Bristol-Myers Squibb Co. (NYSE:BMY)

The analysis of the financial ratios over the reported periods reveals several notable trends and fluctuations in operational efficiency and working capital management.

Inventory Turnover

The inventory turnover ratio generally declined from 5.61 in March 2021 to a low of around 3.57-3.72 through mid to late 2024, indicating a slower rate of inventory sales or possibly increased inventory levels relative to cost of goods sold. However, a significant improvement occurred starting in late 2024, rising sharply to above 5.2 by the end of that year and early 2025, suggesting enhanced inventory management or stronger sales momentum.

Payables Turnover

This ratio showed moderate variability, fluctuating between approximately 2.6 and 3.9 across the periods. It declined notably around late 2024 with a dip to 2.61, implying lengthening payment cycles to suppliers during that time. Despite this, the ratio recovered somewhat by early 2025, indicating a partial return to timelier payments. Overall, the company maintained a relatively stable payables turnover with occasional shifts likely reflecting changes in payment policies or supplier negotiations.

Working Capital Turnover

This metric displayed high volatility, with values ranging from below 4.0 to as high as 15.56. Early in the period, working capital turnover was moderate, but it escalated dramatically around early 2022 and again in 2024, peaking above 15. This suggests episodic improvements in the efficiency with which working capital was used to generate revenue. The sharp rises, followed by declines, may indicate timing differences or operational changes affecting current assets and liabilities rather than steady trends.

Average Inventory Processing Period

The inventory processing period steadily increased from 65 days in early 2021 to about 102 days by late 2024, suggesting inventory was held longer over time. This aligns with the falling inventory turnover ratio during much of this timespan, confirming slower inventory movement. However, a reversal occurred late in 2024, when the days reduced sharply back to around 70 days, indicating improved inventory turnover efficiency coinciding with the rebound in the inventory turnover ratio.

Average Payables Payment Period

This period fluctuated significantly but generally trended upwards from about 99 days in early 2021 to a peak of 140 days in autumn 2025. This increase reflects a lengthening of the payment cycle to suppliers, potentially a deliberate working capital management strategy to preserve cash. However, some variability is observed, including a reduction towards 94-106 days in some quarters, reflecting inconsistent payment patterns.

In summary, the company's financial efficiency measures reveal periods of deteriorating inventory turnover and longer processing times through most of the analysis timeframe, followed by improvement towards the end. Payables turnover and payment periods suggest increasingly lenient supplier payment terms with intermittent reversals. The working capital turnover's high fluctuations point to variable operational control or timing effects. These patterns highlight a dynamic management of working capital components with phases of both constraint and optimization.

Cost of Products Sold (Excluding Amortization of Acquired Intangible Assets)

The cost of products sold demonstrates notable fluctuations over the observed period. Initially, from March 2021 through the end of 2021, there is a moderate decline followed by some recovery, with values generally oscillating between approximately 2,250 and 2,800 million USD. During 2022, costs generally trend upward, peaking towards the close of the year. This increasing trajectory continues into early 2024, where a significant jump occurs in December 2024, reaching a high of 4,812 million USD, which stands out as an anomaly compared to previous quarters. Subsequently, the costs decline but remain elevated relative to earlier periods, stabilizing around 3,000 to 3,400 million USD through the first three quarters of 2025.

Inventories

Inventory levels show a steady expansion across most of the time horizon. Starting from approximately 1,950 million USD in early 2021, inventory rises gradually, crossing the 3,300 million USD mark by the third quarter of 2024. There is an evident dip in the fourth quarter of 2024, with inventory decreasing to approximately 2,557 million USD, followed by a subsequent recovery and stabilization around 2,700 to 2,750 million USD in 2025. The gradual increase signals sustained accumulation or slower turnover of stock over time.

Inventory Turnover Ratio

The inventory turnover ratio exhibits a declining trend from early 2021 through the end of 2024, falling from about 5.61 to a low point near 3.57. This decline suggests that the company is turning over its inventory at a slower rate during this period, potentially indicating either increased stock levels relative to sales or changes in sales velocity. Notably, in the final quarter of 2024 and into 2025, the ratio rebounds sharply, climbing back to a range above 5.1. This rebound corresponds temporally with the reduction in inventory levels and fluctuations in the cost of products sold, implying improved efficiency in inventory management or changes in sales dynamics during that time.

Overall Trends and Insights

The interplay between the cost of products sold, inventory levels, and inventory turnover ratio reflects dynamic operational conditions. The significant spike in cost of products sold at the end of 2024 juxtaposed with a sharp drop in inventories suggests a potential one-time event, such as a large procurement or inventory write-down, impacting financial metrics. The inventory turnover ratio's decline over multiple quarters points to a trend of slower inventory movement, which may affect liquidity and operational efficiency if sustained. However, the recovery in turnover ratio in late 2024 and 2025, alongside more stabilized inventory levels, may indicate corrective actions or market adjustments that enhanced inventory efficiency. Continuous monitoring of these metrics is advisable to ensure effective inventory and cost management.

The analysis of recent quarterly financial data reveals several key trends related to the cost of products sold, accounts payable, and payables turnover for the company.

Cost of Products Sold

The cost of products sold shows some variability across the quarters, with values generally fluctuating between approximately 2,300 and 3,300 million US dollars in most quarters. A notable spike occurs in the quarter ending December 31, 2024, reaching a significant peak at 4,812 million US dollars. Following this peak, the costs decrease but remain at relatively elevated levels compared to earlier periods, indicating a possible increase in production costs or inventory purchases during late 2024.

Accounts Payable

Accounts payable also exhibit fluctuation but tend to trend upward over the longer term. Starting at roughly 2,695 to 3,039 million in early periods, the amount rises markedly by June 30, 2025, reaching above 5,400 million US dollars before slightly declining. This increase corresponds temporally with the spike in cost of products sold, potentially reflecting delayed payments or higher purchasing volumes influencing liabilities to suppliers.

Payables Turnover Ratio

The payables turnover ratio, which measures how quickly the company pays off suppliers, shows variability but generally remains in a range between about 2.6 and 3.9. There are periods of relative stability interspersed with declines and rises. Notably, the payables turnover ratio dips significantly around June 30, 2025, reflecting a slower rate of payment to suppliers despite high accounts payable balances, suggesting extended payment terms or potential cash flow management strategies. Conversely, prior to this dip, some quarters show higher turnover ratios, indicating faster payment cycles.

Overall, the data suggest increasing cost pressure and higher liabilities as reflected in accounts payable, accompanied by shifts in payment practices to suppliers. The peak in cost of goods sold and accounts payable during late 2024 and mid-2025 could indicate either increased procurement activity, inflationary cost impacts, or changes in credit terms. Fluctuations in payables turnover indicate varying payment efficiency, which may impact supplier relations and working capital management.

Working Capital

The working capital exhibited notable fluctuations over the observed periods. Initially, it showed a moderate increase from 9,781 million USD in the first quarter of 2021 to a peak of 11,394 million USD by the end of that year. However, from early 2022, there was a general declining trend reaching a low of 2,847 million USD by the first quarter of 2024. Subsequently, working capital experienced a recovery phase, progressively increasing and stabilizing within the range of approximately 5,400 to 7,500 million USD through to the third quarter of 2025. These movements suggest periods of liquidity tightening followed by stabilization efforts.

Net Product Sales

Net product sales remained relatively stable throughout the period, fluctuating modestly around an average range between approximately 10,800 million USD and 11,900 million USD each quarter. Although minor quarter-to-quarter variations are observable, there is no strong upward or downward trend, indicating a consistent sales performance. The slight peaks and troughs might reflect seasonal demand or product cycle effects, but overall sales levels show resilience without significant growth acceleration or contraction.

Working Capital Turnover Ratio

The working capital turnover ratio demonstrated considerable volatility across the quarters, indicating varying efficiency in utilizing working capital to generate sales. The ratio started around 4.2 to 4.4 in early 2021 and saw sharp increases in some quarters, peaking at 15.56 in the first quarter of 2024. Such spikes generally corresponded with troughs in working capital, reflecting greater efficiency or tighter capital management during those periods. After the peak, the ratio declined and stabilized somewhat between 6 and 8 in the later quarters. These fluctuations suggest that the company may have been managing working capital more aggressively in response to liquidity constraints or strategic shifts during certain periods, subsequently achieving a more balanced turnover.

Overall Financial Trends and Insights

The data indicates the company underwent significant changes in working capital management over time, with periods of liquidity contraction followed by recovery. Despite these shifts in working capital, net product sales maintained steady performance, which contributed to high turnover ratios when working capital was lower. The high variability in the turnover ratio shows responsiveness in asset utilization efficiency, potentially linked to internal financial strategies or external market conditions. While sales remained consistent, periods of low working capital could have implied increased operational pressure or optimized use of resources to maintain steady revenue streams. The gradual normalization of working capital and turnover ratios in later periods suggests improved balance between liquidity and operational efficiency.

The analysis of the inventory management metrics indicates significant fluctuations and changes over the reported quarters.

Inventory Turnover Ratio

The inventory turnover ratio demonstrates a declining trend from the first quarter of 2021 through most of 2024. Starting at 5.61 in March 2021, it decreased gradually, reaching its lowest value around 3.57 by September 2024. This decline suggests that inventory is being sold and replaced more slowly over this period. However, from late 2024 into 2025, there is a marked recovery in inventory turnover, rising sharply to above 5.3 by the first three quarters of 2025, which could indicate improved efficiency in inventory management or stronger sales.

Average Inventory Processing Period (Days)

Consistent with the inventory turnover ratio, the average number of days inventory is processed shows an upward trend over most of the timeframe. It begins at 65 days in March 2021 and increases steadily, peaking around 102 days in September 2024. This increase in processing time aligns with the slower inventory turnover, implying that inventory remains on hand for longer periods. Towards the end of 2024 and into 2025, the processing period sharply decreases to approximately 69-70 days, indicating an acceleration in inventory movement.

Overall, the financial metrics reflect a period of declining inventory efficiency throughout 2021 to 2024, with longer inventory holding periods and reduced turnover. This trend reverses substantially in the latter part of 2024 into 2025, suggesting operational improvements or changes in sales dynamics that led to faster inventory throughput and improved management of stock levels.

Payables Turnover

The payables turnover ratio exhibits noticeable fluctuations throughout the analyzed periods. Initially, the ratio decreased from 3.69 in March 2021 to 2.97 in June 2021, followed by an increase to 3.89 in September 2021. A similar up-and-down pattern continues within subsequent quarters, reflecting variability in how quickly the company pays its suppliers. The ratio peaks at 3.88 in December 2024 and dips to its lowest point of 2.61 in June 2025, indicating a slower payment pace during that quarter.

Average Payables Payment Period

The average payment period trends inversely to the payables turnover ratio, as expected. It starts lower at 99 days in March 2021, rises sharply to 123 days by June 2021, and then oscillates between approximately 94 and 120 days across quarters. Notably, there is a significant peak at 140 days in June 2025, coinciding with the lowest payables turnover ratio, suggesting extended payment durations during that quarter. This fluctuation indicates variable liquidity management or adjustments in payment terms with suppliers over time.