Dell Technologies Inc. (NYSE:DELL)

The analysis of the financial activity over the observed periods reveals notable trends in the efficiency of asset management and liquidity management.

Inventory Turnover

The inventory turnover ratio showed a high starting point above 17, peaking during the quarters around late 2023 and early 2024 close to 20.7, reflecting more rapid inventory movement. However, there is a discernible decline after this peak, reaching around 10 to 11 by the later periods in 2025, indicating a slowdown in inventory turnover and suggesting potential buildup or slower sales.

Receivables Turnover

This ratio fluctuated moderately throughout the periods, initially around 8.5 and showing intermittent peaks near 10.5 before the ratio dropped significantly to a low of 6.75 near the final observation. This fluctuating trend suggests variability in the rate of collections from customers, with the recent decline potentially pointing to slower receivables collection or extended credit terms.

Payables Turnover

The payables turnover exhibited a generally stable but slight downward trend from approximately 3.4 to slightly below 3 by 2024, with some variability. This implies a tendency for the company to extend its payment periods to suppliers gradually over time, potentially to conserve cash flow.

Average Inventory Processing Period

This metric inversely correlates with inventory turnover and confirmed the trend of deteriorating inventory efficiency over time. Starting at about 21 days, it increased to roughly 33 to 36 days in the later quarters, reflecting that inventory remains longer before being sold or used.

Average Receivable Collection Period

Receivables turnover patterns are mirrored here, with collection periods increasing from low 40s days initially, dipping below 40 days roughly mid-period, and then extending substantially to a high of 54 days by the end of the observed timeline. This indicates a lengthening period to convert receivables into cash, signaling potential collection challenges.

Operating Cycle

The operating cycle period fluctuated between mid-60s to upper 70s days with notable increases towards the last quarters, peaking at 87 days. This excessive lengthening suggests decreased efficiency in the combined management of inventory and receivables.

Average Payables Payment Period

Conversely, the average payables payment period notably declined from a high above 130 days in mid-periods to roughly 85 days near the early 2023 mark before increasing again to around 125 days towards the end. This variability indicates fluctuating cash outflow management strategies, possibly balancing supplier relations and liquidity needs.

Cash Conversion Cycle

The cash conversion cycle (CCC) remained negative throughout, ranging approximately from -30 to about -54 days. A negative CCC implies the company is receiving cash from customers before it pays its suppliers, which is generally favorable for liquidity. The CCC deepened (more negative) in mid-periods reflecting improved cash flow timing, but this advantage lessened slightly in recent periods.

Overall, the data illustrates a trend of increasing inventory and receivable days, implying some deterioration in asset turnover and collection efficiency. Despite this, the company has managed to keep a negative cash conversion cycle, partly by extending its payable periods strategically. The large fluctuations and recent worsening in some turnover ratios call for close monitoring to ensure operational efficiency and cash flow viability do not deteriorate further.

Cost of Net Revenue

The cost of net revenue exhibited a general upward trend from May 2020 through August 2021, increasing from approximately $15.0 billion to nearly $22.4 billion. Following this peak, a notable decline occurred through mid-2023, reaching a low near $15.9 billion in May 2023. Subsequently, cost levels fluctuated, rising again toward the end of 2024 and early 2025, with a sharp increase in August 2025, peaking at over $24.3 billion. This pattern indicates periods of expansion in operational costs followed by contraction and renewed growth, suggesting variability in business activity or cost management effectiveness over time.

Inventories

Inventory levels demonstrated an overall increasing trajectory from just over $3.6 billion in May 2020 to approximately $7.4 billion by May 2025. There was consistent growth especially between Q4 2020 and early 2022, with inventories rising steadily from approximately $3.4 billion to nearly $6.3 billion. This was followed by a marked decrease in mid-2023 down to roughly $3.4 billion, before inventories again trended upward through 2024 and 2025. The rising inventory balances towards the end of the period may reflect an accumulation of stock potentially linked to anticipated demand increases or supply chain adjustments.

Inventory Turnover Ratio

The inventory turnover ratio, an indicator of how efficiently inventory is managed relative to sales, showed a declining trend over the period. From a high of approximately 20.66 in late 2023, the ratio fell considerably to near 10.16 by mid-2025. This decrease corresponds with the increase in inventory levels and fluctuations in the cost of net revenue, implying that inventory is being held longer before sale or usage, possibly due to slowing sales, overstocking, or supply chain delays. Earlier in the period, turnover ratios were generally higher, indicating more rapid inventory movement during those quarters.

Overall Insights

The combined trends suggest that while operational costs have experienced fluctuations with periods of growth and decline, inventory management has become less efficient as indicated by the falling inventory turnover ratio. The accumulation of inventories alongside decreasing turnover may signal challenges in aligning inventory levels with sales and cost trends. This could point to issues such as demand variability, supply chain constraints, or strategic stockpiling. Monitoring these dynamics is crucial for optimizing working capital and maintaining cost effectiveness going forward.

The financial data indicates several notable patterns and trends in the company’s quarterly performance metrics over the observed periods.

Net Revenue

The net revenue demonstrates a generally fluctuating trend with periods of increase and decrease. Initially, from the beginning of the timeline through early 2022, revenue mainly grows with some volatility. After reaching highs close to 28 billion US dollars, the data shows a modest decline and stabilization around 22 to 25 billion in mid-2023 before surging sharply to nearly 30 billion towards the end of the timeline. This suggests periods of both contraction and expansion, possibly reflecting varying business or market conditions.

Accounts Receivable, Net of Allowance

Accounts receivable values follow a volatile path, with initial steady increases peaking near 14 billion US dollars around late 2021, followed by a reduction in early 2023 to below 10 billion. Subsequently, there is a partial recovery, with another increase reaching over 15 billion by the end of the timeline. This variability in receivables may indicate fluctuations in credit sales or collection efficiency, along with possible changes in customer payment behavior or credit terms.

Receivables Turnover Ratio

The receivables turnover ratio exhibits significant variability, generally oscillating between approximately 7 and 10 times. Higher turnover ratios point to more effective collection processes, while lower ratios suggest slower collections. Noteworthy is a peak exceeding 10 times early in 2023, coinciding with reduced receivables balances, which implies improved efficiency in managing outstanding customer payments during that period. However, the ratio declines sharply toward the end of the timeline, falling to around 6.75, which may signal a slowdown in collections or increased credit risk.

Overall, the analysis reveals that while net revenue experienced growth with some periodic declines, accounts receivable levels and turnover ratios indicate fluctuating efficiency in managing receivables. The volatility in receivables and turnover ratios, especially toward the most recent quarters, could warrant closer monitoring to ensure continued effective credit and collection management practices in relation to the company’s revenue generation.

Cost of Net Revenue

The cost of net revenue exhibits a fluctuating but overall increasing trend over the observed periods. Starting from approximately 15,044 million USD, it rises to a peak around the early 2022 timeframe, with some notable decreases in mid and late 2022. After a dip observed from early to mid-2023, the cost increases significantly by the last recorded periods, reaching up to approximately 24,329 million USD by August 2025. This volatility may reflect changes in operational scale, cost management, or market conditions impacting the company's expenses related to revenue generation.

Accounts Payable

Accounts payable demonstrates a general upward movement across the periods. Initial values around 18,432 million USD increase gradually, with notable rises through 2021 and 2022, peaking near 27,463 million USD by the final period in August 2025. The fluctuations in accounts payable correspond with variations in the company's outstanding obligations towards suppliers and creditors, which could suggest shifts in payment policies, supplier terms, or purchase volumes over time.

Payables Turnover Ratio

The payables turnover ratio shows variability, ranging approximately between 2.80 and 4.28. Early in the period, the ratio begins near 3.43, declining steadily to around 2.80 in late 2021, before increasing sharply to above 4.20 in early 2023. Following this peak, it trends downward again, settling between 2.90 and 3.60 in the most recent periods. These fluctuations indicate changes in how quickly the company is settling its payables relative to its purchases; higher ratios suggest faster payment cycles whereas lower ratios indicate slower payments. The pattern might reflect strategic adjustments in liquidity management or response to market pressures.

Overall Insights

The data indicates that the company has experienced growth in cost-related figures alongside an increase in liabilities such as accounts payable, reflecting scaling operations or cost pressures. The payables turnover ratio's volatility underscores adjustments in payment practices or supplier relationships. Periods of rising cost of net revenue, accompanied by increasing accounts payable, suggest expanding operational demands, while the variations in turnover ratio may signal management's efforts to balance cash flow with supplier commitments. Close monitoring of these trends is advisable to ensure optimal working capital management and maintain financial stability.

Working Capital

The working capital displayed a generally negative value throughout the periods, indicating that current liabilities exceeded current assets consistently. There was a notable worsening from May 2020 (-9,080 million USD) reaching a low point around November 2024 (-14,490 million USD). Despite some fluctuations, the overall trend suggests increasing short-term obligations relative to current assets. In the first half of 2023, the negative working capital slightly improved to around -9,303 million USD but deteriorated again through 2024, reflecting growing liquidity pressures.

Net Revenue

Net revenue showed a positive growth trend over the examined periods, with initial figures around 21,897 million USD in May 2020 expanding gradually to a peak of 29,776 million USD by August 2025. The revenue experienced some cyclical fluctuations, particularly between late 2022 and early 2024 where declines were observed compared to earlier peaks. However, the general trajectory was upward, reflecting possibly stronger sales or market expansion. The revenue increased significantly after the mid-2024 period, indicating improved business conditions or successful strategic initiatives.

Working Capital Turnover

The working capital turnover ratio is not provided, thus no trend or analysis can be made for this metric.

Overall Observations

Despite the company's ability to grow net revenue steadily, the persistent negative working capital suggests potential challenges in meeting short-term liabilities with current assets. The trend toward deeper negative working capital could indicate increased operational or financial risk. This juxtaposition implies that while revenues might be expanding, the financial structure's liquidity may require attention to ensure sustainable operations. The absence of working capital turnover ratios limits further insight into asset efficiency related to working capital management.

Inventory Turnover

The inventory turnover ratio exhibited a generally fluctuating pattern over the analyzed periods. Initially, the ratio hovered around 17.4 to 19.05, indicating a relatively stable turnover rate. From late 2020 through early 2021, the turnover began to decline gradually, reaching a low point near 10.16 by mid-2025. The highest turnover ratios were observed between early 2023 and late 2024, peaking at approximately 20.66 before experiencing a pronounced downtrend. This suggests that the frequency at which inventory was sold and replaced decreased over time, especially in the later quarters, potentially signaling a slower movement of inventory or increased stock levels.

Average Inventory Processing Period

The average inventory processing period, expressed in days, showed an inverse pattern to the inventory turnover ratio, which is consistent with their financial relationship. Initially, processing times remained relatively short, around 19 to 22 days, indicating efficient inventory management. However, starting from late 2021, there was a notable increase in the inventory processing period, peaking at approximately 36 days by mid-2025. This lengthening duration suggests that inventory was held for longer periods before being sold or processed, which aligns with the observed decline in inventory turnover.

Overall Trends and Insights

The analyzed data indicate that the company experienced a period of efficient inventory management in the earlier quarters, with high turnover rates and shorter processing times. However, over time, particularly after early 2023, these metrics shifted unfavorably. The decrease in inventory turnover coupled with a rising average processing time suggests challenges such as slower sales, overstocking, supply chain delays, or shifts in demand patterns. This trend may require attention to optimize inventory strategies and improve turnover to avoid potential negative impacts on liquidity and operational efficiency.

The analysis of the receivables turnover and average receivable collection period over the given quarterly intervals reveals fluctuating trends indicating variations in the efficiency of the company's credit and collection functions.

Receivables Turnover Ratio

The receivables turnover ratio exhibits variability across the periods, starting at 8.53 and declining to 7.86 within the first two quarters. This ratio demonstrates a cyclical pattern, reaching lows around 7.01 and highs close to 10.48. Notably, the highest turnover ratio is observed around May 2024, suggesting a period of enhanced efficiency in collecting receivables. However, the ratio experiences a notable downturn toward the last recorded quarter, dropping to 6.75.

Average Receivable Collection Period

The average collection period generally inversely mirrors the receivables turnover ratio, ranging between 35 and 54 days. Initially, it increases from 43 days to a peak of 50 days in the early quarters, indicating a slower collection process. Subsequently, there is a reduction to approximately 35 days around mid-2023 to early 2024, reflecting improved efficiency in collections. A spike to 54 days in the final quarter analyzed suggests a slowdown in collections, coinciding with the lower turnover ratio.

Overall Insights

Across the observed periods, the data suggest periods of both strengthened and weakened credit management. The oscillations in turnover ratio and collection days indicate that the company’s ability to convert receivables to cash fluctuates, with certain quarters showing effective collection processes while others imply potential issues in receivable management. The recent rise in collection period coupled with the decline in turnover ratio may warrant closer attention to credit policies or market conditions affecting customer payment behavior.

The analysis of key operational efficiency ratios over the reported periods reveals notable fluctuations and trends in inventory management, receivables collection, and overall operating cycle duration.

Average Inventory Processing Period

This metric demonstrates variability with a general upward trend followed by recent increases. Initially maintaining around 20-22 days, it escalated to a peak of 33-36 days in the later periods, indicating slower inventory turnover. The peak periods suggest possible challenges in inventory management or supply chain delays, while intermediate decreases to around 18-20 days indicate periods of improved efficiency.

Average Receivable Collection Period

The collection period shows oscillations without a distinct directional trend but displays notable short-term declines and spikes. Starting in the mid-40s range (days), it dropped briefly to the mid-30s, reflecting improved receivables turnover, but increases back above 50 days in the latest period suggest reduced efficiency in collecting outstanding receivables. Variability in this ratio may reflect changing customer payment behavior or credit policies.

Operating Cycle

The operating cycle, which combines inventory and receivables periods, follows a somewhat cyclical pattern with intermediate peaks and troughs. Initial figures cluster in the mid-60 to low-70 day range, with reductions to mid-50s in certain quarters, indicating periods of enhanced operational efficiency. However, recent data show an extension to as high as 87 days, implying a lengthening of the total time invested in working capital.

Overall, the data suggest that operational processes related to inventory and receivable management have experienced periods of both efficiency gains and setbacks. In particular, the recent elongation of both the inventory period and operating cycle may signal emerging operational challenges that warrant management attention to optimize working capital utilization.

Payables Turnover Ratio

The payables turnover ratio experienced a decline from 3.43 in May 2020 to a low point of 2.80 by October 2021, indicating a slower payment cycle to suppliers during this period. Following this, the ratio improved markedly, reaching a peak of 4.28 in February 2023, which reflects a faster payment rate.

After peaking, the turnover ratio declined again, fluctuating moderately between 2.91 and 3.59 from August 2023 through August 2025, suggesting some variability but generally stabilizing at a somewhat lower turnover rate than the peak was.

Average Payables Payment Period (Days)

The average payables payment period showed an inverse trend relative to the payables turnover. Starting at 107 days in May 2020, it increased steadily to a maximum of 130 days by October 2021, indicating longer delays in payments to suppliers.

Subsequently, this metric declined sharply to a low of 85 days by February 2023, consistent with the faster payables turnover ratio noted during this period. Post-February 2023, the payment period rose again, fluctuating between 86 and 125 days through to August 2025, reflecting a return to more extended payment durations.

Overall Observation

The data reveal a clear inverse relationship between the payables turnover ratio and the average payment period, as is financially expected. The company initially slowed payments, extending payment periods up to late 2021. Thereafter, a strategic shift towards quicker payments is evident through early 2023, followed by a stabilization phase with moderate fluctuations in payment speed.

This pattern may reflect changing cash flow management strategies or responses to economic conditions and supplier negotiations during the observed timeframe.

Average Inventory Processing Period

The average inventory processing period displayed variation over the observed timeframe. It began at 21 days and showed a general increasing trend reaching a peak of 33 days around mid-2024, indicating a lengthening in the time taken to process inventory. However, there were fluctuations including declines to 18 days in late 2023 and early 2024 periods. This suggests intermittent improvements in inventory turnover efficiency, followed by periods of slower processing.

Average Receivable Collection Period

The average receivable collection period demonstrated variability without a consistent trend. Starting at 43 days, it fluctuated between mid-30s to low 50s across different quarters. Notably, the lowest values appeared in mid-2023 (around 35 days), indicating improved collection efficiency. However, toward the end of the data series, there was an increase up to 54 days, implying a slower collection rate and potential challenges in receivable management during that period.

Average Payables Payment Period

The average payables payment period generally remained elevated, ranging mostly between 85 to 130 days. It started at 107 days and exhibited a rising trend peaking at 130 days in late 2021. Subsequently, it decreased to as low as 85 days in early 2023 indicating quicker payment cycles, but then recovered to around the 120-day mark by mid-2024. This pattern suggests a strategic extension and contraction in payment terms with suppliers over time.

Cash Conversion Cycle

The cash conversion cycle was consistently negative throughout the period, ranging from approximately -18 to -54 days. This negative cycle indicates that the company generally receives payments before it needs to pay its suppliers, which is favorable for liquidity. The cycle showed a general improvement trend from early 2022 with the shortest negative cycle (-18 days), followed by fluctuations that mostly kept it between -30 and -50 days. The negative values reflect efficient management of working capital despite some volatility.