Analysis of Short-term (Operating) Activity Ratios
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)
AbbVie Inc., short-term (operating) activity ratios
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
| 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$4,181 million by 2024. This steady increase indicates accumulation of stock over the years, which might be related to changes in inventory management or preparation for anticipated demand.
- Inventory Turnover Ratio
- The inventory turnover ratio experienced fluctuations during the period. It rose from 4.65 in 2020 to a high of 5.58 in 2021, indicating more efficient inventory management or faster sales. However, it decreased to 4.87 in 2022, marginally increased to 4.98 in 2023, and dropped again to 4.04 in 2024. The overall decline in the ratio by the end of the period suggests a slower movement of inventory relative to sales, potentially implying overstocking or lower sales velocity.
Receivables Turnover
AbbVie Inc., receivables turnover calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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
| 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 $2,945 million. The increase over the initial four years could indicate extended credit terms or increased purchasing activity, while the subsequent decline in 2024 might reflect efforts to reduce short-term liabilities or changes in supplier payment practices.
- Payables Turnover
- The payables turnover ratio demonstrated a decreasing trend from 6.76 in 2020 to 5.54 in 2023, reflecting a slowdown in the rate at which payables were being settled relative to cost of goods sold. In 2024, the ratio slightly improved to 5.74, suggesting a modest acceleration in payment pace, yet remaining below earlier levels. This trend suggests a tendency toward longer payment periods over the majority of the period, with some recovery in the most recent year.
Working Capital Turnover
AbbVie Inc., working capital turnover calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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
| 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
| 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
| 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
| 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
| 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 + 71 – 64 = 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.