporting date: 2019-11-30), 10-K (reporting date: 2019-08-31), 10-Q (reporting date: 2019-05-31), 10-Q (reporting date: 2019-02-28), 10-Q (reporting date: 2018-11-30), 10-K (reporting date: 2018-08-31), 10-Q (reporting date: 2018-05-31), 10-Q (reporting date: 2018-02-28), 10-Q (reporting date: 2017-11-30), 10-K (reporting date: 2017-08-31), 10-Q (reporting date: 2017-05-31), 10-Q (reporting date: 2017-02-28), 10-Q (reporting date: 2016-11-30), 10-K (reporting date: 2016-08-31), 10-Q (reporting date: 2016-05-31), 10-Q (reporting date: 2016-02-29), 10-Q (reporting date: 2015-11-30), 10-K (reporting date: 2015-08-31), 10-Q (reporting date: 2015-05-31), 10-Q (reporting date: 2015-02-28), 10-Q (reporting date: 2014-11-30), 10-K (reporting date: 2014-08-31), 10-Q (reporting date: 2014-05-31), 10-Q (reporting date: 2014-02-28), 10-Q (reporting date: 2013-11-30).
1 Q3 2020 Calculation
Receivables turnover
= (SalesQ3 2020
+ SalesQ2 2020
+ SalesQ1 2020
+ SalesQ4 2019)
÷ Accounts receivable, net
= (34,631 + 35,820 + 34,339 + 33,954)
÷ 6,982 = 19.87
2 Click competitor name to see calculations.
The sales figures demonstrate an overall upward trend throughout the presented periods, rising from approximately $18.3 billion in late 2013 to a peak close to $35.8 billion by early 2020. There is evidence of a steady increase with some fluctuations, particularly notable growth occurs starting in early 2015, where sales surged significantly and maintained a generally higher level compared to previous years.
The accounts receivable, net, also display an overall increasing pattern, starting at $2.7 billion and progressing to around $7.0 billion by mid-2020. A sharp increase is observed in early 2015, coinciding with the sales growth period, after which the balances stabilize but remain elevated compared to earlier periods. The receivables values show some variability within subsequent quarters, suggesting seasonal or operational fluctuations, but the long-term direction is upward.
Receivables turnover ratios show substantial variation initially, with lower turnover rates (around 12 to 16 range) during mid-2014 to early 2015. From mid-2015 onwards, ratios consistently improve and stabilize, fluctuating mostly between 17 and 20. This indicates a generally increasing efficiency in collecting receivables relative to sales after the initial dip, despite the growing receivables balance. A few minor decreases occur temporarily but the overall metric trends toward better receivables management by the end of the data period.
The data reveal that while both sales and accounts receivable have grown significantly, the receivables turnover ratio's improvement indicates effective management of credit sales and collection processes over time. The growth in sales is not fully matched by accounts receivable, as evidenced by the turnover ratio improvements, suggesting an enhancement in liquidity and working capital quality relating to receivables.
Payables Turnover
May 31, 2020 | Feb 29, 2020 | Nov 30, 2019 | Aug 31, 2019 | May 31, 2019 | Feb 28, 2019 | Nov 30, 2018 | Aug 31, 2018 | May 31, 2018 | Feb 28, 2018 | Nov 30, 2017 | Aug 31, 2017 | May 31, 2017 | Feb 28, 2017 | Nov 30, 2016 | Aug 31, 2016 | May 31, 2016 | Feb 29, 2016 | Nov 30, 2015 | Aug 31, 2015 | May 31, 2015 | Feb 28, 2015 | Nov 30, 2014 | Aug 31, 2014 | May 31, 2014 | Feb 28, 2014 | Nov 30, 2013 | |||||||||
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Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||||||||||||
Cost of sales | 28,193) | 28,307) | 27,076) | 26,726) | 27,138) | 26,774) | 26,152) | 25,867) | 26,554) | 24,925) | 23,399) | 22,809) | 22,973) | 21,885) | 21,385) | 21,481) | 22,065) | 22,317) | 21,614) | 21,257) | 21,314) | 19,691) | 14,258) | 13,730) | 13,961) | 13,955) | 13,177) | ||||||||
Trade accounts payable | 14,033) | 14,968) | 15,401) | 14,341) | 14,130) | 14,348) | 14,660) | 13,566) | 13,089) | 13,301) | 13,570) | 12,494) | 11,528) | 11,264) | 11,372) | 11,000) | 10,337) | 9,873) | 10,643) | 10,088) | 9,932) | 10,293) | 5,189) | 4,315) | 4,235) | 4,488) | 4,762) | ||||||||
Short-term Activity Ratio | |||||||||||||||||||||||||||||||||||
Payables turnover1 | 7.86 | 7.30 | 6.99 | 7.45 | 7.50 | 7.34 | 7.06 | 7.43 | 7.46 | 7.08 | 6.71 | 7.13 | 7.61 | 7.71 | 7.67 | 7.95 | 8.44 | 8.76 | 7.88 | 7.59 | 6.95 | 5.99 | 10.77 | 12.71 | — | — | — | ||||||||
Benchmarks | |||||||||||||||||||||||||||||||||||
Payables Turnover, Competitors2 | |||||||||||||||||||||||||||||||||||
Costco Wholesale Corp. | 12.93 | 12.45 | 9.31 | 11.38 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||
Target Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||
Walmart Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
Based on: 10-Q (reporting date: 2020-05-31), 10-Q (reporting date: 2020-02-29), 10-Q (reporting date: 2019-11-30), 10-K (reporting date: 2019-08-31), 10-Q (reporting date: 2019-05-31), 10-Q (reporting date: 2019-02-28), 10-Q (reporting date: 2018-11-30), 10-K (reporting date: 2018-08-31), 10-Q (reporting date: 2018-05-31), 10-Q (reporting date: 2018-02-28), 10-Q (reporting date: 2017-11-30), 10-K (reporting date: 2017-08-31), 10-Q (reporting date: 2017-05-31), 10-Q (reporting date: 2017-02-28), 10-Q (reporting date: 2016-11-30), 10-K (reporting date: 2016-08-31), 10-Q (reporting date: 2016-05-31), 10-Q (reporting date: 2016-02-29), 10-Q (reporting date: 2015-11-30), 10-K (reporting date: 2015-08-31), 10-Q (reporting date: 2015-05-31), 10-Q (reporting date: 2015-02-28), 10-Q (reporting date: 2014-11-30), 10-K (reporting date: 2014-08-31), 10-Q (reporting date: 2014-05-31), 10-Q (reporting date: 2014-02-28), 10-Q (reporting date: 2013-11-30).
1 Q3 2020 Calculation
Payables turnover
= (Cost of salesQ3 2020
+ Cost of salesQ2 2020
+ Cost of salesQ1 2020
+ Cost of salesQ4 2019)
÷ Trade accounts payable
= (28,193 + 28,307 + 27,076 + 26,726)
÷ 14,033 = 7.86
2 Click competitor name to see calculations.
- Cost of Sales
- The cost of sales demonstrates an overall upward trend throughout the observed periods. Starting at approximately 13,177 million USD in November 2013, it remains relatively stable until late 2014, after which a marked increase occurs, reaching nearly 19,691 million USD by February 2015. This sharp rise is maintained, with fluctuations, and the cost peaks at around 28,307 million USD in May 2020. Despite minor decreases observed in some quarters, the general trajectory is rising, indicating growth in the volume or cost associated with goods sold.
- Trade Accounts Payable
- Trade accounts payable exhibit significant volatility over the same timeframe. Initially, values decrease from 4,762 million USD in November 2013 to 4,235 million USD by May 2014, suggesting a reduction in short-term liabilities during that period. Subsequently, from early 2015 onward, there is a sharp rise to over 10,000 million USD, peaking at approximately 15,401 million USD in February 2020. This substantial increase in accounts payable corresponds with the rising cost of sales, potentially reflecting extended payment terms or higher procurement volumes. Fluctuations continue through 2020, but the overall level remains elevated relative to the earlier years.
- Payables Turnover Ratio
- The payables turnover ratio displays a downward trend at the start of the data series with values around 12.71 in mid-2014 declining sharply to approximately 5.99 in early 2015. This initial drop indicates slower payment cycles for payables during this period. From 2015 onward, the ratio stabilizes, fluctuating between roughly 6.7 and 8.8 but showing no consistent upward or downward trend in the longer term. The stabilization suggests a relatively steady pace in managing payables through the latter years, although the turnover is notably lower than the initial peak, implying longer payment periods or increased outstanding payables relative to cost of sales.
Working Capital Turnover
May 31, 2020 | Feb 29, 2020 | Nov 30, 2019 | Aug 31, 2019 | May 31, 2019 | Feb 28, 2019 | Nov 30, 2018 | Aug 31, 2018 | May 31, 2018 | Feb 28, 2018 | Nov 30, 2017 | Aug 31, 2017 | May 31, 2017 | Feb 28, 2017 | Nov 30, 2016 | Aug 31, 2016 | May 31, 2016 | Feb 29, 2016 | Nov 30, 2015 | Aug 31, 2015 | May 31, 2015 | Feb 28, 2015 | Nov 30, 2014 | Aug 31, 2014 | May 31, 2014 | Feb 28, 2014 | Nov 30, 2013 | |||||||||
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Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||||||||||||
Current assets | 18,326) | 18,909) | 19,604) | 18,700) | 19,021) | 19,851) | 20,083) | 17,846) | 19,988) | 20,358) | 19,681) | 19,753) | 28,152) | 27,509) | 26,668) | 25,883) | 19,713) | 20,378) | 20,231) | 19,657) | 21,029) | 20,715) | 23,280) | 12,242) | 11,928) | 12,036) | 11,722) | ||||||||
Less: Current liabilities | 26,649) | 28,662) | 29,494) | 25,769) | 25,060) | 25,303) | 25,099) | 21,667) | 21,482) | 22,559) | 20,517) | 18,547) | 21,713) | 17,678) | 17,729) | 17,013) | 15,811) | 16,272) | 16,874) | 16,557) | 16,157) | 16,690) | 9,877) | 8,895) | 8,409) | 8,499) | 8,821) | ||||||||
Working capital | (8,323) | (9,753) | (9,890) | (7,069) | (6,039) | (5,452) | (5,016) | (3,821) | (1,494) | (2,201) | (836) | 1,206) | 6,439) | 9,831) | 8,939) | 8,870) | 3,902) | 4,106) | 3,357) | 3,100) | 4,872) | 4,025) | 13,403) | 3,347) | 3,519) | 3,537) | 2,901) | ||||||||
Sales | 34,631) | 35,820) | 34,339) | 33,954) | 34,591) | 34,528) | 33,793) | 33,442) | 34,334) | 33,021) | 30,740) | 30,149) | 30,118) | 29,446) | 28,501) | 28,636) | 29,498) | 30,184) | 29,033) | 28,522) | 28,795) | 26,573) | 19,554) | 19,057) | 19,401) | 19,605) | 18,329) | ||||||||
Short-term Activity Ratio | |||||||||||||||||||||||||||||||||||
Working capital turnover1 | — | — | — | — | — | — | — | — | — | — | — | 98.02 | 18.12 | 11.81 | 13.07 | 13.23 | 30.05 | 28.38 | 33.64 | 33.37 | 19.29 | 21.01 | 5.79 | 22.82 | — | — | — | ||||||||
Benchmarks | |||||||||||||||||||||||||||||||||||
Working Capital Turnover, Competitors2 | |||||||||||||||||||||||||||||||||||
Costco Wholesale Corp. | 63.59 | 153.67 | 400.20 | 602.22 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||
Target Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||
Walmart Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
Based on: 10-Q (reporting date: 2020-05-31), 10-Q (reporting date: 2020-02-29), 10-Q (reporting date: 2019-11-30), 10-K (reporting date: 2019-08-31), 10-Q (reporting date: 2019-05-31), 10-Q (reporting date: 2019-02-28), 10-Q (reporting date: 2018-11-30), 10-K (reporting date: 2018-08-31), 10-Q (reporting date: 2018-05-31), 10-Q (reporting date: 2018-02-28), 10-Q (reporting date: 2017-11-30), 10-K (reporting date: 2017-08-31), 10-Q (reporting date: 2017-05-31), 10-Q (reporting date: 2017-02-28), 10-Q (reporting date: 2016-11-30), 10-K (reporting date: 2016-08-31), 10-Q (reporting date: 2016-05-31), 10-Q (reporting date: 2016-02-29), 10-Q (reporting date: 2015-11-30), 10-K (reporting date: 2015-08-31), 10-Q (reporting date: 2015-05-31), 10-Q (reporting date: 2015-02-28), 10-Q (reporting date: 2014-11-30), 10-K (reporting date: 2014-08-31), 10-Q (reporting date: 2014-05-31), 10-Q (reporting date: 2014-02-28), 10-Q (reporting date: 2013-11-30).
1 Q3 2020 Calculation
Working capital turnover
= (SalesQ3 2020
+ SalesQ2 2020
+ SalesQ1 2020
+ SalesQ4 2019)
÷ Working capital
= (34,631 + 35,820 + 34,339 + 33,954)
÷ -8,323 = —
2 Click competitor name to see calculations.
- Working Capital Trends
- The working capital showed significant fluctuations over the analyzed periods. Initially, it remained positive and relatively stable from November 2013 through August 2014, ranging approximately between 2,900 and 3,500 million US dollars. A notable spike occurred in November 2014, with working capital increasing sharply to over 13,000 million, followed by a rapid decrease back to pre-spike levels within the next quarters through 2015. After 2015, a downward trend became evident, with working capital steadily declining and turning negative beginning in November 2017. This negative working capital trend deepened over subsequent quarters, reaching levels close to -9,800 million US dollars by early 2020, indicating a deterioration in the company’s short-term liquidity position.
- Sales Performance
- Sales consistently increased over the analyzed time frame, showing an overall upward trajectory. Starting at approximately 18,300 million US dollars in late 2013, sales rose steadily, reaching about 30,700 million by late 2017. Growth continued from 2018 into early 2020, with sales peaking near 35,800 million US dollars in early 2020. This pattern indicates sustained revenue growth despite fluctuations in working capital.
- Working Capital Turnover Ratios
- The working capital turnover ratios are sporadically reported and show considerable variation. Early in the dataset, the ratio is absent, but from November 2014 to August 2016, it fluctuated between approximately 5.79 and 33.64, indicating varying efficiency in the use of working capital to generate sales. The exceptionally high ratio in November 2017, around 98.02, suggests an outlier or a significant anomaly likely linked to the negative or very low working capital reported during that period. The lack of consistent data for this ratio in later periods limits conclusive analysis for recent working capital efficiency.
- Overall Financial Insights
- The data reveals a company experiencing continuous sales growth along with a decreasing trend in working capital, eventually moving into negative territory. This suggests that although sales performance is improving, the ability to manage short-term assets and liabilities may be weakening, leading to potential liquidity concerns. The volatility observed in the working capital turnover ratio reflects these operational challenges in converting working capital to sales efficiently in certain periods.
Average Inventory Processing Period
May 31, 2020 | Feb 29, 2020 | Nov 30, 2019 | Aug 31, 2019 | May 31, 2019 | Feb 28, 2019 | Nov 30, 2018 | Aug 31, 2018 | May 31, 2018 | Feb 28, 2018 | Nov 30, 2017 | Aug 31, 2017 | May 31, 2017 | Feb 28, 2017 | Nov 30, 2016 | Aug 31, 2016 | May 31, 2016 | Feb 29, 2016 | Nov 30, 2015 | Aug 31, 2015 | May 31, 2015 | Feb 28, 2015 | Nov 30, 2014 | Aug 31, 2014 | May 31, 2014 | Feb 28, 2014 | Nov 30, 2013 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Selected Financial Data | |||||||||||||||||||||||||||||||||||
Inventory turnover | 11.53 | 11.32 | 10.22 | 11.44 | 10.73 | 10.34 | 9.43 | 10.53 | 9.88 | 9.12 | 9.10 | 10.01 | 10.11 | 9.41 | 8.69 | 9.77 | 9.77 | 9.58 | 8.49 | 8.82 | 7.87 | 6.57 | 8.58 | 9.02 | — | — | — | ||||||||
Short-term Activity Ratio (no. days) | |||||||||||||||||||||||||||||||||||
Average inventory processing period1 | 32 | 32 | 36 | 32 | 34 | 35 | 39 | 35 | 37 | 40 | 40 | 36 | 36 | 39 | 42 | 37 | 37 | 38 | 43 | 41 | 46 | 56 | 43 | 40 | — | — | — | ||||||||
Benchmarks (no. days) | |||||||||||||||||||||||||||||||||||
Average Inventory Processing Period, Competitors2 | |||||||||||||||||||||||||||||||||||
Costco Wholesale Corp. | 29 | 31 | 37 | 31 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||
Target Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||
Walmart Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
Based on: 10-Q (reporting date: 2020-05-31), 10-Q (reporting date: 2020-02-29), 10-Q (reporting date: 2019-11-30), 10-K (reporting date: 2019-08-31), 10-Q (reporting date: 2019-05-31), 10-Q (reporting date: 2019-02-28), 10-Q (reporting date: 2018-11-30), 10-K (reporting date: 2018-08-31), 10-Q (reporting date: 2018-05-31), 10-Q (reporting date: 2018-02-28), 10-Q (reporting date: 2017-11-30), 10-K (reporting date: 2017-08-31), 10-Q (reporting date: 2017-05-31), 10-Q (reporting date: 2017-02-28), 10-Q (reporting date: 2016-11-30), 10-K (reporting date: 2016-08-31), 10-Q (reporting date: 2016-05-31), 10-Q (reporting date: 2016-02-29), 10-Q (reporting date: 2015-11-30), 10-K (reporting date: 2015-08-31), 10-Q (reporting date: 2015-05-31), 10-Q (reporting date: 2015-02-28), 10-Q (reporting date: 2014-11-30), 10-K (reporting date: 2014-08-31), 10-Q (reporting date: 2014-05-31), 10-Q (reporting date: 2014-02-28), 10-Q (reporting date: 2013-11-30).
1 Q3 2020 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 11.53 = 32
2 Click competitor name to see calculations.
- Inventory Turnover
- The inventory turnover ratio demonstrates a generally positive trend over the periods analyzed, starting at 9.02 in November 2014 and gradually increasing to 11.53 by May 2020. This indicates an improvement in the efficiency with which the company manages its inventory, as goods are being sold and replaced more frequently over time. Although there are minor fluctuations, such as a dip to 6.57 in May 2015 and a moderate decline around 2018-2019, the overall movement is upward, suggesting enhanced inventory control and operational effectiveness.
- Average Inventory Processing Period
- The average inventory processing period, measured in days, inversely correlates with the inventory turnover. Starting at 40 days in November 2014, the period shows a declining trend, reaching as low as 32 days by May 2020. This reduction in the processing period complements the increasing inventory turnover ratio, illustrating that inventory is being processed and renewed more quickly. There are some short-term increases, such as a rise to 56 days in May 2015, but overall the trend reflects improved inventory efficiency and faster inventory cycles.
- Summary of Trends
- Collectively, the data points to improved inventory management over the span covered. The company has succeeded in increasing its inventory turnover while simultaneously reducing the average time inventory remains on hand. These trends imply operational enhancements that may contribute to better cash flow management and reduced holding costs. Periodic fluctuations suggest some variability likely due to seasonal factors or operational adjustments, but the long-term trajectory is one of enhanced inventory efficiency.
Average Receivable Collection Period
May 31, 2020 | Feb 29, 2020 | Nov 30, 2019 | Aug 31, 2019 | May 31, 2019 | Feb 28, 2019 | Nov 30, 2018 | Aug 31, 2018 | May 31, 2018 | Feb 28, 2018 | Nov 30, 2017 | Aug 31, 2017 | May 31, 2017 | Feb 28, 2017 | Nov 30, 2016 | Aug 31, 2016 | May 31, 2016 | Feb 29, 2016 | Nov 30, 2015 | Aug 31, 2015 | May 31, 2015 | Feb 28, 2015 | Nov 30, 2014 | Aug 31, 2014 | May 31, 2014 | Feb 28, 2014 | Nov 30, 2013 | |||||||||
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Selected Financial Data | |||||||||||||||||||||||||||||||||||
Receivables turnover | 19.87 | 18.32 | 18.48 | 18.94 | 18.84 | 17.39 | 18.84 | 20.01 | 17.91 | 17.03 | 17.56 | 18.11 | 18.41 | 20.46 | 19.03 | 18.75 | 18.01 | 17.31 | 16.56 | 15.10 | 13.62 | 12.05 | 21.69 | 23.74 | — | — | — | ||||||||
Short-term Activity Ratio (no. days) | |||||||||||||||||||||||||||||||||||
Average receivable collection period1 | 18 | 20 | 20 | 19 | 19 | 21 | 19 | 18 | 20 | 21 | 21 | 20 | 20 | 18 | 19 | 19 | 20 | 21 | 22 | 24 | 27 | 30 | 17 | 15 | — | — | — | ||||||||
Benchmarks (no. days) | |||||||||||||||||||||||||||||||||||
Average Receivable Collection Period, Competitors2 | |||||||||||||||||||||||||||||||||||
Costco Wholesale Corp. | 3 | 5 | 4 | 4 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||
Walmart Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
Based on: 10-Q (reporting date: 2020-05-31), 10-Q (reporting date: 2020-02-29), 10-Q (reporting date: 2019-11-30), 10-K (reporting date: 2019-08-31), 10-Q (reporting date: 2019-05-31), 10-Q (reporting date: 2019-02-28), 10-Q (reporting date: 2018-11-30), 10-K (reporting date: 2018-08-31), 10-Q (reporting date: 2018-05-31), 10-Q (reporting date: 2018-02-28), 10-Q (reporting date: 2017-11-30), 10-K (reporting date: 2017-08-31), 10-Q (reporting date: 2017-05-31), 10-Q (reporting date: 2017-02-28), 10-Q (reporting date: 2016-11-30), 10-K (reporting date: 2016-08-31), 10-Q (reporting date: 2016-05-31), 10-Q (reporting date: 2016-02-29), 10-Q (reporting date: 2015-11-30), 10-K (reporting date: 2015-08-31), 10-Q (reporting date: 2015-05-31), 10-Q (reporting date: 2015-02-28), 10-Q (reporting date: 2014-11-30), 10-K (reporting date: 2014-08-31), 10-Q (reporting date: 2014-05-31), 10-Q (reporting date: 2014-02-28), 10-Q (reporting date: 2013-11-30).
1 Q3 2020 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 19.87 = 18
2 Click competitor name to see calculations.
The receivables turnover ratio exhibits some fluctuations over the observed quarters. Initially, no data is available for the periods before November 30, 2013. Starting from November 30, 2013, the ratio was notably high at 23.74 but then showed a decline to 12.05 by May 31, 2014. After this low point, there was a recovery trend, with the ratio improving steadily to reach around 20 by November 30, 2016. This improvement was followed by a period of relative stability with minor fluctuations, maintaining values generally between 17 and 20 from approximately August 31, 2015, through May 31, 2020. The overall pattern suggests that after an initial decline, the receivables turnover stabilized at a moderate level, indicating consistent efficiency in collecting receivables during the latter periods.
Correspondingly, the average receivable collection period, measured in number of days, moves inversely to the receivables turnover. Early on, specifically from November 30, 2013, collection periods were low, around 15 days, but there was an increase up to 30 days by May 31, 2014, coinciding with the observed dip in receivables turnover. After reaching this peak in days, the collection period gradually decreased again, reaching about 19-20 days from November 30, 2016, and maintaining this range through to the end of the observed period in May 31, 2020. The declines in collection days after the early peaks correspond with improvements in turnover, reflecting enhanced efficiency in the conversion of receivables to cash.
In summary, the data indicates an initial period of declining receivables turnover and lengthening collection periods, followed by recovery and stabilization. This suggests that the company improved its receivables management over time, achieving a more consistent and effective collection process during the latter part of the reporting period.
- Receivables Turnover Ratio Trends
- Initial high value with a sharp decline, followed by steady recovery and stabilization between 17 and 20.
- Average Receivable Collection Period Trends
- Increase in days during the early period, peaking at 30 days, then gradually decreasing to stable values around 19-20 days thereafter.
- Correlation
- Inverse relationship observed between turnover ratio and collection period, consistent with improved receivables efficiency over time.
- Overall Insight
- Improved management and collection efficiency in receivables after initial volatility, leading to stabilized operational performance in this aspect.
Operating Cycle
May 31, 2020 | Feb 29, 2020 | Nov 30, 2019 | Aug 31, 2019 | May 31, 2019 | Feb 28, 2019 | Nov 30, 2018 | Aug 31, 2018 | May 31, 2018 | Feb 28, 2018 | Nov 30, 2017 | Aug 31, 2017 | May 31, 2017 | Feb 28, 2017 | Nov 30, 2016 | Aug 31, 2016 | May 31, 2016 | Feb 29, 2016 | Nov 30, 2015 | Aug 31, 2015 | May 31, 2015 | Feb 28, 2015 | Nov 30, 2014 | Aug 31, 2014 | May 31, 2014 | Feb 28, 2014 | Nov 30, 2013 | |||||||||
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Selected Financial Data | |||||||||||||||||||||||||||||||||||
Average inventory processing period | 32 | 32 | 36 | 32 | 34 | 35 | 39 | 35 | 37 | 40 | 40 | 36 | 36 | 39 | 42 | 37 | 37 | 38 | 43 | 41 | 46 | 56 | 43 | 40 | — | — | — | ||||||||
Average receivable collection period | 18 | 20 | 20 | 19 | 19 | 21 | 19 | 18 | 20 | 21 | 21 | 20 | 20 | 18 | 19 | 19 | 20 | 21 | 22 | 24 | 27 | 30 | 17 | 15 | — | — | — | ||||||||
Short-term Activity Ratio | |||||||||||||||||||||||||||||||||||
Operating cycle1 | 50 | 52 | 56 | 51 | 53 | 56 | 58 | 53 | 57 | 61 | 61 | 56 | 56 | 57 | 61 | 56 | 57 | 59 | 65 | 65 | 73 | 86 | 60 | 55 | — | — | — | ||||||||
Benchmarks | |||||||||||||||||||||||||||||||||||
Operating Cycle, Competitors2 | |||||||||||||||||||||||||||||||||||
Costco Wholesale Corp. | 32 | 36 | 41 | 35 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||
Walmart Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
Based on: 10-Q (reporting date: 2020-05-31), 10-Q (reporting date: 2020-02-29), 10-Q (reporting date: 2019-11-30), 10-K (reporting date: 2019-08-31), 10-Q (reporting date: 2019-05-31), 10-Q (reporting date: 2019-02-28), 10-Q (reporting date: 2018-11-30), 10-K (reporting date: 2018-08-31), 10-Q (reporting date: 2018-05-31), 10-Q (reporting date: 2018-02-28), 10-Q (reporting date: 2017-11-30), 10-K (reporting date: 2017-08-31), 10-Q (reporting date: 2017-05-31), 10-Q (reporting date: 2017-02-28), 10-Q (reporting date: 2016-11-30), 10-K (reporting date: 2016-08-31), 10-Q (reporting date: 2016-05-31), 10-Q (reporting date: 2016-02-29), 10-Q (reporting date: 2015-11-30), 10-K (reporting date: 2015-08-31), 10-Q (reporting date: 2015-05-31), 10-Q (reporting date: 2015-02-28), 10-Q (reporting date: 2014-11-30), 10-K (reporting date: 2014-08-31), 10-Q (reporting date: 2014-05-31), 10-Q (reporting date: 2014-02-28), 10-Q (reporting date: 2013-11-30).
1 Q3 2020 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= 32 + 18 = 50
2 Click competitor name to see calculations.
- Average Inventory Processing Period
- The average inventory processing period displays some variability over the periods analyzed. Starting from 40 days in November 2014, it fluctuates with peaks reaching up to 56 days in May 2014 and falling to a low of 32 days observed in several recent periods, including May and August 2020. Overall, there is a subtle downward trend in the average inventory days, suggesting improving efficiency in managing inventory or turnover rates over time. The most recent data points indicate stabilization in the low 30s.
- Average Receivable Collection Period
- The average receivable collection period shows a degree of increase initially, rising from 15 days in November 2014 to a peak of 30 days by May 2014, although some irregularities are noted in the timeline. After the peak, a gradual decline is observed with the period stabilizing between 18 and 21 days in the latter part of the dataset, including 18 days in May 2020. This suggests a tightening of credit collection or improvements in cash flow management concentrated in the more recent periods.
- Operating Cycle
- The operating cycle, which combines inventory processing and receivable collection periods, reveals a pattern consistent with the trends in its components. Beginning from 55 days in November 2014, it escalates to a high of 86 days in May 2014, then progressively decreases with fluctuations, stabilizing around the low 50s in the latest periods (including 50 days in May 2020). The overall reduction indicates enhanced operational efficiency, reflecting shorter durations between cash outlays for inventory and cash inflows from receivables.
Average Payables Payment Period
May 31, 2020 | Feb 29, 2020 | Nov 30, 2019 | Aug 31, 2019 | May 31, 2019 | Feb 28, 2019 | Nov 30, 2018 | Aug 31, 2018 | May 31, 2018 | Feb 28, 2018 | Nov 30, 2017 | Aug 31, 2017 | May 31, 2017 | Feb 28, 2017 | Nov 30, 2016 | Aug 31, 2016 | May 31, 2016 | Feb 29, 2016 | Nov 30, 2015 | Aug 31, 2015 | May 31, 2015 | Feb 28, 2015 | Nov 30, 2014 | Aug 31, 2014 | May 31, 2014 | Feb 28, 2014 | Nov 30, 2013 | |||||||||
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Selected Financial Data | |||||||||||||||||||||||||||||||||||
Payables turnover | 7.86 | 7.30 | 6.99 | 7.45 | 7.50 | 7.34 | 7.06 | 7.43 | 7.46 | 7.08 | 6.71 | 7.13 | 7.61 | 7.71 | 7.67 | 7.95 | 8.44 | 8.76 | 7.88 | 7.59 | 6.95 | 5.99 | 10.77 | 12.71 | — | — | — | ||||||||
Short-term Activity Ratio (no. days) | |||||||||||||||||||||||||||||||||||
Average payables payment period1 | 46 | 50 | 52 | 49 | 49 | 50 | 52 | 49 | 49 | 52 | 54 | 51 | 48 | 47 | 48 | 46 | 43 | 42 | 46 | 48 | 53 | 61 | 34 | 29 | — | — | — | ||||||||
Benchmarks (no. days) | |||||||||||||||||||||||||||||||||||
Average Payables Payment Period, Competitors2 | |||||||||||||||||||||||||||||||||||
Costco Wholesale Corp. | 28 | 29 | 39 | 32 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||
Target Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||
Walmart Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
Based on: 10-Q (reporting date: 2020-05-31), 10-Q (reporting date: 2020-02-29), 10-Q (reporting date: 2019-11-30), 10-K (reporting date: 2019-08-31), 10-Q (reporting date: 2019-05-31), 10-Q (reporting date: 2019-02-28), 10-Q (reporting date: 2018-11-30), 10-K (reporting date: 2018-08-31), 10-Q (reporting date: 2018-05-31), 10-Q (reporting date: 2018-02-28), 10-Q (reporting date: 2017-11-30), 10-K (reporting date: 2017-08-31), 10-Q (reporting date: 2017-05-31), 10-Q (reporting date: 2017-02-28), 10-Q (reporting date: 2016-11-30), 10-K (reporting date: 2016-08-31), 10-Q (reporting date: 2016-05-31), 10-Q (reporting date: 2016-02-29), 10-Q (reporting date: 2015-11-30), 10-K (reporting date: 2015-08-31), 10-Q (reporting date: 2015-05-31), 10-Q (reporting date: 2015-02-28), 10-Q (reporting date: 2014-11-30), 10-K (reporting date: 2014-08-31), 10-Q (reporting date: 2014-05-31), 10-Q (reporting date: 2014-02-28), 10-Q (reporting date: 2013-11-30).
1 Q3 2020 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 7.86 = 46
2 Click competitor name to see calculations.
The payables turnover ratio exhibits a fluctuating pattern with a general declining trend from late 2013 through mid-2020. Starting from a high point around 12.71, the ratio decreases sharply to around 5.99 in mid-2014, indicating a significant slowdown in the frequency of payables being settled. Following this low, the ratio stabilizes between approximately 6.7 and 8.8 in subsequent periods up to early 2020, suggesting a more consistent pattern of payables turnover albeit at a lower level compared to the initial value.
Correspondingly, the average payables payment period, expressed in days, shows an inverse movement relative to the payables turnover ratio, which is consistent with financial theory. Initially, there is an increase from around 29 days in late 2013 up to above 60 days in mid-2014, implying that the company extended the time it takes to settle payables considerably during that time. Thereafter, the payment period oscillates mostly between 42 and 54 days, reflecting a relatively stable accounts payable management strategy over the following years. Towards early 2020, a slight decrease is observed, moving closer to 46 days, which may suggest a modest improvement in payment speed or changes in supplier terms.
The inverse relationship between the payables turnover ratio and the average payment period is evident throughout the analyzed timeframe. Periods characterized by low turnover ratios coincide with extended payment durations, and vice versa. This pattern highlights adjustments in the company's working capital management, potentially in response to operational, market, or liquidity considerations.
Overall, the data reflects a shift from a high turnover and shorter payment cycle early in the period to a more prolonged payment period and lower turnover ratio subsequently. The stabilization observed post-2014 indicates that the company maintained a consistent approach to managing its payables in the context of evolving business needs and external factors.
Cash Conversion Cycle
May 31, 2020 | Feb 29, 2020 | Nov 30, 2019 | Aug 31, 2019 | May 31, 2019 | Feb 28, 2019 | Nov 30, 2018 | Aug 31, 2018 | May 31, 2018 | Feb 28, 2018 | Nov 30, 2017 | Aug 31, 2017 | May 31, 2017 | Feb 28, 2017 | Nov 30, 2016 | Aug 31, 2016 | May 31, 2016 | Feb 29, 2016 | Nov 30, 2015 | Aug 31, 2015 | May 31, 2015 | Feb 28, 2015 | Nov 30, 2014 | Aug 31, 2014 | May 31, 2014 | Feb 28, 2014 | Nov 30, 2013 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Selected Financial Data | |||||||||||||||||||||||||||||||||||
Average inventory processing period | 32 | 32 | 36 | 32 | 34 | 35 | 39 | 35 | 37 | 40 | 40 | 36 | 36 | 39 | 42 | 37 | 37 | 38 | 43 | 41 | 46 | 56 | 43 | 40 | — | — | — | ||||||||
Average receivable collection period | 18 | 20 | 20 | 19 | 19 | 21 | 19 | 18 | 20 | 21 | 21 | 20 | 20 | 18 | 19 | 19 | 20 | 21 | 22 | 24 | 27 | 30 | 17 | 15 | — | — | — | ||||||||
Average payables payment period | 46 | 50 | 52 | 49 | 49 | 50 | 52 | 49 | 49 | 52 | 54 | 51 | 48 | 47 | 48 | 46 | 43 | 42 | 46 | 48 | 53 | 61 | 34 | 29 | — | — | — | ||||||||
Short-term Activity Ratio | |||||||||||||||||||||||||||||||||||
Cash conversion cycle1 | 4 | 2 | 4 | 2 | 4 | 6 | 6 | 4 | 8 | 9 | 7 | 5 | 8 | 10 | 13 | 10 | 14 | 17 | 19 | 17 | 20 | 25 | 26 | 26 | — | — | — | ||||||||
Benchmarks | |||||||||||||||||||||||||||||||||||
Cash Conversion Cycle, Competitors2 | |||||||||||||||||||||||||||||||||||
Costco Wholesale Corp. | 4 | 7 | 2 | 3 | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||
Walmart Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
Based on: 10-Q (reporting date: 2020-05-31), 10-Q (reporting date: 2020-02-29), 10-Q (reporting date: 2019-11-30), 10-K (reporting date: 2019-08-31), 10-Q (reporting date: 2019-05-31), 10-Q (reporting date: 2019-02-28), 10-Q (reporting date: 2018-11-30), 10-K (reporting date: 2018-08-31), 10-Q (reporting date: 2018-05-31), 10-Q (reporting date: 2018-02-28), 10-Q (reporting date: 2017-11-30), 10-K (reporting date: 2017-08-31), 10-Q (reporting date: 2017-05-31), 10-Q (reporting date: 2017-02-28), 10-Q (reporting date: 2016-11-30), 10-K (reporting date: 2016-08-31), 10-Q (reporting date: 2016-05-31), 10-Q (reporting date: 2016-02-29), 10-Q (reporting date: 2015-11-30), 10-K (reporting date: 2015-08-31), 10-Q (reporting date: 2015-05-31), 10-Q (reporting date: 2015-02-28), 10-Q (reporting date: 2014-11-30), 10-K (reporting date: 2014-08-31), 10-Q (reporting date: 2014-05-31), 10-Q (reporting date: 2014-02-28), 10-Q (reporting date: 2013-11-30).
1 Q3 2020 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 32 + 18 – 46 = 4
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several noteworthy trends in the company's operational efficiency metrics over the observed periods.
- Average Inventory Processing Period
- The average inventory processing period displays a fluctuating but generally decreasing trend from the initial available data point of 40 days (Nov 2014) to around the low 30s by May 2020. Notably, the period peaked at 56 days in May 2014 before steadily declining. This suggests an improvement in inventory turnover, indicating better inventory management over time, with the days inventory held reducing by approximately 8 days from early peaks to the latest quarters.
- Average Receivable Collection Period
- The accounts receivable collection period has remained relatively stable, oscillating mostly in the range of 15 to 21 days. The highest value recorded was 30 days in May 2014, after which it quickly declined and then fluctuated within a narrower band in subsequent quarters. This stability in receivable collection suggests consistent credit and collection practices, with no significant deterioration or improvement over the period.
- Average Payables Payment Period
- The payables payment period shows an overall increasing trend from the earliest data available (29 days in Nov 2014) with several fluctuations, reaching a peak around the low 50s in multiple quarters between 2016 and 2020. This indicates a strategic elongation of payment terms to suppliers, potentially improving short-term liquidity. The company appears to have extended its payment period by roughly 20 days over the analyzed timeframe.
- Cash Conversion Cycle
- The cash conversion cycle (CCC), an important measure of operational efficiency, exhibits a downward trend from 26 days in Nov 2014 to values fluctuating around 2 to 10 days in the later periods. This consistent reduction in CCC indicates enhanced working capital management, with cash being tied up for shorter durations. The decline in CCC results from shorter inventory and receivables cycles combined with lengthened payables cycles, thereby improving the company's cash flow management.
In summary, improvements in inventory turnover and stable receivable collections, alongside extended payables terms, have collectively contributed to a significant tightening of the cash conversion cycle. These trends suggest progressively more efficient working capital management practices, positioning the company to better leverage its operational liquidity over the periods examined.