Danaher Corp. (NYSE:DHR)

Inventory Turnover

The inventory turnover ratio exhibits a generally declining trend from 4.28 in April 2021 to around 3.53 by September 2023, indicating a slowdown in inventory movement. A moderate improvement is visible near the end of the period, with the ratio rising to 4.15 in December 2024, suggesting a potential recovery in inventory management efficiency.

Receivables Turnover

The receivables turnover ratio shows fluctuations but maintains an overall relatively stable pattern, ranging mostly between 6.0 and 7.2. It peaked at 7.15 in September 2024, reflecting an efficient collection process at that time, but with slight decreases towards the end of the series, indicating variations in accounts receivable management over time.

Payables Turnover

The payables turnover ratio displays moderate variability with a notable increase from 4.79 in April 2021 to around 6.04 in September 2024, suggesting a trend towards faster payments of liabilities. Some fluctuations appear toward the most recent quarters, but the ratio largely remains in the 5.5 to 6.0 range, indicating relatively consistent payments to suppliers.

Working Capital Turnover

Working capital turnover presents significant volatility throughout the periods. It surged unusually in December 2020 to 7.98 and maintained high levels exceeding 8.0 intermittently after 2023. However, intermediate declines with values as low as 2.18 in mid-2023 indicate episodes of less efficient working capital utilization in some quarters, reflecting considerable variability in the operational efficiency.

Average Inventory Processing Period

This metric increased progressively from 85 days in April 2021 to about 104 days in March 2023 and remained elevated near 100 days through the later periods. The lengthening timeframe suggests slower inventory turnover and potential buildup of stock, which may imply challenges in inventory management or sales.

Average Receivable Collection Period

The average time to collect receivables generally improved from 66 days in early 2021 down to a low of 51 days by late 2022, then slightly increased again to the mid-50s days thereafter. This indicates a fairly steady but cautious management of credit collections, maintaining a collection period close to two months.

Operating Cycle

The operating cycle remained relatively stable, fluctuating around 140 to 160 days throughout the analyzed periods. This consistency points to a steady duration from inventory acquisition to cash collection, despite some minor increases mid-period which later normalized.

Average Payables Payment Period

The payable period showed some variation, initially decreasing from 76 days in April 2021 to around 60 days in mid-2024, reflecting quicker payments to suppliers. Some moderation occurred later with increases back to mid-60 days by December 2024, illustrating fluctuating management of supplier payments.

Cash Conversion Cycle

The cash conversion cycle demonstrates considerable oscillation, with figures dipping from 75 days in early 2021 to a low of 63 days in April 2022, then rising again to near 98 days in late 2023. The cycle shortened again towards the end of the period, indicating variability in the net time taken to convert investments in inventory and receivables into cash, and highlighting the challenges in balancing collection and payment processes.

The analysis of the provided quarterly financial data reveals several trends and fluctuations in costs, inventories, and inventory turnover ratios over the observed periods.

Cost of Sales

The cost of sales exhibits notable variability across the quarters. Starting from 1900 million USD in early April 2020, there is a significant increase by July 2020 to 2445 million USD, continuing to rise and peaking near the end of 2021 at 3430 million USD in December 2022. After this peak, the cost of sales shows some oscillations, decreasing substantially in March 2023 to 2287 million USD and then moving through alternating upward and downward trends subsequently. Noteworthy is the decline toward the end of the latest periods, with the figure at 2230 million USD in March 2025, indicating a reduction relative to previous highs.

Inventories

Inventories also follow a fluctuating pattern but with a more gradual increase overall compared to the cost of sales. The figures start at 2575 million USD in April 2020, with minor increases and decreases in subsequent quarters. From the middle of 2021 onward, inventories rise steadily, reaching a notable high of 3383 million USD in March 2023. Following this peak, inventories tend to decline gradually, ending at 2532 million USD by March 2025. This trajectory points to an initial build-up in stocks followed by some destocking or inventory management efforts in the latest periods.

Inventory Turnover Ratio

The inventory turnover ratio provides insight into the efficiency of inventory management relative to sales. Starting in April 2020, this ratio was not provided; however, data from December 2020 onward show an initial stable range around 4.0 to 4.3. During 2022 and early 2023, the ratio declines to a range between 3.5 and 3.8, suggesting a slower turnover of inventory. The latest quarters demonstrate a slight recovery in turnover efficiency, with ratios oscillating near 3.6 to above 4.0 again by the end of 2024 and early 2025. The overall trend suggests variable inventory management performance, potentially influenced by fluctuating sales or supply chain dynamics.

In summary, the cost of sales and inventories both display cyclical increases and decreases, with peak values mostly around late 2022 and early 2023, followed by downward adjustments. The inventory turnover ratio, inversely related to the inventory levels and sales effectiveness, exhibits moderate variability but indicates some improvement toward the latest periods. These patterns may reflect operational adjustments in production, sales demand changes, or responses to external market conditions during the timeframe analyzed.

Sales Trend

The sales figures exhibit a general upward trajectory from April 2020 through December 2021, increasing from approximately 4,343 million US dollars to 8,148 million US dollars. Following a peak in the December 2021 quarter, sales experienced some volatility, with a decline observed in early 2023 quarters, notably dropping to 5,949 million US dollars by March 31, 2023. Thereafter, sales presented some recovery and fluctuations, ultimately reaching 6,538 million US dollars by December 31, 2024, before slightly decreasing to 5,741 million US dollars in March 2025. This pattern suggests periods of growth interrupted by recent declines and moderate recovery phases.

Trade Accounts Receivable Movement

The balance of trade accounts receivable, net of doubtful accounts, shows a generally increasing trend from April 2020 (3,433 million US dollars) through December 2022 (4,918 million US dollars), indicating growth in credit extended to customers. However, following this peak, a declining pattern becomes evident, with values reducing to around 3,506 million US dollars by March 2025. This decline corresponds temporally with the reduction in sales values, suggesting possible tightening of credit management or improved collections in response to lower sales volumes.

Receivables Turnover Ratio Analysis

The receivables turnover ratio exhibits a gradual increase from 5.51 in December 2020, reaching a high point of 7.15 in June 2024. This ratio's upward movement indicates increasing efficiency in collecting receivables over the observed period. The improvements in turnover ratios despite fluctuations in both sales and receivable balances suggest enhanced credit control or faster conversion of receivables to cash over time. The ratio remains relatively stable in the later quarters, reflecting consistent collections efficiency.

Summary Insights

Overall, the data reveal a period of strong sales growth through late 2021, followed by sales volatility and declines starting in 2023. Trade accounts receivable trends align with sales movements, rising initially, peaking in late 2022, and subsequently decreasing. The receivables turnover ratio's progressive improvement throughout the period points to better credit and collection management, which may have mitigated the impact of sales variability on cash flow. The combined analysis of these financial metrics suggests a business adapting to changing sales dynamics with improved receivables management as fiscal conditions evolved.

The analysis of the quarterly financial data reveals distinct trends in cost of sales, trade accounts payable, and payables turnover ratios over the covered periods.

Cost of Sales

The cost of sales shows an overall fluctuating pattern with notable increases and decreases. Initially, from April 2020 to December 2020, there is a clear upward trend, rising from 1,900 million USD to 2,806 million USD. This upward movement continues into 2021, peaking at 3,205 million USD by December 2021. However, in 2022, the cost of sales demonstrates some volatility, with values shifting between approximately 2,983 million and 3,430 million USD. Throughout 2023 and early 2024, the cost of sales declines significantly, reaching lows around 2,287 million USD before experiencing moderate fluctuations around the 2,300 million to 2,626 million USD range. Toward the end of the data range, the cost sees a modest decrease again, ending near 2,230 million USD by March 2025.

Trade Accounts Payable

The trade accounts payable exhibit a dynamic yet generally downward trajectory following an initial increase. Starting at 1,748 million USD in April 2020, the payable values drop slightly before rising to a peak of 2,569 million USD at the end of 2021. After this peak, there is a conspicuous declining trend through 2022 and 2023, with values moving down steadily from around 2,357 million USD to about 1,766 million by late 2023. Into 2024, the levels remain relatively stable but show a modest decrease further, culminating near 1,722 million USD in March 2025.

Payables Turnover Ratio

The payables turnover ratio, reported as quarterly data starting from December 2020, indicates general volatility but a gradual strengthening efficiency in payables management. After an initial ratio of 4.79, there is a rise to a peak of 5.82 in early 2023, indicating quicker turnover of payables relative to cost of sales. Following this peak, the ratio fluctuates within a range of approximately 5.5 to 6.04, with moments of slight improvement and moderation but generally maintaining a high turnover rate compared to earlier periods. The highest observed ratio at 6.04 in late 2024 suggests the company improved its use of payables as a short-term financing source or optimized supplier payment schedules.

In summary, the cost of sales and trade accounts payable saw peaks around late 2021, followed by declines with some volatility thereafter. The payables turnover ratio indicates improved efficiency in managing payables over the last several quarters, reflecting possibly tighter controls or better cash flow management. The combined trends suggest that the company experienced rising operational activity until 2021, after which it adjusted its cost and payables management to maintain operational stability and working capital effectiveness through 2024 and early 2025.

Working Capital

The working capital exhibits significant fluctuations over the reported periods. Initially, it increased from 2,677 million USD in April 2020 to a peak of 8,567 million USD by July 2021. This was followed by a sharp decline to 3,519 million USD in October 2021, maintaining relatively low levels around 3,500 to 5,000 million USD until December 2022. Starting from early 2023, working capital rose considerably again, reaching a high of 11,838 million USD in September 2023 before dropping sharply to 2,699 million USD in March 2025. The pattern suggests episodic surges and declines rather than steady growth or contraction.

Sales

Sales values display a general upward trend from 4,343 million USD in April 2020 to a peak of 8,369 million USD in December 2022, despite some periodic decreases. Notably, there is a decline starting in early 2023, with sales falling from 5,949 million USD in March 2023 to lower levels around 5,700–6,500 million USD toward the end of the period under review. This indicates a reduction in sales momentum after reaching the December 2022 peak.

Working Capital Turnover

The working capital turnover ratio, available from December 2020 onward, exhibits considerable volatility. Initially, it was relatively stable around 3.1 to 3.5 until July 2021 and then sharply increased to 7.98 in October 2021, peaking at 8.73 in September 2024. These high turnover values correspond with periods of lower working capital levels, indicating improved efficiency in how working capital supports sales. However, periods with lower turnover ratios such as 2.18 in December 2023 correspond to high working capital balances, signaling less efficient asset use in those quarters.

Overall Insights

The data indicates a recurring cycle where spikes in working capital precede declines in turnover ratios. High working capital levels do not consistently correlate with increased sales, as sales peaked ahead of the last major rise in working capital. Conversely, high turnover ratios tend to coincide with periods of lowered working capital, suggesting a more efficient use of resources during these times. The fluctuations underline the possibility of inventory adjustments, receivables management, or other working capital components significantly impacting operational efficiency and sales generation.

The inventory turnover ratio displays a downward trend from April 2021 through mid-2023, declining from 4.28 to a low of approximately 3.5, indicating that the frequency of inventory replacement has decreased over this period. However, there is a moderate recovery observed starting from late 2023, with the ratio rising again towards 4.15 by early 2025, suggesting an improvement in inventory efficiency in recent quarters.

Correspondingly, the average inventory processing period shows an inverse pattern to the inventory turnover ratio. Beginning at 85 days in April 2021, the processing period generally extends over time, reaching peaks above 100 days in early to mid-2023. This elongated processing duration implies a slower turnover of inventory during these quarters. Subsequently, a mild reduction in the processing period occurs towards early 2025, aligning with the observed improvement in inventory turnover.

Inventory Turnover Ratio

Exhibits a declining trend from 4.28 to about 3.5 between April 2021 and mid-2023, followed by a gradual rebound to 4.15 by early 2025.

Average Inventory Processing Period

Shows a corresponding increase from 85 days to over 100 days by mid-2023, suggesting slower inventory movement, with a subsequent decrease to 88–96 days approaching 2025.

Overall, the data indicates that inventory management efficiency declined during the period from 2021 to 2023, as evidenced by lower turnover ratios and longer processing periods. More recently, there are signs of operational improvement in inventory handling, potentially reflecting changes in supply chain dynamics, demand patterns, or internal processes aimed at enhancing inventory turnover.

Receivables Turnover Ratio

The receivables turnover ratio shows an overall increasing trend from the first recorded value of 5.51 to a peak of 7.15 in June 2024. This indicates an improvement in the efficiency of collecting receivables over the periods analyzed. There are some fluctuations, with slight decreases observed around March 2023 (6.4) and December 2023 (6.15), but the general direction remains upward. This suggests that the company has been able to manage its credit sales and collections more effectively over time.

Average Receivable Collection Period

The average receivable collection period, expressed in days, demonstrates a decreasing trend initially, dropping from 66 days down to a low of 51 days in December 2022, signifying faster collection of receivables. After this period, the collection days exhibit some variability, increasing slightly to 60 days by December 2023 before decreasing again to 51 days in June 2024. The ending values stabilize around 54 days, reflecting a consistent collection period in recent quarters.

Relationship Between Ratios

The inverse relationship between the receivables turnover ratio and the average collection period is consistent throughout the data. As the turnover ratio improves, the average collection period generally declines, confirming enhanced efficiency in accounts receivable management. Although occasional fluctuations are noted, the overall pattern points to improved liquidity and working capital management related to receivables.

Average Inventory Processing Period

The average inventory processing period demonstrates a moderately fluctuating pattern over the observed quarters. Starting at 85 days in April 2021, it experiences a slight decline to 84 and 85 days in subsequent quarters but then rises to a peak of 104 days in March and September 2023. After reaching this high, there is a mild reduction towards the end of 2023 and early 2024, settling around 96 to 102 days. The final recorded periods show a decrease to 88 days in March 2025, indicating some improvement in inventory turnover towards the end of the timeline.

Average Receivable Collection Period

The average receivable collection period shows a general downward trend from 66 days in April 2021 to 51 days in December 2022, suggesting improved efficiency in collecting receivables over this timeframe. However, post-December 2022 there is a slight increase and more variability, with values fluctuating between 53 and 60 days up to December 2023. In subsequent quarters, the period stabilizes around the mid-50s, maintaining 54 to 54 days through to March 2025, indicating a relatively steady state in receivables collection efficiency in the later periods.

Operating Cycle

The operating cycle, calculated as the sum of the average inventory processing period and average receivable collection period, remains fairly stable with minor fluctuations. It starts at 151 days in April 2021, dips slightly to 141-142 days in mid to late 2021, and then rises steadily to a high of 163 days in September 2023. Following this peak, there is a decline to 142 days in March 2025, suggesting an improvement in the overall operational efficiency, combining inventory management and receivables collection. The pattern reflects a period of rising operational duration until late 2023, followed by a contraction period towards the end of the timeframe.

Payables Turnover Ratio

The payables turnover ratio exhibits a generally stable to slightly increasing trend over the observed periods. Starting at 4.79 in December 2020, it increased steadily to peak at 6.04 in September 2024. This indicates an improving efficiency in management of accounts payable, reflecting a faster rate of paying suppliers. Minor fluctuations are noted, such as a dip to 4.48 in April 2022, but the overall movement is upward through to the end of the data timeline.

Average Payables Payment Period

The average payables payment period shows an inverse pattern consistent with the payables turnover ratio. Beginning at 76 days in December 2020, it decreases steadily to a low of 60 days in September 2024. This reduction in days payable outstanding suggests quicker payments to suppliers over time. The trend is relatively smooth with periodic small rebounds, such as increases from 60 days to 66 days towards March 2025, indicating some variability in payment timing.

Overall Insight

The analyzed data reveals a clear improvement in payables efficiency. The increasing payables turnover ratio alongside a decreasing average payment period aligns with a strategy focused on faster settlement of payables. This may reflect stronger liquidity management or negotiating power with suppliers, contributing positively to the company's operational cash flow management.

Average Inventory Processing Period

The average inventory processing period shows a general upward trend over the observed quarters. Starting from 85 days in early 2021, the period fluctuates slightly but increases notably towards the end of 2022 and into 2023, reaching peaks around 104 days. Subsequently, it slightly declines with some variability but remains elevated near 100 days through to early 2025. This suggests a longer duration for inventory turnover, which could impact working capital efficiency.

Average Receivable Collection Period

The average receivable collection period demonstrates a mild downward trend from approximately 66 days in early 2021 to a range mostly between 51 and 60 days in subsequent periods. The collection period stabilizes around the low 50s in the latest quarters, indicating an improvement or maintenance in the efficiency of collecting receivables compared to the earlier periods.

Average Payables Payment Period

The payables payment period fluctuates moderately across the periods, beginning near 76 days in early 2021, dipping to around the mid-60 days range through 2022 and 2023, and showing slight decreases toward the end of the data set, reaching approximately 60 to 66 days. This indicates a tighter management of payables, with a trend toward quicker payment cycles in recent quarters.

Cash Conversion Cycle

The cash conversion cycle exhibits variability but generally increased from about 75 days at the start of 2021 to a peak near 98 days in 2023, suggesting a lengthening cycle and potential pressures on cash flow. In the latest quarters, there is some decline to the mid-80s range, indicating a modest improvement, though the cycle remains elevated compared to earlier periods. This pattern reflects the combined effect of longer inventory periods, fluctuating receivable collections, and shorter payable periods, impacting overall liquidity management.