Analysis of Short-term (Operating) Activity Ratios
Quarterly Data
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
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- Statement of Comprehensive Income
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- Analysis of Liquidity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
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- Analysis of Revenues
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Short-term Activity Ratios (Summary)
Baxter International Inc., short-term (operating) activity ratios (quarterly data)
Based on: 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), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31), 10-K (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-Q (reporting date: 2011-03-31).
The analysis of financial ratios over the periods presented reveals variations and trends in inventory efficiency, receivables management, and working capital utilization.
- Inventory Turnover
- The inventory turnover ratio generally shows a declining trend from 2.61 in March 2012, reaching a low of 1.98 by December 2013, suggesting a slower rate of inventory movement over this period. Following this, a recovery with some fluctuations occurs, and the ratio rises notably to a high of 3.86 by March 2015 before slightly decreasing again but maintaining higher levels relative to earlier periods. This overall pattern points to improvements in inventory management efficiency in the later years.
- Receivables Turnover
- Receivables turnover starts around 5.74 in March 2012 and fluctuates mildly around the mid-5 to 6 range for most periods. There is a noticeable dip to 4.75 at September 2015, followed by a rebound to approximately 6.68 in December 2015. This indicates variability in the speed of collections but generally stable receivables management, with some recovery after periods of slower turnover.
- Working Capital Turnover
- This metric displays considerable volatility. Starting at 3.66 in March 2012, it spikes to 4.55 by December 2014, reflecting increased efficiency in utilizing working capital to generate revenue. However, a sharp decline occurs at September 2015 to 1.65, with partial recovery to 3.24 by June 2016, indicating fluctuating efficiency in working capital management during these years.
- Average Inventory Processing Period
- The number of days inventory remains before sale lengthens from 140 days in March 2012 to a peak of 194 days in September 2015, which corresponds with the earlier noted low point in inventory turnover. After this peak, a significant improvement reduces the period to 95 days by December 2015, indicating faster inventory processing in the most recent quarters analyzed.
- Average Receivable Collection Period
- The collection period is fairly stable, hovering around 60 days with minor fluctuations. A notable increase occurs in September 2015 to 77 days, followed by improvement and stabilization near previous levels. This change suggests some challenges in receivables collection that were addressed subsequently.
- Operating Cycle
- The operating cycle, combining inventory processing and receivables collection periods, generally lengthens from approximately 204 days in March 2012 to a peak of 271 days in September 2015. This lengthening trend signals increasing time to convert resources into cash. From the peak, a sharp contraction occurs, bringing the cycle down to around 163 days by June 2016, reflecting enhanced operational efficiency in converting inventories and receivables into cash.
Overall, the data suggests that while there were periods of declining efficiency in inventory and working capital management up to late 2015, significant improvements were achieved subsequently, resulting in faster inventory turnover, reduced processing periods, and a shortened operating cycle by mid-2016. Receivables management remained relatively steady throughout, with minor disruptions addressed promptly. These trends highlight a dynamic operational environment with successful recent measures to improve asset utilization and cash flow cycles.
Turnover Ratios
Average No. Days
Inventory Turnover
Baxter International Inc., inventory turnover calculation (quarterly data)
| 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 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | Mar 31, 2011 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||||||||
| Inventories | |||||||||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||||||||
| Inventory turnover1 | |||||||||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||||||||
| Inventory Turnover, Competitors2 | |||||||||||||||||||||||||||||
| Abbott Laboratories | |||||||||||||||||||||||||||||
| Intuitive Surgical Inc. | |||||||||||||||||||||||||||||
| Medtronic PLC | |||||||||||||||||||||||||||||
Based on: 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), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31), 10-K (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-Q (reporting date: 2011-03-31).
1 Q2 2016 Calculation
Inventory turnover
= (Cost of salesQ2 2016
+ Cost of salesQ1 2016
+ Cost of salesQ4 2015
+ Cost of salesQ3 2015)
÷ Inventories
= ( + + + )
÷ =
2 Click competitor name to see calculations.
The cost of sales exhibits notable fluctuations over the observed periods. Initially, there is a progressive increase from around 1609 million US dollars in the first quarter of 2011 to a peak of 2414 million in the last quarter of 2013. Following this peak, the cost of sales generally declines, reaching its lowest levels in the 2015 quarters, with values approximately between 1384 and 1531 million, before a slight rise again in mid-2016 to above 1600 million.
Inventories generally display an upward trend from early 2011 through 2014, increasing from about 2517 million US dollars to a peak near 3836 million by mid to late 2014. However, in 2015, a sharp decline in inventory values is observed, dropping significantly to levels around 1600 to 1700 million US dollars, which is considerably lower compared to previous years.
Inventory turnover ratios provide further insight into inventory management efficiency. Starting from values in the range of 2.61 in early 2012, the turnover ratio gradually decreases to around 1.88 by late 2014 and early 2015, indicating slower inventory movement during this period. Contrastingly, there is a marked improvement in inventory turnover in 2015 through mid-2016, with ratios increasing sharply to values exceeding 3.5, peaking at 3.86. This suggests a significant acceleration in the rate at which inventory is sold and replaced during this timeframe.
In summary, the data indicates a period of rising cost of sales and inventories through 2013 and 2014, followed by a reduction in both cost of sales and inventory levels in 2015. Concurrently, the inventory turnover ratio reflects an initial slowdown in inventory movement prior to 2015, succeeded by a substantial enhancement in inventory efficiency during 2015 and into 2016. These patterns may reflect strategic adjustments in inventory and cost management over the periods analyzed.
- Cost of Sales
- Increased from early 2011, peaking at the end of 2013, then declined notably through 2015, with a minor uptick in 2016.
- Inventories
- Trend upwards until 2014, reaching a high point in mid-2014, followed by a steep decrease in 2015, stabilizing at lower levels in 2016.
- Inventory Turnover Ratio
- Gradual decline to 2014 indicating slower turnover; significant increase beginning 2015 suggesting improved inventory management and faster turnover.
Receivables Turnover
Baxter International Inc., receivables turnover calculation (quarterly data)
| 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 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | Mar 31, 2011 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||||||
| Net sales | |||||||||||||||||||||||||||||
| Accounts and other current receivables, net | |||||||||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||||||||
| Receivables turnover1 | |||||||||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||||||||
| Receivables Turnover, Competitors2 | |||||||||||||||||||||||||||||
| Abbott Laboratories | |||||||||||||||||||||||||||||
| Elevance Health Inc. | |||||||||||||||||||||||||||||
| Intuitive Surgical Inc. | |||||||||||||||||||||||||||||
| Medtronic PLC | |||||||||||||||||||||||||||||
| UnitedHealth Group Inc. | |||||||||||||||||||||||||||||
Based on: 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), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31), 10-K (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-Q (reporting date: 2011-03-31).
1 Q2 2016 Calculation
Receivables turnover
= (Net salesQ2 2016
+ Net salesQ1 2016
+ Net salesQ4 2015
+ Net salesQ3 2015)
÷ Accounts and other current receivables, net
= ( + + + )
÷ =
2 Click competitor name to see calculations.
The data reveals several noteworthy trends and fluctuations in the company's quarterly financial performance over the period analyzed.
- Net Sales
- Net sales generally demonstrated variability with cyclical fluctuations across quarters. From early 2011 through the end of 2014, net sales showed a pattern of moderate growth with peaks typically occurring in the fourth quarter each year. The highest sales were recorded in December 2013 (US$4,368 million) and December 2014 (US$4,472 million), indicating strong seasonal quarter-end sales. However, starting in 2015, net sales declined sharply with quarterly amounts significantly lower than previous years, with values ranging from approximately US$2,375 million to US$2,603 million by mid-2016. This suggests a substantial reduction in sales volumes or pricing in the latter period.
- Accounts and Other Current Receivables, Net
- Accounts receivable fluctuated over the examined period but appeared to follow a relatively stable trend with slight seasonal increases mostly aligning with quarter-end spikes in net sales. The receivables peaked in December quarters, with the highest value again in December 2013 (US$2,911 million). Post-2014, a decline is evident mirroring the downward trend in net sales, ending with lower receivables figures in 2015 and 2016. However, the decline in receivables was less steep compared to net sales, especially evident in mid-2015 when sales dropped sharply but receivables remained moderately higher, which could suggest slower collections or extended credit terms in that period.
- Receivables Turnover Ratio
- The receivables turnover ratio, which reflects how efficiently receivables are collected, showed fluctuations but remained mostly between 5 and 6.5 times annually. Higher turnover ratios typically indicate faster collection cycles. The highest turnover ratio was observed in June 2015 at 6.68, indicating an improvement in collection efficiency during that quarter despite the reduction in sales. However, the ratio also fell to a low of 4.75 at March 2015, suggesting temporary collection difficulties or extended payment terms. Overall, the turnover ratio displays variability but does not exhibit a clear upward or downward trend, implying that collection efficiency has remained relatively stable notwithstanding sales volatility.
In summary, the analyzed financial metrics show a company experiencing a decline in net sales and a moderate reduction in accounts receivable beginning in early 2015. Simultaneously, the efficiency of receivable collections fluctuated but remained generally stable over the period analyzed. The significant drop in sales in 2015 and 2016 is a prominent feature, meriting closer examination of underlying causes such as market conditions, customer demand, or product mix changes.
Working Capital Turnover
Baxter International Inc., working capital turnover calculation (quarterly data)
| 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 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | Mar 31, 2011 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||||||
| Current assets | |||||||||||||||||||||||||||||
| Less: Current liabilities | |||||||||||||||||||||||||||||
| Working capital | |||||||||||||||||||||||||||||
| Net sales | |||||||||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||||||||
| Working capital turnover1 | |||||||||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||||||||
| Working Capital Turnover, Competitors2 | |||||||||||||||||||||||||||||
| Abbott Laboratories | |||||||||||||||||||||||||||||
| Elevance Health Inc. | |||||||||||||||||||||||||||||
| Intuitive Surgical Inc. | |||||||||||||||||||||||||||||
| Medtronic PLC | |||||||||||||||||||||||||||||
| UnitedHealth Group Inc. | |||||||||||||||||||||||||||||
Based on: 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), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31), 10-K (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-Q (reporting date: 2011-03-31).
1 Q2 2016 Calculation
Working capital turnover
= (Net salesQ2 2016
+ Net salesQ1 2016
+ Net salesQ4 2015
+ Net salesQ3 2015)
÷ Working capital
= ( + + + )
÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals notable variability in working capital, net sales, and working capital turnover ratios over the observed periods.
- Working Capital
- Working capital experienced fluctuations throughout the timeline. Initially, there was a slight decline from $3,872 million in March 2011 to $3,178 million in June 2012. This was followed by a significant increase, peaking at $8,185 million in June 2015, indicating a considerable build-up in current assets or reduction in current liabilities during this period. Post-peak, working capital decreased sharply to $3,100 million by June 2016.
- Net Sales
- Net sales showed an overall upward trend from 2011 to 2014, rising from $3,284 million in March 2011 to a high of $4,472 million in December 2014. However, from March 2015 onward, the data reveals a marked decline in sales, reaching a low of $2,375 million in March 2016, with slight recovery afterward. This drop contrasts with the earlier growth phase and suggests possible market or operational challenges during this later period.
- Working Capital Turnover
- The working capital turnover ratio, calculated from March 2012 onwards, demonstrates significant volatility. The ratio peaked at 4.55 in December 2014, indicating efficient use of working capital to generate sales. However, it declined sharply to 1.66 by March 2015, suggesting less efficient utilization of working capital. This ratio began recovering thereafter, reaching 3.24 by June 2016. The swings in this metric correspond with the fluctuations observed in both working capital and net sales.
Overall, the data indicates a period of growth and improved operational efficiency up to late 2014, followed by a phase characterized by reduced sales performance and fluctuating working capital management into mid-2016. The pronounced changes in working capital and its turnover ratio during this latter period warrant further investigation to identify underlying causes and assess their impact on financial health.
Average Inventory Processing Period
Baxter International Inc., average inventory processing period calculation (quarterly data)
| 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 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | Mar 31, 2011 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||||||||
| Inventory turnover | |||||||||||||||||||||||||||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||||||||||
| Average inventory processing period1 | |||||||||||||||||||||||||||||
| Benchmarks (no. days) | |||||||||||||||||||||||||||||
| Average Inventory Processing Period, Competitors2 | |||||||||||||||||||||||||||||
| Abbott Laboratories | |||||||||||||||||||||||||||||
| Intuitive Surgical Inc. | |||||||||||||||||||||||||||||
| Medtronic PLC | |||||||||||||||||||||||||||||
Based on: 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), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31), 10-K (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-Q (reporting date: 2011-03-31).
1 Q2 2016 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ =
2 Click competitor name to see calculations.
- Inventory Turnover
- Over the observed periods starting from March 31, 2012, the inventory turnover ratio indicates a general fluctuation with some notable trends. Initially, the ratio was 2.61, slightly decreasing and stabilizing around the 2.4 to 2.5 range through 2012 to early 2014. During the year 2014 and part of 2015, the ratio showed a gradual downward trend, dropping to a low of 1.88 by September 30, 2015, which suggests slower inventory movement in this period. However, from the latter part of 2015 onwards, there was a marked improvement, with the ratio increasing sharply to 3.86 by March 31, 2016, and maintaining high values subsequently. This upward trend implies a significant enhancement in inventory management or sales efficiency by the end of the period.
- Average Inventory Processing Period
- The average inventory processing period, expressed in days, mirrors the inverse pattern of inventory turnover, as expected. Starting from 140 days at the end of March 2012, it gradually increased, reaching a peak of 194 days by September 30, 2015. This increasing number indicates that inventory was held longer, which aligns with the declining inventory turnover observed in the same timeframe. Following this peak, there was a sharp reduction in the processing period to around 95 days by December 31, 2015, maintaining a range near 100 days into mid-2016. This decrease corresponds to the increased inventory turnover ratio in the same period, suggesting faster inventory processing and potentially improved operational efficiency.
- Overall Insights
- The data reflects a period of relative decline in inventory efficiency during 2014 and early 2015, characterized by slower turnover and longer holding periods. The turnaround in late 2015, marked by a substantial rise in inventory turnover and reduction in days held, points to an operational shift or strategy adjustment leading to enhanced inventory management. The marked improvement at the end of the timeline is significant and suggests positive developments in either demand, supply chain efficiency, or inventory control practices.
Average Receivable Collection Period
Baxter International Inc., average receivable collection period calculation (quarterly data)
| 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 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | Mar 31, 2011 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||||||||
| Receivables turnover | |||||||||||||||||||||||||||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||||||||||
| Average receivable collection period1 | |||||||||||||||||||||||||||||
| Benchmarks (no. days) | |||||||||||||||||||||||||||||
| Average Receivable Collection Period, Competitors2 | |||||||||||||||||||||||||||||
| Abbott Laboratories | |||||||||||||||||||||||||||||
| Elevance Health Inc. | |||||||||||||||||||||||||||||
| Intuitive Surgical Inc. | |||||||||||||||||||||||||||||
| Medtronic PLC | |||||||||||||||||||||||||||||
| UnitedHealth Group Inc. | |||||||||||||||||||||||||||||
Based on: 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), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31), 10-K (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-Q (reporting date: 2011-03-31).
1 Q2 2016 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
The financial data reveals observable trends in the receivables management of the company over multiple quarters from 2011 to 2016. Two key metrics—receivables turnover ratio and average receivable collection period—are examined to assess the efficiency of the company’s credit and collections processes.
- Receivables Turnover Ratio
- The receivables turnover ratio generally fluctuates between approximately 4.75 and 6.68 during the period under review. Initially, from early 2011 through 2013, the ratio mostly remains in the range of about 5.24 to 6.14, indicating relatively stable turnover. A noticeable dip occurs in the fourth quarter of 2013 where the ratio declines to about 5.29 and again in the fourth quarter of 2015, falling to 4.75, the lowest point recorded. The highest ratio in this span, 6.68, is observed in the second quarter of 2015, suggesting a temporary improvement in receivables turnover during that period. Despite these fluctuations, the turnover ratio does not display a clear long-term upward or downward trend, highlighting periodic variations rather than sustained changes in efficiency.
- Average Receivable Collection Period
- This metric inversely correlates with the receivables turnover ratio and measures the average time in days that receivables are outstanding before collection. The collection period mostly ranges between 55 and 77 days. Earlier periods, such as 2011 and 2012, show a gradual improvement with days reducing from 64 down to 58 at the best point, indicating quicker collections. However, a reversal appears around 2013 and 2014 where the period extends back to approximately 69 to 70 days, suggesting slower collection cycles during that time. The longest average collection period, 77 days, is recorded in the fourth quarter of 2015, aligning with the lowest turnover ratio, which reinforces the observation of decreased efficiency during that period. Collection periods in 2016 appear more stable, fluctuating moderately around 63 to 67 days.
- Insights and Patterns
- The relationship between the receivables turnover ratio and the average collection period consistently exhibits an inverse pattern, which is expected since these ratios are mathematically related. Periods of high turnover ratios correlate with a shorter collection period and vice versa.
- The data indicates some level of volatility in collection efficiency, with no sustained long-term trend toward improvement or deterioration. Specific quarters, particularly late 2013 and late 2015, reveal temporary declines in turnover efficiency, which could warrant further investigation to understand underlying operational or market factors during those times.
- Overall, the company has maintained the majority of its receivables turnover and collection period within a relatively stable band, reflecting consistent receivables management performance over the analyzed timeframe, albeit with episodic fluctuations.
Operating Cycle
Baxter International Inc., operating cycle calculation (quarterly data)
No. days
| 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 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | Mar 31, 2011 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||||||||
| Average inventory processing period | |||||||||||||||||||||||||||||
| Average receivable collection period | |||||||||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||||||||
| Operating cycle1 | |||||||||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||||||||
| Operating Cycle, Competitors2 | |||||||||||||||||||||||||||||
| Abbott Laboratories | |||||||||||||||||||||||||||||
| Intuitive Surgical Inc. | |||||||||||||||||||||||||||||
| Medtronic PLC | |||||||||||||||||||||||||||||
Based on: 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), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31), 10-K (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-Q (reporting date: 2011-03-31).
1 Q2 2016 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= + =
2 Click competitor name to see calculations.
- Inventory Management Trends
- From early 2012 through mid-2015, the average inventory processing period generally exhibited an upward trend, increasing from approximately 140 days to a peak of 194 days by the third quarter of 2015. This indicates a lengthening of the time inventory remains on hand before being sold or processed. Notably, in the last year of the data, the period sharply dropped to the range of 95–105 days, suggesting a marked improvement in inventory turnover and operational efficiency during this time.
- Receivables Collection Trends
- The average receivable collection period displayed moderate fluctuations throughout the period analyzed. Beginning around 64 days in early 2012, it showed slight declines and increases but remained mostly within the range of 55 to 70 days. The peak at 77 days near late 2015 indicates some deterioration in the efficiency of collecting receivables during that quarter, followed by a return to a mid-60-day range, reflecting relative stability in credit and collection policies over time.
- Operating Cycle Analysis
- The operating cycle, which integrates the inventory processing and receivable collection periods, demonstrated a consistent increase from early 2012, starting near 204 days and reaching a high of 271 days in the third quarter of 2015. This uptrend suggests an elongation in the total time to convert inventory and receivables into cash, possibly indicating operational inefficiencies or shifts in sales and collection strategies. However, a significant reduction in the operating cycle occurred in the final year of the data, dropping back to approximately 150–170 days, aligning with improvements observed in inventory processing and receivables collection.
- Overall Financial Operational Insight
- Overall, the data indicates a period of increasing operational cycle lengths through mid-2015, which could have implications for working capital management and liquidity. The reversal of this trend towards shorter inventory processing times, receivable collection periods, and operating cycles in the final year reflects improved operational efficiency and potentially enhanced cash flow management.