Stock Analysis on Net

AbbVie Inc. (NYSE:ABBV)

Analysis of Short-term (Operating) Activity Ratios 

Microsoft Excel

Short-term Activity Ratios (Summary)

AbbVie Inc., short-term (operating) activity ratios

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Turnover Ratios
Inventory turnover 4.04 4.98 4.87 5.58 4.65
Receivables turnover 5.16 4.87 5.16 5.63 5.19
Payables turnover 5.74 5.54 5.94 6.05 6.76
Working capital turnover
Average No. Days
Average inventory processing period 90 73 75 65 79
Add: Average receivable collection period 71 75 71 65 70
Operating cycle 161 148 146 130 149
Less: Average payables payment period 64 66 61 60 54
Cash conversion cycle 97 82 85 70 95

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).


The financial data reveals several notable trends in the company's operational efficiency and working capital management over the five-year period analyzed.

Inventory Turnover
The inventory turnover ratio fluctuated, rising from 4.65 in 2020 to a peak of 5.58 in 2021, then gradually declining to 4.04 by 2024. This suggests an initial improvement in inventory management, followed by a slowdown in inventory movement in the later years.
Receivables Turnover
The receivables turnover ratio showed some variability, increasing from 5.19 in 2020 to 5.63 in 2021, then decreasing to 4.87 in 2023 before recovering to 5.16 in 2024. The fluctuations indicate changes in the efficiency of collections from customers, with a dip in 2023, followed by improvement.
Payables Turnover
There was a declining trend in payables turnover from 6.76 in 2020 to 5.54 in 2023, indicating a slower rate of paying suppliers, followed by a slight increase to 5.74 in 2024. This suggests the company extended its payment terms initially but began to reverse the trend in the last year.
Average Inventory Processing Period
The number of days required to process inventory decreased from 79 days in 2020 to 65 days in 2021, then increased consistently to 90 days in 2024. This decline and subsequent rise mirror the inventory turnover ratio, indicating fluctuating efficiency in inventory management.
Average Receivable Collection Period
The average period for collecting receivables reduced from 70 days in 2020 to 65 days in 2021, then lengthened to 75 days in 2023 before dropping to 71 days in 2024. This pattern aligns with the receivables turnover data, showing changes in collection effectiveness.
Operating Cycle
The operating cycle, representing the total time from inventory purchase to cash collection, shortened from 149 days in 2020 to 130 days in 2021, then lengthened to 161 days in 2024. This suggests that the company initially improved operational efficiency but experienced longer cycles in recent years.
Average Payables Payment Period
The average time to pay suppliers increased steadily from 54 days in 2020 to 66 days in 2023, then slightly decreased to 64 days in 2024. This indicates an overall strategy to extend payment periods, improving short-term liquidity.
Cash Conversion Cycle
The cash conversion cycle improved from 95 days in 2020 to 70 days in 2021, reflecting faster cash recovery. However, it deteriorated to 97 days by 2024, indicating slower cash flow over the later years despite minor improvements between 2022 and 2023.

In summary, the data reveals that the company exhibited enhanced efficiency in inventory management and receivables collection in 2021, resulting in shorter operating and cash conversion cycles. However, from 2022 onwards, there was a reversal, with increasing inventory days and receivables collection times, extending the operating and cash conversion cycles. The company also extended its payables period, likely to manage liquidity, but this was insufficient to fully offset the lengthening cash conversion cycle by 2024. This suggests potential challenges in working capital management and operational efficiency in recent years that may require strategic focus.


Turnover Ratios


Average No. Days


Inventory Turnover

AbbVie Inc., inventory turnover calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Cost of products sold 16,904 20,415 17,414 17,446 15,387
Inventories 4,181 4,099 3,579 3,128 3,310
Short-term Activity Ratio
Inventory turnover1 4.04 4.98 4.87 5.58 4.65
Benchmarks
Inventory Turnover, Competitors2
Amgen Inc. 1.84 0.89 1.30 1.58 1.58
Bristol-Myers Squibb Co. 5.46 4.02 4.33 4.74 5.68
Danaher Corp. 4.15 3.80 4.03 4.16 4.28
Eli Lilly & Co. 1.11 1.23 1.54 1.88 1.38
Gilead Sciences Inc. 3.66 3.64 3.75 4.08 2.72
Johnson & Johnson 2.21 2.37 2.49 2.87 3.04
Merck & Co. Inc. 2.49 2.54 2.95 2.29 2.45
Pfizer Inc. 1.65 2.45 3.82 3.40 1.08
Regeneron Pharmaceuticals Inc. 0.64 0.70 0.65 1.25 0.58
Thermo Fisher Scientific Inc. 5.06 5.06 4.60 3.88 4.02
Vertex Pharmaceuticals Inc. 1.27 1.71 2.35 2.56 2.62
Inventory Turnover, Sector
Pharmaceuticals, Biotechnology & Life Sciences 2.46 2.55 3.06 3.11 2.63
Inventory Turnover, Industry
Health Care 9.50 9.18 9.22 9.17 8.17

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 2024 Calculation
Inventory turnover = Cost of products sold ÷ Inventories
= 16,904 ÷ 4,181 = 4.04

2 Click competitor name to see calculations.


The analysis of financial data reveals certain trends in cost of products sold, inventories, and inventory turnover ratios over the years.

Cost of Products Sold
The cost of products sold increased from US$15,387 million in 2020 to a peak of US$20,415 million in 2023. This represents a general upward trend over the five-year period, with a notable increase in 2023 followed by a decline in 2024 to US$16,904 million. The decline in the last year suggests some reduction in production costs or changes in sales volume.
Inventories
Inventories showed a consistent growth trend throughout the period. Starting at US$3,310 million in 2020, they increased to US$4,181 million by 2024. This steady increase indicates accumulation of stock over the years, which might be related to changes in inventory management or preparation for anticipated demand.
Inventory Turnover Ratio
The inventory turnover ratio experienced fluctuations during the period. It rose from 4.65 in 2020 to a high of 5.58 in 2021, indicating more efficient inventory management or faster sales. However, it decreased to 4.87 in 2022, marginally increased to 4.98 in 2023, and dropped again to 4.04 in 2024. The overall decline in the ratio by the end of the period suggests a slower movement of inventory relative to sales, potentially implying overstocking or lower sales velocity.

Receivables Turnover

AbbVie Inc., receivables turnover calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Net revenues 56,334 54,318 58,054 56,197 45,804
Accounts receivable, net 10,919 11,155 11,254 9,977 8,822
Short-term Activity Ratio
Receivables turnover1 5.16 4.87 5.16 5.63 5.19
Benchmarks
Receivables Turnover, Competitors2
Amgen Inc. 4.72 3.70 4.46 4.96 5.36
Bristol-Myers Squibb Co. 5.19 4.93 5.48 5.65 5.72
Danaher Corp. 6.75 6.09 6.40 6.36 5.51
Eli Lilly & Co. 4.09 3.75 4.14 4.24 4.18
Gilead Sciences Inc. 6.47 5.78 5.65 6.01 4.98
Johnson & Johnson 5.98 5.73 5.88 6.14 6.08
Merck & Co. Inc. 6.24 5.81 6.27 5.28 6.11
Pfizer Inc. 5.55 5.33 9.24 7.16 5.38
Regeneron Pharmaceuticals Inc. 2.29 2.31 2.28 2.66 2.07
Thermo Fisher Scientific Inc. 5.23 5.21 5.53 4.92 5.61
Vertex Pharmaceuticals Inc. 6.85 6.31 6.19 6.66 7.01
Receivables Turnover, Sector
Pharmaceuticals, Biotechnology & Life Sciences 5.26 4.96 5.76 5.54 5.34
Receivables Turnover, Industry
Health Care 8.42 8.15 8.84 8.65 8.64

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 2024 Calculation
Receivables turnover = Net revenues ÷ Accounts receivable, net
= 56,334 ÷ 10,919 = 5.16

2 Click competitor name to see calculations.


The financial data reveals notable trends in the company's net revenues, accounts receivable, and receivables turnover over the five-year period from 2020 to 2024.

Net Revenues
Net revenues increased substantially from 45,804 million USD in 2020 to 56,197 million USD in 2021, representing significant growth. This upward trend continued moderately into 2022, reaching 58,054 million USD. However, there was a decline in 2023 where revenues fell to 54,318 million USD, before recovering slightly to 56,334 million USD in 2024. Overall, revenues show growth from 2020 to 2024 but with a noticeable dip in 2023.
Accounts Receivable, Net
The net accounts receivable balance rose steadily from 8,822 million USD in 2020 to a peak of 11,254 million USD in 2022. Following this peak, the figure decreased marginally to 11,155 million USD in 2023 and further to 10,919 million USD in 2024. The gradual increase in receivables until 2022, followed by a slight decline, suggests evolving collection patterns or changes in sales volume on credit.
Receivables Turnover
The receivables turnover ratio demonstrated variability during the period. It increased from 5.19 in 2020 to 5.63 in 2021, indicating faster collection of receivables. However, the ratio declined notably to 5.16 in 2022 and further to 4.87 in 2023, suggesting slower collections relative to credit sales. In 2024, the ratio rebounded to 5.16, indicating some improvement in receivables management or sales patterns. The fluctuation in turnover suggests shifts in credit policies or customer payment behavior over time.

In summary, the data exhibits growth in net revenues with some volatility around 2023, alongside increasing accounts receivable balances until 2022 before a slight decrease. The receivables turnover ratio shows a peak in 2021 with subsequent decline and partial recovery, highlighting variable efficiency in collecting receivables relative to sales over the years.


Payables Turnover

AbbVie Inc., payables turnover calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Cost of products sold 16,904 20,415 17,414 17,446 15,387
Accounts payable 2,945 3,688 2,934 2,882 2,276
Short-term Activity Ratio
Payables turnover1 5.74 5.54 5.94 6.05 6.76
Benchmarks
Payables Turnover, Competitors2
Amgen Inc. 6.74 5.32 4.08 4.72 4.33
Bristol-Myers Squibb Co. 3.88 3.28 3.33 3.37 4.34
Danaher Corp. 5.52 5.58 5.45 4.48 4.79
Eli Lilly & Co. 2.61 2.73 3.43 4.38 3.41
Gilead Sciences Inc. 7.50 11.81 6.25 9.36 5.42
Johnson & Johnson 2.66 2.76 2.66 2.70 2.99
Merck & Co. Inc. 3.72 4.11 4.08 2.96 3.37
Pfizer Inc. 3.17 3.72 5.04 5.53 2.02
Regeneron Pharmaceuticals Inc. 2.50 2.99 2.65 4.32 2.36
Thermo Fisher Scientific Inc. 8.18 8.97 7.67 6.83 7.45
Vertex Pharmaceuticals Inc. 3.71 3.46 3.55 4.64 4.75
Payables Turnover, Sector
Pharmaceuticals, Biotechnology & Life Sciences 4.08 4.25 4.28 4.23 3.86
Payables Turnover, Industry
Health Care 8.12 7.96 7.50 7.61 7.48

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 2024 Calculation
Payables turnover = Cost of products sold ÷ Accounts payable
= 16,904 ÷ 2,945 = 5.74

2 Click competitor name to see calculations.


Cost of Products Sold
The cost of products sold exhibited an overall upward trend from 2020 through 2023, increasing from $15,387 million to a peak of $20,415 million. However, in 2024, this figure declined to $16,904 million, indicating a significant reduction after the prior year's increase. This pattern suggests variability in production or procurement costs, with a notable decrease in the most recent year analyzed.
Accounts Payable
Accounts payable consistently increased year-over-year from 2020 to 2023, rising from $2,276 million to $3,688 million. In 2024, this amount decreased to $2,945 million. The increase over the initial four years could indicate extended credit terms or increased purchasing activity, while the subsequent decline in 2024 might reflect efforts to reduce short-term liabilities or changes in supplier payment practices.
Payables Turnover
The payables turnover ratio demonstrated a decreasing trend from 6.76 in 2020 to 5.54 in 2023, reflecting a slowdown in the rate at which payables were being settled relative to cost of goods sold. In 2024, the ratio slightly improved to 5.74, suggesting a modest acceleration in payment pace, yet remaining below earlier levels. This trend suggests a tendency toward longer payment periods over the majority of the period, with some recovery in the most recent year.

Working Capital Turnover

AbbVie Inc., working capital turnover calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Current assets 25,582 33,002 28,463 27,928 24,173
Less: Current liabilities 38,749 37,841 29,538 35,194 28,661
Working capital (13,167) (4,839) (1,075) (7,266) (4,488)
 
Net revenues 56,334 54,318 58,054 56,197 45,804
Short-term Activity Ratio
Working capital turnover1
Benchmarks
Working Capital Turnover, Competitors2
Amgen Inc. 5.40 2.25 3.82 3.37 2.55
Bristol-Myers Squibb Co. 7.79 4.60 8.30 3.95 3.72
Danaher Corp. 8.85 4.22 4.20 8.40 3.48
Eli Lilly & Co. 10.32 31.84 8.33 4.93
Gilead Sciences Inc. 3.99 5.61 8.42 8.54 5.30
Johnson & Johnson 15.94 11.81 5.95 9.44
Merck & Co. Inc. 6.19 9.29 5.16 7.62 109.83
Pfizer Inc. 8.64 11.09 4.83 4.67
Regeneron Pharmaceuticals Inc. 0.97 0.82 0.96 1.59 1.20
Thermo Fisher Scientific Inc. 4.87 4.05 5.46 5.87 2.76
Vertex Pharmaceuticals Inc. 1.83 0.93 0.85 1.02 0.99
Working Capital Turnover, Sector
Pharmaceuticals, Biotechnology & Life Sciences 7.86 6.68 7.25 5.87 5.34
Working Capital Turnover, Industry
Health Care 19.80 16.59 15.34 11.93 11.78

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 2024 Calculation
Working capital turnover = Net revenues ÷ Working capital
= 56,334 ÷ -13,167 =

2 Click competitor name to see calculations.


Working Capital
The working capital values demonstrate volatility with a consistent negative trend across the reported periods. It started at -4,488 million USD in 2020, worsened significantly to -7,266 million USD in 2021, improved notably to -1,075 million USD in 2022, before declining again to -4,839 million USD in 2023 and then substantially deteriorating to -13,167 million USD in 2024. This fluctuation suggests challenges in managing short-term assets and liabilities, with the sharp increase in negative working capital in 2024 potentially indicating liquidity concerns or increased short-term obligations.
Net Revenues
Net revenues show an overall increasing trend from 2020 to 2024, with some fluctuations. Revenues rose from 45,804 million USD in 2020 to a peak of 58,054 million USD in 2022. However, there was a decrease to 54,318 million USD in 2023, followed by a recovery to 56,334 million USD in 2024. This pattern indicates generally strong revenue generation capability with temporary setbacks, possibly influenced by market conditions, product cycles, or operational factors.
Working Capital Turnover
No data is available for working capital turnover ratio across all periods, limiting insights into the efficiency with which working capital is being used to generate revenue.

Average Inventory Processing Period

AbbVie Inc., average inventory processing period calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data
Inventory turnover 4.04 4.98 4.87 5.58 4.65
Short-term Activity Ratio (no. days)
Average inventory processing period1 90 73 75 65 79
Benchmarks (no. days)
Average Inventory Processing Period, Competitors2
Amgen Inc. 199 411 281 231 231
Bristol-Myers Squibb Co. 67 91 84 77 64
Danaher Corp. 88 96 91 88 85
Eli Lilly & Co. 329 298 237 194 265
Gilead Sciences Inc. 100 100 97 89 134
Johnson & Johnson 165 154 147 127 120
Merck & Co. Inc. 147 144 124 159 149
Pfizer Inc. 222 149 95 107 338
Regeneron Pharmaceuticals Inc. 572 519 562 292 625
Thermo Fisher Scientific Inc. 72 72 79 94 91
Vertex Pharmaceuticals Inc. 287 214 156 143 139
Average Inventory Processing Period, Sector
Pharmaceuticals, Biotechnology & Life Sciences 149 143 119 117 139
Average Inventory Processing Period, Industry
Health Care 38 40 40 40 45

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 2024 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 4.04 = 90

2 Click competitor name to see calculations.


The analysis of the annual financial data reveals notable trends in inventory management over the five-year period examined. The inventory turnover ratio started at 4.65 in 2020 and showed an increase to 5.58 in 2021, indicating improved efficiency in managing inventory during this period. However, after 2021, the ratio declined progressively to 4.87 in 2022, rose slightly to 4.98 in 2023, and then dropped more significantly to 4.04 in 2024. This downward trend from 2021 suggests declining efficiency in inventory turnover in recent years.

In terms of the average inventory processing period, the data demonstrates an inverse relationship with the inventory turnover ratio as expected. The number of days required to process inventory decreased from 79 days in 2020 to a low of 65 days in 2021, aligning with the peak in inventory turnover ratio observed in that year. Following 2021, the processing period increased to 75 days in 2022 and slightly improved to 73 days in 2023, before rising sharply to 90 days in 2024. The sharp increase in 2024 indicates slower inventory processing, consistent with the reduced inventory turnover ratio in the same year.

Inventory Turnover Ratio
Peaked in 2021 at 5.58, followed by a downward trend through 2024, indicating fluctuating inventory efficiency with recent declines.
Average Inventory Processing Period
Shortest in 2021 at 65 days and lengthened significantly by 2024, reaching 90 days, suggesting slower inventory movement.
Relationship Observed
The inverse correlation between the turnover ratio and processing days is evident, reflecting typical operational dynamics where higher turnover corresponds with quicker inventory processing.

Overall, the data suggests that while there was an improvement in inventory management efficiency up to 2021, performance has deteriorated subsequently, culminating in slower turnover and extended processing periods by 2024. This may indicate challenges in inventory control or shifts in operational conditions impacting the company's inventory cycle.


Average Receivable Collection Period

AbbVie Inc., average receivable collection period calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data
Receivables turnover 5.16 4.87 5.16 5.63 5.19
Short-term Activity Ratio (no. days)
Average receivable collection period1 71 75 71 65 70
Benchmarks (no. days)
Average Receivable Collection Period, Competitors2
Amgen Inc. 77 99 82 74 68
Bristol-Myers Squibb Co. 70 74 67 65 64
Danaher Corp. 54 60 57 57 66
Eli Lilly & Co. 89 97 88 86 87
Gilead Sciences Inc. 56 63 65 61 73
Johnson & Johnson 61 64 62 59 60
Merck & Co. Inc. 58 63 58 69 60
Pfizer Inc. 66 69 40 51 68
Regeneron Pharmaceuticals Inc. 160 158 160 137 177
Thermo Fisher Scientific Inc. 70 70 66 74 65
Vertex Pharmaceuticals Inc. 53 58 59 55 52
Average Receivable Collection Period, Sector
Pharmaceuticals, Biotechnology & Life Sciences 69 74 63 66 68
Average Receivable Collection Period, Industry
Health Care 43 45 41 42 42

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 2024 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 5.16 = 71

2 Click competitor name to see calculations.


Receivables Turnover
The receivables turnover ratio shows a fluctuating trend over the analyzed period. It increased from 5.19 in 2020 to 5.63 in 2021, indicating improved efficiency in collecting receivables during that year. However, the ratio declined to 5.16 in 2022 and further to 4.87 in 2023, suggesting a deterioration in collection efficiency. In 2024, the ratio rebounded slightly to 5.16, returning to the 2022 level. Overall, the trend shows that after an initial improvement, collection efficiency weakened for two consecutive years before experiencing a modest recovery.
Average Receivable Collection Period
The average receivable collection period, expressed in days, inversely mirrors the changes in the receivables turnover ratio. It decreased from 70 days in 2020 to 65 days in 2021, implying that the company collected its receivables more quickly during that year. Subsequently, the collection period lengthened to 71 days in 2022 and further to 75 days in 2023, indicating slower collections. In 2024, this period shortened again to 71 days, consistent with the slight improvement seen in the receivables turnover ratio for the same year. These fluctuations suggest variability in the company's accounts receivable management and collection practices, with a peak in collection efficiency around 2021 followed by a period of decline and partial recovery.
Overall Assessment
The data indicates a cyclical pattern in receivables management. The peak performance in 2021 was followed by a less efficient period in 2022 and 2023, potentially reflecting operational or market challenges affecting collections. The slight rebound in 2024 might signal the beginning of a recovery or adjustment in credit policies. Close monitoring and further analysis could help determine the underlying causes and guide strategic decisions to improve cash flow from receivables.

Operating Cycle

AbbVie Inc., operating cycle calculation, comparison to benchmarks

No. days

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data
Average inventory processing period 90 73 75 65 79
Average receivable collection period 71 75 71 65 70
Short-term Activity Ratio
Operating cycle1 161 148 146 130 149
Benchmarks
Operating Cycle, Competitors2
Amgen Inc. 276 510 363 305 299
Bristol-Myers Squibb Co. 137 165 151 142 128
Danaher Corp. 142 156 148 145 151
Eli Lilly & Co. 418 395 325 280 352
Gilead Sciences Inc. 156 163 162 150 207
Johnson & Johnson 226 218 209 186 180
Merck & Co. Inc. 205 207 182 228 209
Pfizer Inc. 288 218 135 158 406
Regeneron Pharmaceuticals Inc. 732 677 722 429 802
Thermo Fisher Scientific Inc. 142 142 145 168 156
Vertex Pharmaceuticals Inc. 340 272 215 198 191
Operating Cycle, Sector
Pharmaceuticals, Biotechnology & Life Sciences 218 217 182 183 207
Operating Cycle, Industry
Health Care 81 85 81 82 87

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 2024 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= 90 + 71 = 161

2 Click competitor name to see calculations.


Average Inventory Processing Period
The average inventory processing period initially decreased from 79 days in 2020 to 65 days in 2021, indicating improved efficiency in inventory turnover during that time. However, it subsequently increased to 75 days in 2022, remained relatively stable at 73 days in 2023, then rose significantly to 90 days in 2024. This suggests a recent trend toward slower inventory processing, which may warrant further investigation.
Average Receivable Collection Period
The average receivable collection period showed a decline from 70 days in 2020 to 65 days in 2021, reflecting an improvement in collecting receivables more promptly. This period then increased to 71 days in 2022 and peaked at 75 days in 2023, before declining back to 71 days in 2024. This pattern indicates some variability in collection efficiency with a slight overall increase compared to 2020.
Operating Cycle
The operating cycle, representing the combined time to process inventory and collect receivables, fell from 149 days in 2020 to 130 days in 2021, signaling enhanced operational efficiency. It then rose steadily over the next three years to 146 days in 2022, 148 days in 2023, and 161 days in 2024. The upward trend in the most recent years suggests a lengthening of the operating cycle, potentially driven by slower inventory turnover and extended receivable collection periods observed during these years.

Average Payables Payment Period

AbbVie Inc., average payables payment period calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data
Payables turnover 5.74 5.54 5.94 6.05 6.76
Short-term Activity Ratio (no. days)
Average payables payment period1 64 66 61 60 54
Benchmarks (no. days)
Average Payables Payment Period, Competitors2
Amgen Inc. 54 69 90 77 84
Bristol-Myers Squibb Co. 94 111 109 108 84
Danaher Corp. 66 65 67 82 76
Eli Lilly & Co. 140 134 106 83 107
Gilead Sciences Inc. 49 31 58 39 67
Johnson & Johnson 137 132 137 135 122
Merck & Co. Inc. 98 89 89 123 108
Pfizer Inc. 115 98 72 66 181
Regeneron Pharmaceuticals Inc. 146 122 138 84 155
Thermo Fisher Scientific Inc. 45 41 48 53 49
Vertex Pharmaceuticals Inc. 98 106 103 79 77
Average Payables Payment Period, Sector
Pharmaceuticals, Biotechnology & Life Sciences 90 86 85 86 95
Average Payables Payment Period, Industry
Health Care 45 46 49 48 49

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 2024 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 5.74 = 64

2 Click competitor name to see calculations.


Payables Turnover
The payables turnover ratio exhibits a declining trend from 6.76 in 2020 to a low of 5.54 in 2023, followed by a slight recovery to 5.74 in 2024. This indicates that the company has been taking longer to pay its suppliers over the years, although there is a modest improvement in the most recent period.
Average Payables Payment Period
The average payables payment period, expressed in number of days, has increased from 54 days in 2020 to a peak of 66 days in 2023, before decreasing slightly to 64 days in 2024. This confirms the trend observed in the payables turnover ratio, showing that the company’s payment cycle lengthened significantly over the four-year period, with a minor reduction in the final year.
Overall Analysis
These metrics collectively suggest that the company extended its payment terms or delayed payments to suppliers over the period from 2020 through 2023, potentially as a cash management strategy. The slight reversal in 2024 may indicate a strategic shift toward quicker payment or improved liquidity conditions. The inverse relationship between the ratios and the days' payables is consistent and highlights a clear pattern of changing payment practices.

Cash Conversion Cycle

AbbVie Inc., cash conversion cycle calculation, comparison to benchmarks

No. days

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data
Average inventory processing period 90 73 75 65 79
Average receivable collection period 71 75 71 65 70
Average payables payment period 64 66 61 60 54
Short-term Activity Ratio
Cash conversion cycle1 97 82 85 70 95
Benchmarks
Cash Conversion Cycle, Competitors2
Amgen Inc. 222 441 273 228 215
Bristol-Myers Squibb Co. 43 54 42 34 44
Danaher Corp. 76 91 81 63 75
Eli Lilly & Co. 278 261 219 197 245
Gilead Sciences Inc. 107 132 104 111 140
Johnson & Johnson 89 86 72 51 58
Merck & Co. Inc. 107 118 93 105 101
Pfizer Inc. 173 120 63 92 225
Regeneron Pharmaceuticals Inc. 586 555 584 345 647
Thermo Fisher Scientific Inc. 97 101 97 115 107
Vertex Pharmaceuticals Inc. 242 166 112 119 114
Cash Conversion Cycle, Sector
Pharmaceuticals, Biotechnology & Life Sciences 128 131 97 97 112
Cash Conversion Cycle, Industry
Health Care 36 39 32 34 38

Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 2024 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 90 + 7164 = 97

2 Click competitor name to see calculations.


The analysis of the financial metrics over the five-year period reveals notable trends in the management of working capital components. The average inventory processing period initially decreased from 79 days in 2020 to 65 days in 2021, indicating improved inventory turnover. However, this was followed by an increase to 75 days in 2022 and a slight decrease to 73 days in 2023, before rising significantly to 90 days in 2024. This suggests a deterioration in inventory management efficiency in the most recent year.

The average receivable collection period shows a general stability with minor fluctuations. It decreased from 70 days in 2020 to 65 days in 2021, then increased to 71 days in 2022, peaked at 75 days in 2023, and slightly declined back to 71 days in 2024. This pattern indicates some variability in the collection of receivables but no clear long-term improvement or worsening trend.

The average payables payment period demonstrates a steady upward trend from 54 days in 2020 to a peak of 66 days in 2023, before slightly decreasing to 64 days in 2024. This suggests the company extended its payment terms or delayed payments to suppliers over the period, potentially to manage cash outflows more effectively.

The cash conversion cycle, which reflects the net time between cash outflows and inflows, decreased significantly from 95 days in 2020 to 70 days in 2021. However, it then increased to 85 days in 2022 and remained relatively stable at 82 days in 2023, before rising sharply again to 97 days in 2024. This indicates that although there was an improvement in liquidity management early in the period, the efficiency declined notably in the latest year, likely impacted by the increased inventory days and changes in receivables and payables periods.

Inventory Processing Period
Initial improvement followed by volatility and a significant increase by the end of 2024.
Receivable Collection Period
Relatively stable with minor fluctuations around the low 70-day range.
Payables Payment Period
Gradual extension of payment terms over the period with a slight dip in the final year.
Cash Conversion Cycle
Marked improvement in 2021 but followed by a rising trend, culminating in a longer cycle than at the start by 2024.