Boston Scientific Corp. (NYSE:BSX)

Inventory Turnover

The inventory turnover ratio exhibits moderate fluctuations over the reported periods. Starting at 2.41 in 2018, it declined to 1.97 in 2019, indicating slower inventory movement. It then improved to 2.56 in 2020, followed by a decrease to 2.3 in 2021 and further down to 2.12 in 2022. Overall, the trend suggests some variability with a general decline from the 2020 peak.

Receivables Turnover

The receivables turnover ratio shows relative stability with slight variations. It starts at 6.11 in 2018, dips marginally to 5.87 in 2019, then increases to 6.47 in 2020 and peaks at 6.69 in 2021 before slightly declining to 6.44 in 2022. This pattern suggests consistent efficiency in collecting receivables, with a minor dip in recent years.

Payables Turnover

The payables turnover ratio demonstrates notable volatility. Beginning at 8.06 in 2018, it sharply decreases to 5.75 in 2019, rises again to 6.75 in 2020, then declines substantially to 4.67 in 2021 and marginally to 4.59 in 2022. This indicates a marked lengthening in the payment period to suppliers over time.

Working Capital Turnover

Working capital turnover data is missing for the first two years but shows a strong upward trend for the subsequent years. It rises from 3.29 in 2020 to 5.82 in 2021 and further to 6.48 in 2022. This considerable increase suggests enhanced efficiency in utilizing working capital to generate revenue in recent years.

Average Inventory Processing Period

The average inventory processing period decreases from 151 days in 2018 to 142 days in 2020, indicating improved inventory management. However, it then increases to 158 days in 2021 and further to 172 days in 2022, signaling potential delays or slower inventory turnover in the latest periods.

Average Receivable Collection Period

The average receivable collection period shows slight fluctuations but remains relatively stable. It starts at 60 days in 2018, rises marginally to 62 days in 2019, then decreases to 56 days in 2020, slightly improves to 55 days in 2021, and rises again to 57 days in 2022. This stability reflects steady credit management practices.

Operating Cycle

The operating cycle mirrors fluctuations in inventory and receivables periods. It lengthens from 211 days in 2018 to 247 days in 2019, shortens to 198 days in 2020, then increases again to 213 days in 2021 and 229 days in 2022. The variability suggests changing operational efficiency across the years.

Average Payables Payment Period

This metric shows a significant upward trend, growing from 45 days in 2018 to 64 days in 2019, decreasing to 54 days in 2020, then markedly increasing to 78 days in 2021 and slightly further to 80 days in 2022. This indicates a growing length in the time taken to settle payables, potentially reflecting strategic cash flow management or supplier negotiations.

Cash Conversion Cycle

The cash conversion cycle initially rises from 166 days in 2018 to 183 days in 2019, then decreases substantially to 144 days in 2020 and further to 135 days in 2021, indicating improved cash flow efficiency. However, it lengthens again to 149 days in 2022, suggesting some reversal in these gains.

Cost of Products Sold

The cost of products sold has exhibited a consistent upward trend over the five-year period. Starting at 2,812 million US dollars in 2018, it increased annually to reach 3,955 million US dollars by the end of 2022. This steady increase suggests rising production costs or increased sales volume.

Inventories

Inventory levels have also shown an overall increasing pattern, beginning at 1,166 million US dollars in 2018 and rising to 1,867 million US dollars by 2022. However, there was a notable fluctuation in 2020, where inventories decreased from 1,579 million to 1,351 million US dollars before increasing again in the following years. This may indicate temporary adjustments in stock management or supply chain variations.

Inventory Turnover Ratio

The inventory turnover ratio demonstrated some variability but remained within a relatively narrow range. It started at 2.41 times in 2018, dropped to 1.97 times in 2019, then increased to 2.56 times in 2020. After that, it declined gradually to 2.3 times in 2021 and 2.12 times in 2022. The initial decline in 2019 suggests slower inventory movement or accumulation of stock, followed by a quicker turnover in 2020, and a moderate slowing in subsequent years. This ratio implies moderate changes in the efficiency of inventory management relative to sales over time.

Net Sales

Net sales showed an overall upward trend from 2018 to 2022. Starting at $9,823 million in 2018, sales increased to $10,735 million in 2019. A decline was observed in 2020, with sales dropping to $9,913 million. However, this was followed by a strong recovery and growth in the subsequent years, with net sales reaching $11,888 million in 2021 and $12,682 million in 2022. The fluctuations suggest a possible impact from external factors in 2020 but a robust recovery thereafter.

Trade Accounts Receivable, Net

Trade accounts receivable exhibited a generally increasing pattern over the five-year period. Beginning at $1,608 million in 2018, receivables rose to $1,828 million in 2019 before declining to $1,531 million in 2020, mirroring the net sales trend. From 2020 onwards, there was continual growth, with receivables reaching $1,778 million in 2021 and $1,970 million in 2022. This trend suggests an expansion in credit sales or extended collection periods in recent years.

Receivables Turnover Ratio

The receivables turnover ratio showed some variability over the period. It started at 6.11 in 2018 and declined slightly to 5.87 in 2019, indicating a slower collection pace. In 2020, the ratio increased to 6.47 and continued to improve to 6.69 in 2021, suggesting more efficient collection during these years. In 2022, the ratio slightly decreased to 6.44, though it remained higher than the levels seen in 2018 and 2019. Overall, the turnover ratio suggests that the company managed to improve its collection efficiency after 2019, with a minor decrease in the final year.

The analysis of the annual financial data indicates several notable trends over the five-year period ending December 31, 2022.

Cost of products sold

There is a consistent and steady increase in the cost of products sold from 2018 through 2022. The values rise from $2,812 million in 2018 to $3,955 million in 2022, reflecting a growth trend in this expense category. This upward trajectory suggests increasing production or procurement costs, potentially driven by higher sales volumes, inflationary pressures, or increased raw material costs.

Accounts payable

Accounts payable show an overall upward trend, increasing from $349 million in 2018 to $862 million in 2022. However, the pattern displays some volatility, with a significant increase in 2019, a slight decline in 2020, followed by substantial increases in 2021 and 2022. This variability may indicate shifts in supplier payment strategies or changes in purchasing patterns.

Payables turnover ratio

The payables turnover ratio shows a declining trend over the period. It decreases from 8.06 in 2018 to 4.59 in 2022, with intermittent fluctuations in 2019 and 2020. A lower ratio typically suggests that the company is taking longer to pay its suppliers, which may reflect changes in credit terms, cash management strategies, or liquidity considerations.

Overall, the increasing cost of goods sold combined with rising accounts payable and a declining payables turnover ratio suggests that while costs and liabilities related to purchases are growing, the company may be extending payment periods to suppliers over time. This could be a deliberate cash flow management tactic or a response to external financial conditions.

Working Capital

Working capital showed a significant shift over the five-year period. Initially, there was a substantial negative value of -1257 million US$, indicating a deficit in current assets relative to current liabilities in 2018. This negative working capital improved dramatically by 2019, increasing to -167 million US$, suggesting better liquidity management. In 2020, there was a notable positive turn with working capital reaching 3013 million US$, marking a strong recovery. However, working capital slightly declined in the following years, registering 2043 million US$ in 2021 and 1957 million US$ in 2022, yet it remained significantly positive, indicating a stable liquidity position.

Net Sales

Net sales exhibited an overall upward trend across the period. Starting at 9823 million US$ in 2018, sales increased to 10735 million US$ in 2019 despite a dip to 9913 million US$ in 2020, which may reflect external challenges during that year. From 2020 onwards, net sales showed substantial growth, rising to 11888 million US$ in 2021 and further to 12682 million US$ in 2022, indicating strong revenue growth and possibly increased market demand or successful business strategies implemented post-2020.

Working Capital Turnover

The working capital turnover ratio, which measures the efficiency of using working capital to generate sales, was not available until 2020. From 2020, the ratio showed a positive and increasing trend, starting at 3.29 and rising sharply to 5.82 in 2021 and then to 6.48 in 2022. This increasing ratio suggests that the company has been improving its effectiveness in utilizing working capital to generate sales, reflecting enhanced operational efficiency or better working capital management in recent years.

The financial data indicates fluctuations in the inventory management efficiency over the observed five-year period.

Inventory turnover (ratio)

The inventory turnover ratio experienced a decline from 2.41 in 2018 to 1.97 in 2019, suggesting slower inventory movement during that year. In 2020, the ratio improved significantly to 2.56, indicating better inventory utilization. However, this improvement was followed by a decrease to 2.3 in 2021 and further down to 2.12 in 2022, reflecting a trend towards slower turnover in the last two years.

Average inventory processing period (number of days)

The average inventory processing period lengthened considerably from 151 days in 2018 to 185 days in 2019, implying that inventory stayed longer in stock. This period improved markedly in 2020, reducing to 142 days, thus aligning with the improvement in inventory turnover. However, afterward, it increased again to 158 days in 2021 and further to 172 days in 2022, indicating a trend of growing inventory holding times towards the end of the period.

Overall, the data reveals a notable deterioration in inventory management efficiency in 2019, an improvement during 2020, and a subsequent decline over 2021 and 2022. These shifts suggest challenges in maintaining optimal inventory levels consistently throughout the years analyzed.

Receivables Turnover

The receivables turnover ratio demonstrates some fluctuation over the five-year period. It started at 6.11 in 2018, slightly declined to 5.87 in 2019, then increased to a peak of 6.69 in 2021 before settling at 6.44 in 2022. This overall trend suggests variability in the efficiency with which receivables were collected, with a notable improvement after 2019 and a slight decline in the final year observed.

Average Receivable Collection Period

The average receivable collection period inversely mirrors the receivables turnover trend. It increased from 60 days in 2018 to 62 days in 2019, indicating a longer collection period. Subsequently, there was a decrease to 56 days in 2020 and further improvement to 55 days in 2021. In 2022, this period rose slightly to 57 days but remained below the figures recorded in 2018 and 2019. This pattern shows periods of increasing efficiency in collecting receivables after 2019, with a moderate lengthening in the last year.

Summary of Observations

Overall, the data presents an improvement in receivables management efficiency following the year 2019, reflected by a higher receivables turnover and shorter collection periods until 2021. The slight reversal in 2022 indicates a mild reduction in collection efficiency but does not return to the less favorable levels of 2018-2019. These trends may imply responsive adjustment in credit policies or collection strategies over time, with potential external factors influencing the slight deterioration observed in the last year.

Average inventory processing period

The average inventory processing period exhibited fluctuation over the analyzed years. Beginning at 151 days in 2018, the period increased significantly to 185 days in 2019. It then decreased to 142 days in 2020, followed by a gradual increase to 158 days in 2021 and further to 172 days in 2022. This indicates variability in inventory turnover efficiency, with a notable dip in processing time in 2020 but a general trend towards longer inventory holding periods from 2020 onward.

Average receivable collection period

The average receivable collection period remained relatively stable throughout the period, fluctuating slightly between 55 and 62 days. Starting at 60 days in 2018, it increased marginally to 62 days in 2019, then decreased to 56 days in 2020 and 55 days in 2021, before rising modestly to 57 days in 2022. This suggests a consistent collection efficiency with minor improvements in 2020 and 2021, followed by a slight easing in 2022.

Operating cycle

The operating cycle, representing the total time from inventory acquisition to cash collection, showed variability largely influenced by changes in inventory processing. It extended from 211 days in 2018 to a peak of 247 days in 2019, before declining to 198 days in 2020. Subsequently, it increased to 213 days in 2021 and further to 229 days in 2022. The cycle reflects an overall increase compared to 2018, indicating longer durations in completing operational cash flow cycles in recent years, with 2020 as an anomalous year of improvement.

Payables Turnover

The payables turnover ratio exhibits a declining trend over the analyzed period, decreasing from 8.06 in 2018 to 4.59 in 2022. This reflects a reduction in the frequency with which payables are settled annually, indicating potentially slower payments to suppliers as time progresses.

Average Payables Payment Period

The average payables payment period shows a notable increase from 45 days in 2018 to 80 days in 2022. This indicates that the company is taking progressively longer to pay its suppliers. The increase is especially marked from 2019 onwards, with a peak in the 2021-2022 period.

Overall Analysis

The inverse relationship between payables turnover and average payment period is consistent with typical financial behaviors: as the payment period extends, turnover decreases. The trend suggests a strategic shift or cash flow management practice where the company is extending its payment terms, potentially to conserve cash or manage working capital more efficiently. However, longer payment periods may impact supplier relationships and should be considered carefully within the broader operational and financial context.

Average Inventory Processing Period

The inventory processing period exhibited fluctuations throughout the analyzed years. It increased significantly from 151 days in 2018 to a peak of 185 days in 2019, indicating slower inventory turnover. This was followed by a reduction to 142 days in 2020, suggesting improved efficiency. However, the period slightly increased again to 158 days in 2021 and further to 172 days in 2022, implying some challenges in maintaining inventory turnover speed in recent years.

Average Receivable Collection Period

The receivable collection period showed relative stability across the years. It started at 60 days in 2018 and experienced a minor rise to 62 days in 2019. Subsequently, it decreased to 56 days in 2020 and remained nearly stable at 55 days in 2021, with a slight increase to 57 days in 2022. This consistency suggests steady management of accounts receivable and collection processes.

Average Payables Payment Period

The payables payment period demonstrated notable growth over the period examined. Beginning at 45 days in 2018, it increased sharply to 64 days in 2019, indicating a lengthening of the payment cycle to suppliers. Following a slight drop to 54 days in 2020, it substantially rose to 78 days in 2021 and marginally increased further to 80 days in 2022. This trend may reflect extended payment terms or more strategic cash flow management.

Cash Conversion Cycle

The cash conversion cycle generally decreased from 166 days in 2018 to a low of 135 days in 2021, suggesting improving efficiency in converting investments in inventory and other resources into cash flows. Nevertheless, it edged upward to 149 days in 2022, indicating a slight reversal or increased operational delays. Overall, the cash conversion cycle remains elevated, reflecting the combined effects of inventory, receivables, and payables management reported above.