CVS Health Corp. (NYSE:CVS)

Inventory Turnover

The inventory turnover ratio shows a generally increasing trend over the periods analyzed. Beginning at 11.88 in March 2021, the ratio steadily rises, reaching a peak of 19.28 by June 2024 before slightly declining towards 18.74 by March 2025. This trend indicates improving efficiency in managing and selling inventory over time, suggesting enhanced inventory management practices or stronger sales performance.

Receivables Turnover

The receivables turnover ratio exhibits a gradual decline from 12.32 in March 2021 to 9.51 by March 2025. The initial slight fluctuations eventually lead to a downward trajectory, implying a reduction in the efficiency of collecting receivables. This could indicate lengthening collection periods or challenges in managing accounts receivable.

Payables Turnover

The payables turnover ratio experiences variability but overall remains relatively stable with minor fluctuations between 18.49 and 22.40. It shows some peaks, notably 22.08 in March 2023 and 22.40 in March 2024, while ending at 19.70 in March 2025. The data reflects a consistent pace in paying suppliers, with slight changes that may reflect strategic timing of payments or supplier terms.

Working Capital Turnover

No data is available for the working capital turnover ratio, thus no assessment can be made.

Average Inventory Processing Period

The average inventory processing period reveals a decreasing trend, moving from 31 days in March 2021 down to 19 days by March 2025, albeit with minor fluctuations around the mid-20s earlier on. This decline supports the observed increase in inventory turnover, indicating faster inventory movement and potentially improved operational efficiency.

Average Receivable Collection Period

The average receivable collection period shows a slight increase over the timeframe, fluctuating around 30-32 days initially and rising to 38 days by March 2025. This confirms the declining receivables turnover and suggests that the company is taking longer to collect payments from customers, which could impact cash flow management.

Operating Cycle

The operating cycle, which represents the total time taken from inventory acquisition to cash collection, generally declines from 61 days in March 2021 to 57 days by March 2025, with some variability. The overall reduction indicates improved operational efficiency, despite the increase in receivable collection days, likely driven by the faster inventory processing period.

Average Payables Payment Period

The average payables payment period fluctuates moderately between 16 and 20 days over the periods, ending at 19 days in March 2025. This relatively stable payment period suggests consistent management of payables, neither significantly leveraging extended payment terms nor accelerating payments.

Cash Conversion Cycle

The cash conversion cycle decreases overall from 42 days in March 2021 to 38 days by March 2025, showing improved efficiency in converting resource inputs into cash flows. Although some fluctuations occur, the trend points to better working capital management, supported by faster inventory turnover and relatively stable payables periods, offsetting the lengthening receivables collection.

Cost of Revenues

The cost of revenues shows a generally increasing trend over the observed quarterly periods. Starting from 54,734 million USD in March 2020, it experienced fluctuations but maintained an upward trajectory, reaching a peak in December 2024 at 84,811 million USD before slightly declining to 80,192 million USD in March 2025. Notable increases occurred during mid-2022 to the end of 2023, highlighting rising operational costs or expanded business activities.

Inventories

Inventories remained relatively stable with minor fluctuations throughout the examined periods. Beginning at 16,976 million USD in March 2020, the inventory values fluctuated within a narrow range, showing occasional decreases and recoveries. For instance, inventories decreased from 18,160 million USD in March 2022 to 17,375 million USD in June 2022, followed by rebounds thereafter. A downward trend was somewhat noticeable between early 2023 and mid-2024 before stabilizing near 17,000 to 18,000 million USD.

Inventory Turnover Ratio

The inventory turnover ratio exhibited a clear upward trend from 11.88 in March 2020 to a high of 19.28 in June 2024. This metric demonstrates improving efficiency in managing and selling inventory, suggesting that the company is accelerating the rate at which inventory is converted into sales. Slight decreases occurred toward the end of the timeline, with the ratio moving from 19.28 in June 2024 down to 17.75 and then rising again to 18.74 by March 2025. Overall, the increased turnover ratio indicates enhanced operational performance in inventory management over the observed years.

Revenues from customers

The revenue demonstrated a general upward trajectory from March 2020 through March 2025, increasing from approximately $66.6 billion to around $94.1 billion. There were fluctuations within this period, with slight dips in certain quarters such as March 2024 and March 2025. Notably, the revenue growth accelerated after June 2021, with several quarters exceeding $90 billion, indicating a strong recovery or expansion phase in the latter half of the timeline.

Accounts receivable, net

The net accounts receivable exhibited a rising trend across the entire timeframe, moving from about $23 billion in March 2020 to nearly $39.6 billion by March 2025. This increase suggests a growing amount of credit extended to customers or changes in payment cycles. Between March 2023 and December 2023, there was a pronounced increase, with receivables climbing from around $28.3 billion to more than $35 billion, which may indicate either higher sales on credit or slower collection during that period.

Receivables turnover ratio

The receivables turnover ratio showed a general declining trend over the observed periods, decreasing from about 12.3 in September 2020 to under 10 by March 2025. This decline suggests that the company is collecting its receivables more slowly over time. The most significant downward movement was visible after December 2022, with the ratio dropping below 11 and continuing to trend downward through to the end of the period. Such a pattern may reflect changes in credit policy, customer payment behavior, or operational factors affecting collection efficiency.

The cost of revenues exhibits an overall increasing trend from March 31, 2020, through March 31, 2025, with some fluctuations observed within individual quarters. Initially, the cost of revenues rose from approximately $54.7 billion in Q1 2020 to around $62.9 billion by Q4 2021, marking a gradual upward trajectory. Following this period, costs continued to climb, peaking at approximately $84.8 billion by Q4 2024, before a slight decrease to about $80.2 billion in Q1 2025. This progression indicates a substantial growth in the expenses associated with generating revenue over the five-year span, although some quarters experienced minor decreases or stagnation.

Accounts payable also demonstrate a general upward movement over the analyzed periods. Starting from roughly $10.2 billion in Q1 2020, the figure fluctuates but trends upward to reach nearly $16.5 billion by Q1 2025. The rises and intermittent drops within quarters suggest variability in short-term liabilities, possibly influenced by operational activities, payment negotiations, or supplier relationships. Despite this volatility, the increase over time aligns with the rising cost of revenues, reflecting possibly larger volumes of transactions or extended payment terms.

The payables turnover ratio shows fluctuations but remains relatively stable within a range generally between 18 and 22 throughout the available data from Q4 2020 onwards. Notably, the ratio peaked at 22.4 in Q4 2023, suggesting a faster conversion of accounts payable during that period. A higher turnover ratio typically implies more efficient payment processes to suppliers. Although the ratio experiences ups and downs, it does not display a definitive long-term upward or downward trend, indicating consistent payables management practices amidst changing business conditions.

Cost of Revenues

Consistently increasing over the five-year period from approximately $54.7 billion to a peak near $84.8 billion.

Minor quarterly fluctuations occur but the overall trend reflects growing costs associated with revenue generation.

Accounts Payable

General upward trend from about $10.2 billion to $16.5 billion, with some variability in individual quarters.

The rise mirrors increased operational volume or changes in payment terms.

Payables Turnover Ratio

Relatively stable, moving between 18 and 22 over the period with occasional spikes and dips.

Peaks suggest periods of more rapid supplier payments; overall, no strong long-term trend.

Working Capital

The working capital data shows a consistently negative balance across all periods, indicating a recurring current liabilities excess over current assets. Starting at -602 million USD in March 2020, the negative working capital deepened significantly, reaching as low as -15,846 million USD by December 2024. This figure exhibits considerable volatility, with sharp fluctuations, notably deepening negative values in late 2023 and early 2024 periods. Overall, the trend suggests increasing pressure on liquidity or aggressive working capital management strategies that result in a higher amount of current liabilities relative to current assets.

Revenues from Customers

Revenue figures demonstrate a generally positive trend over the observed periods. The revenue started at 66,593 million USD in March 2020 and showed gradual growth with some fluctuations. Notable increases occurred during 2021 and 2022, peaking at 93,545 million USD in December 2024 before a slight reduction in March 2025 to 94,068 million USD. This upward trend suggests steady demand and market expansion, although quarter-to-quarter changes sometimes show minor declines, indicating potential seasonal or operational influences.

Working Capital Turnover

Working capital turnover ratios were not provided in the dataset, so no analysis can be derived for operational efficiency based on this metric.

The inventory turnover ratio exhibits a clear upward trend over the periods analyzed. From an initial value of 11.88 recorded in the first quarter of 2021, the ratio consistently increased with minor fluctuations, reaching a peak of 19.28 by the second quarter of 2024. This rise indicates an improving efficiency in managing and selling inventory, reflecting a potential enhancement in operational performance and inventory management strategies over time. The turnover ratio slightly declined during some quarters, such as in the third quarter of 2024 and early 2025, but overall the trend remains positive.

Correspondingly, the average inventory processing period, which represents the number of days inventory is held before being sold, shows a decreasing trend that aligns inversely with the inventory turnover ratio. Starting at 31 days in the first quarter of 2021, the average processing period steadily shortened to 19 days by the second quarter of 2024. This reduction implies more rapid inventory movement and improved inventory liquidity. Minor increments to 20 or 21 days occurred occasionally, yet the general trajectory highlights a significant improvement in turnover efficiency.

Inventory Turnover Ratio

Increased from 11.88 (Q1 2021) to approximately 19.28 (Q2 2024), indicating better inventory utilization and sales efficiency.

Minor declines in some late periods suggest occasional fluctuations but do not offset the overall upward trend.

Average Inventory Processing Period

Decreased from 31 days (Q1 2021) to 19 days (Q2 2024), reflecting faster inventory turnover and improved operational efficiency.

Occasional small increases in days occur but overall trend is downward, maintaining alignment with turnover ratio movements.

In summary, the data reflects a significant improvement in inventory management performance over the given time horizons, with enhanced turnover rates and shortened inventory holding periods. These changes may contribute positively to the company’s liquidity and operational effectiveness.

The receivables turnover ratio from the available quarterly data shows an initial high value around 12.32, which gradually declines over the analyzed periods to a low of 9.51 by the end of the period. This overall downward trend indicates a decreasing frequency of receivables being collected within the accounting period.

Correspondingly, the average receivable collection period in days exhibits a general increase throughout the timeline, starting from 30 days and reaching up to 38 days towards the later periods. This suggests that the company is taking longer to collect its receivables as time progresses.

Receivables Turnover

The ratio starts above 12, fluctuates around the 11 to 12 range for several quarters, and then declines steadily to below 10. This indicates a reduction in the efficiency of collecting receivables over time.

Average Receivable Collection Period

The period remains relatively stable around 30-32 days initially, then lengthens, peaking at 38 days in the final quarter. This reflects slowed cash inflows from receivables, possibly impacting liquidity.

In summary, the financial data suggests a trend of decreasing efficiency in receivables management, as evidenced by the declining turnover ratio and increasing collection period. This could have implications for the company’s working capital and cash flow, requiring attention to credit policy or collection efforts.

Average inventory processing period

The average inventory processing period exhibits a generally downward trend over the analyzed quarters. Starting at 31 days in the first available quarter (March 31, 2021), it steadily decreases to 19 days by March 31, 2025. A few minor fluctuations occur, such as slight increases from 25 to 26 days around late 2022 and from 20 to 21 days in late 2024, but the overall pattern suggests improved inventory turnover and efficiency over time.

Average receivable collection period

The average receivable collection period maintains relative stability with slight fluctuations within a narrow range, predominantly between 30 and 38 days. It begins near 30 days around early 2021, increasing to a peak of 38 days by March 31, 2025. The trend indicates some extension in the time taken to collect receivables, particularly noticeable from mid-2023 onward, which may suggest changes in credit policies or customer payment behavior.

Operating cycle

The operating cycle, which reflects the sum of inventory processing and receivable collection periods, shows an overall gradual decline from 61 days in early 2021 to 57 days by the end of the analyzed period. Despite small rises around late 2023 and 2024, the cycle shortens, reaching its lowest point of 52 days in the second quarter of 2024. This indicates a general improvement in the company's efficiency in managing inventory and receivables together.

The payables turnover ratio exhibits fluctuations over the quarters analyzed, reflecting variations in the company's efficiency in managing its payables. Initially, there is a rising trend from 19.72 to a peak of 22.4 in the third quarter of 2024, indicating an improvement in the rate at which payables are being settled relative to purchases. However, this is followed by a moderate decline back to 19.7 by the first quarter of 2025. Overall, the ratio remains within a range of approximately 18 to 22.4, suggesting some variability but generally consistent payables management efficiency.

The average payables payment period, expressed in number of days, inversely correlates with the turnover ratio and demonstrates relative stability with minor fluctuations. The period mostly oscillates between 16 and 20 days across the quarters, with occasional slight reductions such as the drop to 16 days in the second quarter of 2024. This indicates that the company's payment timing to its suppliers remains fairly consistent, typically around 18 to 20 days, with short-term variations potentially responsive to operational or strategic factors.

Payables Turnover Ratio

Shows an overall increasing trend from late 2020 through 2024, peaking in mid-2024 before slightly decreasing, which reflects enhanced efficiency in paying suppliers during the peak period.

Ranges mainly between 18 and 22.4, indicating moderate variability but no extreme volatility in payables management.

Average Payables Payment Period

Remains relatively stable between 16 and 20 days, indicating consistent payment behavior towards creditors.

Minor quarterly fluctuations suggest responsiveness to short-term cash flow needs or operational adjustments.

Relationship Between the Ratios

The inverse relationship between these two metrics is evident, with higher turnover ratios corresponding to shorter average payment periods, reinforcing internal consistency.

The financial data reveals notable trends in the company's working capital efficiency, specifically in the management of inventory, receivables, payables, and the overall cash conversion cycle over multiple quarterly periods.

Average Inventory Processing Period

This metric demonstrates a consistent decline from 31 days in early 2020 to approximately 19-22 days by 2025. The steady decrease suggests improved inventory turnover and potentially more efficient inventory management practices, reducing the time inventory is held before being sold or used.

Average Receivable Collection Period

The receivables collection period oscillates between 30 and 38 days. Starting around 30-32 days in 2020, it shows a subtle upward trend into the mid to high 30s in the most recent periods. This increase may indicate a marginally slower pace in collecting receivables, which could impact cash inflows.

Average Payables Payment Period

Payables payment periods remain relatively stable, fluctuating generally between 16 and 20 days. There is no clear directional trend, implying consistent payment terms with suppliers and maintaining a relatively balanced approach to settling obligations.

Cash Conversion Cycle (CCC)

The CCC, which integrates inventory, receivables, and payables periods, reflects a moderate decrease overall: from a high of 42-43 days in 2020 down to the mid-to-high 30s by 2025. Although some quarterly variability is present, the downward movement in CCC corresponds with the improved inventory processing period, partially offset by the slight extension in receivables collection. This indicates a modest improvement in overall working capital efficiency but also highlights potential areas for faster receivables turnover.

In summary, the company has enhanced its inventory management effectively, as evidenced by shorter holding periods. The stable payables period suggests maintained supplier relationships without extending payment terms excessively. However, the gradual increase in receivables days points to slight challenges in speeding up collections. The net result is a marginally improved cash conversion cycle, reflecting more efficient use of cash tied up in operations, though there remains room for improvement in the collection process to optimize liquidity further.