Abbott Laboratories (NYSE:ABT)

The financial data reveals several notable trends in inventory, receivables, payables, and working capital management over the periods analyzed. Each metric provides insight into operational efficiency and liquidity management.

Inventory Turnover

Inventory turnover ratios show a general declining trend from early 2021 through mid-2023, falling from around 3.59 to 2.62, indicating slower inventory movement. Slight recovery is observed towards late 2024 reaching 3.02; however, the ratio fluctuates, suggesting some instability in inventory management efficiency.

Receivables Turnover

The receivables turnover ratio peaked near 7.03 in late 2021 but gradually declined to around 5.41 by mid-2025. This downward trend implies an elongation in the collection period, signaling potential challenges in collecting customer payments promptly.

Payables Turnover

Payables turnover maintains relative stability around a range of approximately 4.0 to 4.6, with slight fluctuations. This steadiness suggests consistent payment patterns to suppliers without significant acceleration or delay.

Working Capital Turnover

Working capital turnover ratios fluctuate between roughly 3.6 and 4.8, with no clear upward or downward trend. Some quarters exhibit a sharp increase (notably a peak at 4.83), indicating periods of improved efficiency in using working capital to generate sales, but the pattern is somewhat irregular.

Average Inventory Processing Period

The average inventory processing days decreased steadily from 122 days in early 2021 to around 102 days by March 2022, reflecting improved inventory management. Subsequently, it increased again, reaching a high of around 139 days in mid-2023 before slightly declining but remaining elevated through the later periods, indicating some erosion of earlier gains.

Average Receivable Collection Period

This metric decreased from about 68 days at the start of the dataset to approximately 52 days by late 2021, showing faster collection of receivables. Thereafter, it gradually increased back to above 60 days by 2024-2025, indicating a lengthening of the collection process in recent periods.

Operating Cycle

The operating cycle shortened from 190 days in early 2021 to about 157 days by March 2022, implying more efficient overall operations combining inventory turnover and receivables collection. This was followed by a gradual increase, with the operating cycle extending back above 190 days by 2023-2025, signaling some deterioration in working capital efficiency.

Average Payables Payment Period

The average payables payment period shortened from 96 days at the beginning of 2021 to around 78 days by late 2021, suggesting quicker payments to suppliers during that period. Later, the period returned to a range between 80 and 88 days, indicating relatively stable but slightly longer payment terms over time.

Cash Conversion Cycle

The cash conversion cycle showed improvement from 94 days at the outset to a low of 70 days in early 2021, highlighting enhanced liquidity through quicker cash recovery. Following this, it increased steadily, reaching above 110 days in 2023 and maintaining elevated levels thereafter, reflecting longer durations to convert investments in inventory and receivables to cash.

In summary, the data reflects initial improvements in operational efficiency and liquidity management during early 2021, with faster inventory turnover, receivables collection, and payment cycles. However, from mid-2022 onward, many metrics indicate a reversal, with slowing turnover ratios, lengthening collection and operating cycles, and an increased cash conversion cycle. This suggests challenges in maintaining previous efficiency levels, with working capital and liquidity management facing headwinds in recent periods.

The analysis of the quarterly financial data reveals several notable trends and patterns over the period under consideration. The "Cost of products sold, excluding amortization of intangible assets," exhibits fluctuations with a general increasing trend from the beginning of 2020 through mid-2024. Starting at approximately 3,281 million USD in the first quarter of 2020, this cost experiences peaks and troughs, reaching values above 4,900 million USD by mid-2024. Several quarters show spikes, notably in the second quarter of 2021 and the second quarter of 2025, highlighting periods of increased production or sales costs.

Inventories reveal a consistent upward trend over the same period. Initial inventory levels of around 4,568 million USD in early 2020 increase steadily, surpassing 6,900 million USD by the end of the period in mid-2025. The upward trajectory indicates growing stock levels, which may reflect expanded operations or strategic stockpiling. Despite some minor fluctuations, the general movement is an increase in inventory holdings, which might necessitate a review of inventory management efficiency and working capital requirements.

The inventory turnover ratio, where data is available, provides insight into how effectively inventory is managed relative to sales. This ratio starts near 3.00 in early measurements from 2020 and rises to peaks around 3.59 in late 2020 and early 2021, suggesting a period when inventory was sold more rapidly. Following this peak period, the turnover ratio declines gradually, stabilizing around 2.6 to 2.7 in later quarters through mid-2025. This decline may indicate slower inventory movement relative to sales volume or increased inventory holdings, consistent with the noted rise in inventory levels.

Cost of Products Sold

Shows an overall increasing trend with periodic peaks, indicating variable cost pressures or changes in business activity intensity.

Highest values occur near mid-2024 and mid-2025, exceeding 4,900 million USD, suggesting heightened costs or demand in these periods.

Inventories

Consistently increase over the period, nearly doubling from around 4,500 million USD to above 6,900 million USD.

This sustained growth may reflect expansion, increased production capacity, or strategic accumulation of stock.

Inventory Turnover Ratio

Peaks at about 3.59 in early 2021, indicating efficient inventory management during that time.

Subsequently declines to approximately 2.7, signaling a relative slowdown in inventory turnover despite higher inventory levels.

In summary, the data suggest increasing costs of goods sold alongside growing inventory balances, with a gradual decline in the efficiency of inventory turnover over recent quarters. These dynamics may warrant attention to cost control measures and inventory management practices to optimize working capital and operational efficiency going forward.

The analysis of the financial data reveals several notable trends in net sales, trade receivables, and receivables turnover ratios over the observed periods.

Net Sales

Net sales demonstrated a generally fluctuating but upward tendency from March 31, 2020 through June 30, 2025. Initially, sales decreased from $7,726 million in March 2020 to $7,328 million in June 2020, followed by a sharp recovery and steady rise through December 2020, reaching $10,701 million. Sales remained relatively stable with slight fluctuations around $10,000 million to $11,000 million in subsequent periods, peaking at $11,142 million in June 2025. Despite some quarterly declines, the overall trend indicates resilience and moderate growth in net sales over the five-year horizon.

Trade Receivables (Less Allowances)

Trade receivables showed an increasing trend in general, starting at $5,292 million in March 2020 and rising to $7,972 million by June 2025. Although there were periods of decline, such as from $7,199 million in June 2022 to $6,218 million in December 2022, the long-term direction remains upward. This pattern suggests that the company's outstanding customer credit balances have grown, potentially reflecting higher sales volumes or extended payment terms.

Receivables Turnover Ratio

The receivables turnover ratio began to be reported in September 2020 at 5.4 and generally increased to a peak of 7.03 and 7.02 in September and December 2022, indicating improved efficiency in collecting receivables during that time. However, after reaching this peak, the ratio declined gradually to 5.41 by June 2025. The decrease in turnover ratio in the later periods could imply slower collection or increasing credit terms, which aligns with the rise in trade receivables observed simultaneously.

In summary, while net sales have maintained growth with some fluctuations and trade receivables have increased notably, the receivables turnover ratio's recent decline suggests a potential slowdown in cash collections or leniency in credit policies. These intertwined trends warrant attention to manage working capital effectively going forward.

The cost of products sold, excluding amortization of intangible assets, reveals a fluctuating trend over the observed periods. Starting at 3,281 million US dollars in the first quarter of 2020, there is a notable increase reaching a peak of 4,947 million US dollars by mid-2021. This peak is followed by a general decline and some variability, with values oscillating around the 4,300 to 4,900 million US dollar range in subsequent periods. The cost ends near 4,854 million US dollars in the second quarter of 2025, showing a moderate increase compared to the earlier quarters of 2024.

Trade accounts payable exhibit an overall growth trend with multiple fluctuations. Initially recorded at 3,181 million US dollars in early 2020, the figure rises to a high of approximately 4,757 million US dollars by the first quarter of 2022. Following this peak, the accounts payable show some volatility but maintain values generally above 4,000 million US dollars. The latest values reach around 4,306 million US dollars by mid-2025, indicating stabilization with mild decreases relative to the previous peak periods.

The payables turnover ratio, available from the fourth quarter of 2020 onward, indicates operational efficiency in managing payables. The ratio starts at 3.8 and increases steadily to 4.55 by late 2021, implying faster payment cycles. Thereafter, the ratio fluctuates modestly but remains within a range of approximately 4.0 to 4.67. This stability in turnover ratio suggests consistent payables management despite the fluctuations in the absolute amounts of cost of products sold and trade accounts payable.

Cost of Products Sold

Started at 3,281 million US$ in Q1 2020, peaked at 4,947 million US$ in mid-2021, with subsequent fluctuations between 4,300 and 4,900 million US$. The value near 4,854 million US$ at Q2 2025 indicates a general moderate upward trend over the full period.

Trade Accounts Payable

Increased from 3,181 million US$ in early 2020 to a peak near 4,757 million US$ in Q1 2022, followed by fluctuations around 4,000 million US$, ending near 4,306 million US$ at Q2 2025, showing overall growth and some recent stabilization.

Payables Turnover Ratio

Reported from Q4 2020, the ratio improved from 3.8 to 4.55 by late 2021, signaling faster payment cycles. It remained relatively stable around 4.0 to 4.67 thereafter, implying consistent payables management despite variability in associated financial figures.

An analysis of the financial data reveals several noticeable patterns and trends over the observed periods. Working capital shows a general upward trend from March 2020 through June 2021, increasing from 4,690 million US dollars to a peak of 11,134 million US dollars by December 2021. Following this peak, working capital fluctuates, experiencing declines and recoveries but does not surpass the previous high, ending slightly lower at 11,029 million US dollars by June 2025.

Net sales demonstrate variability across the quarters but generally maintain a level above 7,000 million US dollars throughout the period. Starting with 7,726 million US dollars in March 2020, net sales rise steadily to a high of approximately 11,895 million US dollars by March 2022. After this peak, net sales exhibit some volatility with declines and recoveries, finishing at 11,142 million US dollars by June 2025, close to previous maximum levels.

The working capital turnover ratio, calculated from the available data starting in December 2020, varies between approximately 3.6 and 4.8. Notably, it shows periodic fluctuations without a sustained upward or downward trajectory. The ratio achieves some of its highest points near the later periods, such as 4.83 in June 2024, indicating efficient utilization of working capital relative to sales at those times. However, by June 2025, the ratio decreases to around 3.91, suggesting a slight reduction in turnover efficiency.

Overall, the data indicates that working capital levels expanded significantly during the early period before experiencing stabilization and mild fluctuations. Net sales followed a general growth pattern with some ups and downs but remained relatively strong throughout the timeline. The working capital turnover ratio fluctuated periodically, reflecting changes in operational efficiency or sales relative to working capital. The interplay among these metrics suggests that while the company managed to maintain solid sales levels, the use of working capital saw varying degrees of efficiency over time.

Working Capital

Increased significantly from early 2020 to late 2021, then fluctuated with no substantial new highs, ending near peak levels by mid-2025.

Net Sales

Exhibited an overall upward trend with peaks around early 2022 and mid-2025, accompanied by periodic declines but stable performance above initial values.

Working Capital Turnover

Varied between roughly 3.6 and 4.8, showing no consistent rising or falling trend, indicating fluctuating efficiency in capital utilization relative to sales.

Inventory Turnover

The inventory turnover ratio exhibits a fluctuating trend over the analyzed periods. Initially, it increased from 2.99 to a peak of 3.59 by March 31, 2022, indicating an improvement in the frequency with which inventory is sold and replaced. Subsequently, the ratio declined gradually, reaching a low of 2.62 by June 30, 2023. After this decline, there is a moderate recovery, with the ratio increasing again to 3.02 by March 31, 2025, although it remains somewhat volatile during the final periods.

Average Inventory Processing Period

The average inventory processing period in days shows an inverse relationship to the inventory turnover ratio, as expected. It decreases from 122 days down to a minimum of 102 days by March 31, 2022, corresponding to the period of highest inventory turnover. After this low point, the processing period lengthens progressively, peaking at 139 days by June 30, 2023. This extension of the inventory processing period aligns with the observed decline in turnover. Towards the end of the series, the processing period fluctuates between 130 and 136 days, indicating some stabilization but at a higher level than the previous low points.

Summary of Trends

The data reflects an initial phase of efficiency improvement in inventory management, with faster turnover and shorter processing periods until early 2022. This is followed by a reversal marked by slower turnover and longer processing times through mid-2023. The latter periods demonstrate partial recovery but with ongoing variability, suggesting that inventory management dynamics remain somewhat unsettled.

The analysis of the receivables turnover ratio and the average receivable collection period over the observed quarters reveals specific trends in the company's credit management and operational efficiency related to accounts receivable.

Receivables Turnover

The receivables turnover ratio commenced from a value of 5.4 and demonstrated an improvement through the periods, reaching as high as 7.03 in the quarter ending December 31, 2022. This increase indicates a trend toward faster collection of receivables, reflecting enhanced efficiency in managing credit extended to customers.

However, following this peak, the ratio gradually declined, falling to 5.41 by June 30, 2025. Despite this decrease, the level remained close to the initial value, suggesting some variability but no substantial long-term deterioration in receivables management.

Average Receivable Collection Period

The average receivable collection period exhibited an inverse pattern to the receivables turnover ratio, beginning at 68 days and improving to a low of 52 days by December 31, 2022. This shortening implies a faster conversion of accounts receivable into cash, consistent with the upward trend in receivables turnover during the same timeframe.

Post-December 2022, the collection period extended again, reaching 67 days by June 30, 2025. This elongation points to a slower collection process, aligning with the observed decrease in the turnover ratio during the latter periods.

Overall, the data reflects a period of improved credit and collection management from early 2020 through late 2022, followed by a slight reversal in the subsequent quarters leading into mid-2025. This cyclical behavior may suggest external market factors or internal policy adjustments impacting the efficiency of receivables management over time.

Inventory Processing Period

The average inventory processing period shows a generally increasing trend from the earliest available data in March 2020, starting at 122 days and initially decreasing to 105 days by December 2020. Subsequently, the period fluctuates, rising to a peak of 139 days in September 2023 before slightly declining toward 130-134 days by mid to late 2025. This indicates increasing time required to process inventory overall, with some recent stabilization at higher levels compared to 2020.

Receivable Collection Period

The average receivable collection period exhibits a downward trend in the early phases, dropping from 68 days in March 2020 to as low as 52 days in December 2021. After this reduction, the period gradually increases, reaching 67 days again by mid-2025. This pattern suggests improved collection efficiency initially, followed by a gradual ease in collections over the later periods, returning near to initial levels.

Operating Cycle

The operating cycle, which combines the inventory processing and receivable collection periods, follows a similar pattern to the inventory processing period. It decreases from 190 days in March 2020 to a low of 157 days in March 2021, before increasing consistently to 201 days by March 2025. The lengthening operating cycle implies increased time to convert inputs into cash over the longer term, driven primarily by the lengthening inventory processing period despite fluctuating receivables collection times.

Payables Turnover Ratio

The payables turnover ratio shows a general increasing trend from March 31, 2020, through June 30, 2025. Initially, it rises from 3.8 to a peak of 4.67 by December 31, 2021. Subsequently, the ratio fluctuates moderately within the range of approximately 4.15 to 4.55 for the remainder of the periods. This suggests an improvement in the efficiency with which payables are managed, indicating that payables are being settled more frequently over time.

Average Payables Payment Period (in days)

The average payables payment period exhibits a generally downward trend from 96 days at the end of the second quarter in 2020 to a low of around 78 days by December 31, 2022. After this reduction, there is a slight increase and stabilization, with the payment period oscillating between 80 and 88 days throughout the remaining reporting periods up to June 30, 2025. This pattern indicates that the company improved its payment cycle speed initially, paying suppliers faster, but later settled into a more consistent payment period slightly above 80 days.

Relationship between Metrics

The inverse relationship between the payables turnover ratio and the average payables payment period is evident throughout the observed periods. As the turnover ratio increases, the average payment period decreases, demonstrating effective payables management and cash flow optimization. While early improvements are more pronounced, the metrics show signs of reaching relative stabilization from 2022 onward.

The analysis of the quarterly financial data reveals several noteworthy trends in the company's operational efficiency over the observed periods.

Average Inventory Processing Period

The average inventory processing period shows a declining trend initially, decreasing from 122 days in March 2021 to a low of 102 days in March 2022. However, following this decline, there is an upward trend where the period increases to a peak of 139 days in June 2023. Subsequently, minor fluctuations occur, but overall the period remains elevated, ending at 134 days in June 2025. This pattern suggests periods of improved inventory turnover followed by a relative slowdown in inventory processing in the later periods.

Average Receivable Collection Period

The average receivable collection period generally exhibits a decreasing trend early on, moving from 68 days in March 2021 to 52 days around December 2021. Post this reduction, the period stabilizes around the mid-50-day range before experiencing a gradual increase toward the end of the data, reaching 67 days by June 2025. This implies initial improvements in receivables collection efficiency that taper off and later slightly reverse.

Average Payables Payment Period

The average payables payment period shows a variable pattern with an initial decline from 96 days in March 2021 to 78 days by December 2021. Thereafter, the period fluctuates between 80 and 88 days without a clear directional trend, ending at 83 days in June 2025. This suggests some inconsistency in the timing of payments to suppliers with no definitive trend toward earlier or later payments.

Cash Conversion Cycle

The cash conversion cycle (CCC), which integrates the effects of inventory, receivables, and payables periods, initially improves from 94 days in March 2021 to a low of 70 days by March 2022. Following this improvement, the CCC progressively worsens, rising to 114 days by June 2023 and maintaining a higher level with minor fluctuations through June 2025, where it reaches 118 days. This indicates that despite earlier gains in operational efficiency, the company's overall cash flow cycle has lengthened in recent periods, potentially reflecting challenges in working capital management.

In summary, the data indicates periods of operational improvements early in the timeline, with shorter inventory and receivables periods contributing to a reduced cash conversion cycle. However, more recently, there is a reversal of these trends, with longer inventory holding times and increasing receivables collection periods contributing to an extended cash conversion cycle. The payables period remains relatively stable with some fluctuations. These developments suggest that while the company had initially improved its working capital efficiency, it now faces challenges in maintaining those efficiencies over time.