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: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31).
The analysis of the financial ratios over the reported periods reveals several noteworthy trends related to the company’s operational efficiency and working capital management.
- Receivables Turnover
- The receivables turnover ratio displays a general declining trend from 22.46 down to around 13.62, before rising slightly to 15.2 in the most recent period. This downward trajectory indicates that the company's efficiency in collecting receivables has decreased over the years, suggesting longer collection times or potentially less stringent credit policies.
- Payables Turnover
- The payables turnover ratio shows significant fluctuations, starting around 14.29, dropping to a low of 5.07 in late 2015, before stabilizing in the range of approximately 6 to 10 in subsequent periods. This volatility implies inconsistent supplier payment practices, with periods of slow payment extending the payable days, followed by phases of quicker settlement.
- Working Capital Turnover
- The working capital turnover ratio exhibits a clear upward trend, increasing from under 2 in early periods to over 7 in the latest quarter. This improvement suggests an enhanced ability to generate sales from working capital resources, reflecting more efficient use of current assets and liabilities to support operations.
- Average Receivable Collection Period
- The average collection period in days has generally increased from around 16 to 27 days, with minor fluctuations across quarters. This aligns with the decrease in receivables turnover, reinforcing the observation that customers are taking longer to fulfill payment obligations.
- Average Payables Payment Period
- The average payment period has shown considerable variability, spiking to as high as 72 days around late 2015, followed by a gradual decline to the 35-45 days range in more recent periods. These variations indicate shifts in the company’s payment strategies or cash flow management, with a tendency toward longer payment terms initially, then moving to more consistent and possibly improved payables management.
Overall, the data depict a company facing challenges in receivables collection efficiency and fluctuating payables management, yet showing substantial improvement in working capital utilization over time. The increase in collection periods and decrease in receivables turnover warrant attention to credit policies, while the more stable payables periods and rising working capital turnover may reflect deliberate efforts to optimize liquidity and operational efficiency.
Turnover Ratios
Average No. Days
Receivables Turnover
Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||||
Net revenues | 2,649) | 2,687) | 2,643) | 2,877) | 2,649) | 2,640) | 2,580) | 2,613) | 2,409) | 2,328) | 2,217) | 2,395) | 2,217) | 2,230) | 2,137) | 2,322) | 2,099) | 2,110) | 2,061) | 4,921) | 4,353) | 4,366) | 4,262) | |||||||
Accounts receivable, net | 714) | 797) | 716) | 712) | 761) | 745) | 683) | 695) | 626) | 619) | 592) | 592) | 626) | 628) | 599) | 619) | 595) | 662) | 703) | 797) | 755) | 765) | 810) | |||||||
Short-term Activity Ratio | ||||||||||||||||||||||||||||||
Receivables turnover1 | 15.20 | 13.62 | 15.10 | 15.09 | 13.77 | 13.75 | 14.54 | 13.77 | 14.93 | 14.79 | 15.30 | 15.17 | 14.23 | 13.99 | 14.47 | 13.88 | 18.81 | 20.31 | 22.33 | 22.46 | — | — | — | |||||||
Benchmarks | ||||||||||||||||||||||||||||||
Receivables Turnover, Competitors2 | ||||||||||||||||||||||||||||||
Home Depot Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
TJX Cos. Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
Based on: 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31).
1 Q3 2019 Calculation
Receivables turnover
= (Net revenuesQ3 2019
+ Net revenuesQ2 2019
+ Net revenuesQ1 2019
+ Net revenuesQ4 2018)
÷ Accounts receivable, net
= (2,649 + 2,687 + 2,643 + 2,877)
÷ 714 = 15.20
2 Click competitor name to see calculations.
The quarterly financial data reveals several trends regarding revenue generation, accounts receivable, and receivables turnover ratio over the analyzed periods.
- Net Revenues
- Net revenues exhibited moderate fluctuations throughout the periods, initially rising from 4,262 million US dollars in the first quarter of 2014 to peak at 4,921 million US dollars by the end of 2014. This was followed by a noticeable decline in the first quarter of 2015, where revenue halved approximately to around 2,061 million US dollars. Subsequent quarters show relatively stable revenues with slight growth and seasonal variations, ranging mostly between 2,000 and 2,900 million US dollars. The end of 2018 to the first three quarters of 2019 demonstrated relatively steady revenues, maintaining levels close to the mid-2,600 million range, indicating stabilization after the earlier sharp drop.
- Accounts Receivable, Net
- The accounts receivable showed variability but remained within a moderate range. Starting at 810 million US dollars in Q1 2014, it declined slightly to about 595 million US dollars by Q3 2015, reflecting improved collection efficiency or reducing outstanding debts during that period. In later years, accounts receivable experienced a gradual increase, peaking around 797 million US dollars in Q3 2019, suggesting a return to higher receivables or possibly extending credit terms. The variability in accounts receivable values tends to track alongside revenue patterns but with less pronounced volatility.
- Receivables Turnover Ratio
- This ratio, which reflects the efficiency in collecting receivables, shows a declining trend from Q1 2014 through the first half of 2015, going from approximately 22.46 down to around 13.88, indicating slower collection periods or growing accounts receivable relative to sales. Thereafter, the ratio remained relatively stable within the range of approximately 13.5 to 15.3, suggesting a consistent collection performance with minor fluctuations. The slight uptick towards the end of 2018 and mid-2019 implies some improvement in collection speed or better management of receivables during those periods.
Payables Turnover
Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | ||||||||
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Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||||
Cost of net revenues | 627) | 630) | 601) | 618) | 608) | 597) | 559) | 590) | 556) | 561) | 515) | 539) | 498) | 493) | 477) | 493) | 433) | 434) | 411) | 1,600) | 1,389) | 1,392) | 1,351) | |||||||
Accounts payable | 296) | 303) | 251) | 286) | 225) | 253) | 252) | 330) | 260) | 284) | 296) | 283) | 278) | 304) | 275) | 349) | 175) | 368) | 393) | 401) | 339) | 312) | 277) | |||||||
Short-term Activity Ratio | ||||||||||||||||||||||||||||||
Payables turnover1 | 8.36 | 8.11 | 9.66 | 8.33 | 10.46 | 9.10 | 8.99 | 6.73 | 8.35 | 7.44 | 6.91 | 7.09 | 7.05 | 6.24 | 6.68 | 5.07 | 16.45 | 10.42 | 12.19 | 14.29 | — | — | — | |||||||
Benchmarks | ||||||||||||||||||||||||||||||
Payables Turnover, Competitors2 | ||||||||||||||||||||||||||||||
Amazon.com Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
Home Depot Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
Lowe’s Cos. Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
TJX Cos. Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
Based on: 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31).
1 Q3 2019 Calculation
Payables turnover
= (Cost of net revenuesQ3 2019
+ Cost of net revenuesQ2 2019
+ Cost of net revenuesQ1 2019
+ Cost of net revenuesQ4 2018)
÷ Accounts payable
= (627 + 630 + 601 + 618)
÷ 296 = 8.36
2 Click competitor name to see calculations.
The financial data reveals several trends in the examined periods. The cost of net revenues shows a relatively stable pattern with some fluctuations across the quarters, generally ranging between approximately $1,351 million and $1,600 million in the earlier periods of 2014. Thereafter, starting from 2015, there is a noticeable reduction in the reported values, consistently hovering near the $400 to $600 million range, signaling a structural change or possible reclassification in reporting.
Accounts payable figures have demonstrated variability over the reported periods. There was an upward trend from early 2014, peaking around the end of 2014 at $401 million, followed by a decline during parts of 2015 with a significant dip to $175 million in one quarter. Subsequent quarters show a pattern of oscillation without a clear long-term trend, ranging between approximately $225 million and $330 million from 2016 to 2019.
The payables turnover ratio, available starting from the first quarter of 2015, presents diverse movement over time. In early 2015, the ratio decreased progressively from 14.29 to 5.07 by the fourth quarter, indicating slower payment cycles or higher average payables relative to cost of goods sold. From 2016 onwards, the ratio generally fluctuated between 6 and 10, suggesting variability in how quickly the company settles its payables but without a consistent directional trend. Notably, peaks above 9 occur intermittently, interspersed with troughs around 6 to 7, implying episodic changes in payment or purchasing strategies.
Collectively, the data illustrates that after 2014, the company's cost of net revenues figures were significantly lower and less volatile, while accounts payable and payables turnover reflected moderate fluctuations without sustained trends. The variations in payables turnover ratio imply adjustments in operational cash flow management, but no consistent improvement or deterioration is strongly evident over the observed timeline.
- Cost of Net Revenues
- Initially between $1,351M and $1,600M in 2014, then markedly lower and stable around $400M–$600M from 2015 onward.
- Accounts Payable
- Fluctuates notably, with a peak at $401M in late 2014, followed by oscillations around $225M to $330M from 2016 to 2019.
- Payables Turnover Ratio
- Declined sharply in 2015 from 14.29 to 5.07, then fluctuated between 6 and 10, with no clear long-term trend.
Working Capital Turnover
Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||||
Current assets | 5,209) | 6,844) | 6,665) | 7,126) | 6,963) | 6,184) | 6,763) | 7,743) | 7,858) | 10,906) | 8,493) | 8,875) | 9,783) | 9,914) | 9,703) | 7,904) | 8,280) | 28,549) | 26,514) | 26,531) | 25,654) | 22,378) | 22,359) | |||||||
Less: Current liabilities | 3,685) | 5,209) | 4,500) | 4,454) | 4,006) | 2,608) | 2,568) | 3,539) | 3,190) | 4,596) | 4,433) | 3,847) | 3,763) | 2,206) | 2,107) | 2,263) | 4,436) | 17,060) | 17,611) | 17,531) | 16,491) | 17,538) | 15,741) | |||||||
Working capital | 1,524) | 1,635) | 2,165) | 2,672) | 2,957) | 3,576) | 4,195) | 4,204) | 4,668) | 6,310) | 4,060) | 5,028) | 6,020) | 7,708) | 7,596) | 5,641) | 3,844) | 11,489) | 8,903) | 9,000) | 9,163) | 4,840) | 6,618) | |||||||
Net revenues | 2,649) | 2,687) | 2,643) | 2,877) | 2,649) | 2,640) | 2,580) | 2,613) | 2,409) | 2,328) | 2,217) | 2,395) | 2,217) | 2,230) | 2,137) | 2,322) | 2,099) | 2,110) | 2,061) | 4,921) | 4,353) | 4,366) | 4,262) | |||||||
Short-term Activity Ratio | ||||||||||||||||||||||||||||||
Working capital turnover1 | 7.12 | 6.64 | 4.99 | 4.02 | 3.54 | 2.86 | 2.37 | 2.28 | 2.00 | 1.45 | 2.23 | 1.79 | 1.48 | 1.14 | 1.14 | 1.52 | 2.91 | 1.17 | 1.76 | 1.99 | — | — | — | |||||||
Benchmarks | ||||||||||||||||||||||||||||||
Working Capital Turnover, Competitors2 | ||||||||||||||||||||||||||||||
Amazon.com Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
Home Depot Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
Lowe’s Cos. Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
TJX Cos. Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
Based on: 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31).
1 Q3 2019 Calculation
Working capital turnover
= (Net revenuesQ3 2019
+ Net revenuesQ2 2019
+ Net revenuesQ1 2019
+ Net revenuesQ4 2018)
÷ Working capital
= (2,649 + 2,687 + 2,643 + 2,877)
÷ 1,524 = 7.12
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals notable fluctuations and trends over the observed periods in working capital, net revenues, and working capital turnover ratios, providing insight into operational efficiency and revenue generation dynamics.
- Working Capital
- Working capital exhibits considerable volatility throughout the time frame. Starting with a high value of 6,618 million USD in March 2014, it declines sharply in June 2014 to 4,840 million USD, then peaks again in September 2014 at 9,163 million USD. Following this, a downward trajectory prevails from 2015 onward, with intermittent recoveries. For instance, the value increased to 11,489 million USD in June 2015 but then sharply declined to 3,844 million USD by September 2015. From 2016 through 2019, working capital progressively decreases from 7,596 million USD to 1,524 million USD by September 2019, indicating a substantial reduction in liquidity over these years.
- Net Revenues
- Net revenues maintain a relatively stable range without large fluctuations but show subtle trends. The initial quarters record values around 4,200 to 4,900 million USD, with a significant drop in 2015 to approximately 2,000 million USD per quarter. From 2016 onwards, net revenues fluctuate narrowly between 2,100 and 2,900 million USD, showing modest growth towards the end of the period, reaching around 2,649 million USD in September 2019. This pattern reflects a period of substantial change around 2015, followed by stabilization in subsequent years.
- Working Capital Turnover
- The working capital turnover ratio data, available from 2015, demonstrates a general upward trend. Starting at 1.99 in the first quarter of 2015, the ratio experiences some variation but consistently increases over the following years, reaching 7.12 by September 2019. This rising ratio implies improving efficiency in utilizing working capital to generate revenues, particularly noteworthy given the concurrent decline in absolute working capital values.
In summary, while working capital has decreased significantly over time, net revenues remain relatively stable after an initial drop, and working capital turnover has improved considerably. These insights suggest a trend toward more efficient use of available working capital to sustain revenue levels despite diminishing liquidity. This could also reflect strategic changes in asset management or operating cycle optimization within the company.
Average Receivable Collection Period
Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Selected Financial Data | ||||||||||||||||||||||||||||||
Receivables turnover | 15.20 | 13.62 | 15.10 | 15.09 | 13.77 | 13.75 | 14.54 | 13.77 | 14.93 | 14.79 | 15.30 | 15.17 | 14.23 | 13.99 | 14.47 | 13.88 | 18.81 | 20.31 | 22.33 | 22.46 | — | — | — | |||||||
Short-term Activity Ratio (no. days) | ||||||||||||||||||||||||||||||
Average receivable collection period1 | 24 | 27 | 24 | 24 | 26 | 27 | 25 | 27 | 24 | 25 | 24 | 24 | 26 | 26 | 25 | 26 | 19 | 18 | 16 | 16 | — | — | — | |||||||
Benchmarks (no. days) | ||||||||||||||||||||||||||||||
Average Receivable Collection Period, Competitors2 | ||||||||||||||||||||||||||||||
Home Depot Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
TJX Cos. Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
Based on: 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31).
1 Q3 2019 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 15.20 = 24
2 Click competitor name to see calculations.
- Receivables Turnover
- The receivables turnover ratio shows a decreasing trend from 2014 to 2019. Starting at a high of around 22.46 in the first quarter of 2014, the ratio declines steadily, reaching approximately 15.2 by the third quarter of 2019. This decline suggests that the company was collecting receivables less frequently over time, indicating a slower conversion of receivables into cash.
- Average Receivable Collection Period
- The average collection period complements the turnover ratio findings, starting at 16 days in early 2014 and increasing to an average range between 24 and 27 days by 2019. This increase indicates that the company took longer to collect payments from its customers as time progressed, reflecting a relaxation in credit policies or greater delays in customer payments.
- Overall Trends and Insights
- The inverse relationship between receivables turnover and collection period is consistent throughout the timeframe, confirming that as the turnover ratio decreases, the collection days increase. This pattern suggests a general easing in the cash conversion cycle related to accounts receivable. The period between 2014 and 2019 thus reflects a gradual slowing in the efficiency of receivables management, which may have implications for cash flow and working capital management.
Average Payables Payment Period
Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Sep 30, 2017 | Jun 30, 2017 | Mar 31, 2017 | Dec 31, 2016 | Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Selected Financial Data | ||||||||||||||||||||||||||||||
Payables turnover | 8.36 | 8.11 | 9.66 | 8.33 | 10.46 | 9.10 | 8.99 | 6.73 | 8.35 | 7.44 | 6.91 | 7.09 | 7.05 | 6.24 | 6.68 | 5.07 | 16.45 | 10.42 | 12.19 | 14.29 | — | — | — | |||||||
Short-term Activity Ratio (no. days) | ||||||||||||||||||||||||||||||
Average payables payment period1 | 44 | 45 | 38 | 44 | 35 | 40 | 41 | 54 | 44 | 49 | 53 | 51 | 52 | 59 | 55 | 72 | 22 | 35 | 30 | 26 | — | — | — | |||||||
Benchmarks (no. days) | ||||||||||||||||||||||||||||||
Average Payables Payment Period, Competitors2 | ||||||||||||||||||||||||||||||
Amazon.com Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
Home Depot Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
Lowe’s Cos. Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
TJX Cos. Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
Based on: 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31), 10-K (reporting date: 2016-12-31), 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-Q (reporting date: 2016-03-31), 10-K (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-Q (reporting date: 2015-03-31), 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31).
1 Q3 2019 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 8.36 = 44
2 Click competitor name to see calculations.
- Payables Turnover Ratio
- The payables turnover ratio presents a variable trend over the analyzed periods. Starting from a value of 14.29 in March 2015, the ratio gradually declined to 10.42 by September 2015 before sharply increasing to 16.45 at the end of 2015. In 2016, the ratio dropped significantly to a range between 5.07 and 7.05, indicating slower turnover of payables during that year. From 2017 onwards, the ratio showed moderate fluctuation within a tighter range, generally trending upward from approximately 6.91 to peak at 10.46 in September 2018. By mid-2019, the ratio experienced a slight decline, settling around values between 8.11 and 9.66, suggesting a moderate acceleration in paying suppliers compared to earlier in the period.
- Average Payables Payment Period (Days)
- The average payables payment period inversely mirrors the payables turnover ratio, consistent with financial principles. Initial figures in early 2015 were relatively low, starting at 26 days in March and increasing to 35 days by September. At the end of 2015, the payables days declined markedly to 22 days, reflecting faster payments. However, in 2016, there was a significant increase, with days rising sharply to a peak of 72 days in March, indicating a substantial delay in payments. Throughout 2017 and 2018, this period gradually shortened, ranging from roughly 44 to 40 days, suggesting an improvement in supplier payment efficiency. By mid-2019, the period stabilized around 44 to 45 days, indicating a consistent payment pattern in the more recent quarters.
- Overall Observations
- The data reflects fluctuations in the company's management of payables and payment timing. The inverse relationship between the payables turnover ratio and average payment period is evident throughout, demonstrating changes in liquidity management and cash flow strategies. Notable is the significant extension of payment periods in 2016, possibly indicative of cash preservation efforts or operational constraints during that time. More recently, the trend stabilizes, suggesting a return to balanced payables management with a moderate pace of payment, neither accelerating excessively nor significantly delaying supplier payments.