EMC Corp. (NYSE:EMC)

The analysis of the financial turnover ratios and cycle periods over the observed periods reveals several noteworthy trends and patterns.

Inventory Turnover Ratio

The inventory turnover ratio fluctuated moderately, starting at 7.65 and reaching a peak of 7.84 in the third quarter of 2015 before slightly declining toward the mid-2016 period. This suggests a generally stable efficiency in managing inventory levels, with a slight improvement noted towards the later periods.

Receivables Turnover Ratio

The receivables turnover ratio showed inconsistency, with values oscillating between approximately 5.54 and 8.49. High volatility was observed, with a notable dip in the last quarter of 2014, followed by recovery. This pattern implies variations in the company's effectiveness in collecting receivables over time.

Payables Turnover Ratio

The payables turnover ratio exhibited variable performance, ranging from a low of around 5.42 in late 2014 to a high near 9.3 in mid-2016. The fluctuation suggests varying management of payment obligations, with some periods reflecting longer payment delays and others more rapid payments to suppliers.

Working Capital Turnover Ratio

The working capital turnover ratio displayed considerable volatility with sharp declines and recoveries. It fell notably in mid-2013 and again showed an increase toward late 2015, followed by a downward trend into mid-2016. This volatility indicates changes in how efficiently the company utilized its working capital to generate sales.

Average Inventory Processing Period

The average inventory processing period gradually lengthened from 48 days to approximately 60 days by the end of 2013, implying slower inventory movement. However, a reversal began with a steady reduction to 47–48 days by mid-2016, suggesting improved inventory management and faster turnover in recent periods.

Average Receivable Collection Period

This period showed fluctuations within a range of approximately 43 to 66 days. Peaks in collection periods, such as around late 2014 and early 2016, indicate temporary slowdowns in cash collection, while improvements in other quarters suggest efforts to expedite receivables management.

Operating Cycle

The operating cycle lengthened from 95 days to a high near 117 days by the end of 2012 and into 2014, reflecting slower cash conversion. Subsequent reductions brought the cycle back to around 91 days by mid-2016, denoting enhanced operational efficiency in turning inventory and receivables into cash.

Average Payables Payment Period

The payables payment period varied between 39 and 67 days, with increases during some quarters, such as late 2014 and early 2016, implying deliberate extension of payment terms or delayed payments to suppliers. Shorter payment periods in other quarters may reflect strategic shifts in cash management.

Cash Conversion Cycle

The cash conversion cycle fluctuated between a low of 44 days and a high of 65 days, showing a general pattern of reduction in the later periods. This trend indicates an overall improvement in managing the time between cash outflows and inflows, enhancing liquidity and operational cash efficiency.

Overall, the data suggests a company experiencing periodic challenges in efficiently managing receivables, payables, and working capital, but with a general trend toward improved operational cycles and inventory management by mid-2016. The fluctuations in various turnover ratios reflect strategic adjustments likely influenced by changing market conditions and internal policies aimed at optimizing cash flows and operational efficiency.

The financial data exhibits several notable trends over the observed periods. Cost of revenues demonstrates a generally increasing pattern with periodic fluctuations. From early 2012 until the end of 2013, the cost shows a rising trajectory, peaking near the end of 2013. Although there is some variability, this trend of increase is evident across multiple quarters. Beginning in 2014, the cost continues to fluctuate but remains at elevated levels compared to earlier periods, reaching notable highs at several points through mid-2016.

Inventories reveal a gradual upward trend from March 2012 through the end of 2013, indicating accumulation or holding of more inventory. After peaking near late 2013, inventory levels experience some decline but stabilize afterward, maintaining a relatively consistent range from early 2014 through mid-2016. This stability suggests efforts to control inventory levels more effectively or changes in operational dynamics.

The inventory turnover ratio reflects the efficiency with which the company manages inventory relative to sales. Initially, the ratio shows a decline from around 7.65 in early 2012 to approximately 6.13 by late 2013, indicating slower inventory movement relative to revenues during that period. However, starting from late 2013 and continuing through 2015, the ratio improves considerably, rising above 7.8, which suggests enhanced inventory management and faster turnover. The ratio stabilizes slightly below this peak in early to mid-2016, maintaining relatively high efficiency compared to earlier periods.

Cost of Revenues

Generally increasing trend with fluctuations; peaks at the end of 2013 and remains elevated through mid-2016.

Inventories

Gradual increase up to late 2013, slight decrease thereafter, followed by stabilization from 2014 onward.

Inventory Turnover Ratio

Declined between 2012 and 2013, indicating slower inventory movement; significant improvement and stabilization above prior levels from late 2013 through mid-2016.

In summary, the data indicates that while cost of revenues has generally increased, the company has managed to improve its inventory turnover efficiency significantly after 2013. The stabilization of inventory levels alongside improved turnover suggests enhanced operational controls and potentially better alignment of inventory with sales trends.

The quarterly financial data reveals fluctuations and some notable trends in the company's revenues, accounts receivable, and receivables turnover ratios over the observed periods.

Revenues

Revenues exhibit a generally cyclical pattern, with recurring peaks mostly observed in the fourth quarters of each year. For instance, higher revenue figures are recorded in December 2012 (6030 million USD), December 2013 (6682 million USD), December 2014 (7049 million USD), and December 2015 (7015 million USD). There are periodic dips following these peak quarters, often in the first or second quarters of the subsequent years. Over the span from March 2012 to June 2016, revenues seem to maintain an overall stable level with some growth before strong seasonal increases at year-end.

Accounts and Notes Receivable, Net of Allowances

The accounts receivable balances follow an upward trend, generally rising within each calendar year and peaking towards year-end. These balances increase from approximately 2,662 million USD in March 2012 to a notable high of 4,413 million USD by December 2014. While there are some reductions in the earliest quarters of subsequent years, the overall longer-term trend suggests growth in outstanding receivables. This may reflect expanded sales on credit or changes in collection practices.

Receivables Turnover Ratio

The receivables turnover ratio displays considerable variability over the periods, fluctuating between a low around 5.54 and a high exceeding 8.4. Generally, higher turnover ratios correspond with lower accounts receivable balances and signify more effective collection of receivables. Conversely, turnover ratios tend to dip in quarters where receivables spike, such as in December 2014, where the ratio reaches 5.54 against the highest receivables balance. The fluctuations suggest periods of changing efficiency in receivable collections, potentially influenced by seasonality or altered credit terms.

In summary, the analysis reveals a pattern of seasonal revenue increases toward year-end, accompanied by corresponding rises in accounts receivable balances. The receivables turnover ratio inversely mirrors these movements, indicating that when receivables are high, the company’s collections slow down and vice versa. Over the examined timeframe, the trend in revenues is relatively stable with seasonal peaks, while receivables generally increase, possibly signaling extended credit or growing sales volume. The dynamics of receivables turnover imply fluctuating efficiency in collections, which could warrant ongoing monitoring to manage cash flow optimally.

The financial data reveals several notable trends in the company's cost of revenues, accounts payable, and payables turnover over the examined periods.

Cost of Revenues

The cost of revenues demonstrates fluctuation but a general upward trend across the quarters. Starting from approximately 1.98 billion USD in March 2012, the figure sees periodic increases and decreases but ultimately reaches a peak near 2.65 billion USD by December 2015. Notably, there are significant spikes in certain quarters, such as December 2012, December 2013, and December 2014, indicating potential seasonality or end-of-year cost increments. After peaking in late 2015, there is a decline in the first two quarters of 2016 yet the values remain elevated compared to earlier years.

Accounts Payable

Accounts payable also fluctuates throughout the timeline, with values generally ranging between 880 million USD and 1.7 billion USD. There are multiple peaks, particularly in December 2013, December 2014, and December 2015, which align with the peaks in cost of revenues, suggesting synchronized increases in payables with rising costs. The data indicates considerable volatility, especially towards the end of most years, with some quarters experiencing sharp increases, such as the jump to approximately 1.7 billion USD in December 2014. The first half of 2016 shows a moderate rise in accounts payable after a lower value in March 2016.

Payables Turnover Ratio

The payables turnover ratio, which measures the frequency of payment to suppliers, shows a declining trend from 8.57 in March 2012 to some of its lowest points near 5.4 to 6.1 in the years 2013 and 2015, particularly in the fourth quarters. This suggests slower payment patterns or increased payables outstanding during these periods. However, at some points, such as June 2016, the payables turnover ratio rises to 9.3, indicating faster payments or improved payables management. Overall, the ratio exhibits substantial volatility, reflecting changes in operational or financial strategies that impact supplier payment cycles.

In summary, the company’s cost of revenues and accounts payable generally trend upward with noticeable seasonal or cyclical peaks towards the end of each year. The payables turnover ratio varies inversely with accounts payable levels at times, indicating fluctuating payment timings. These patterns could reflect operational adjustments, seasonal factors, or variations in supplier payment practices over the periods analyzed.

The analysis of the quarterly financial data reveals several noteworthy trends in working capital, revenues, and working capital turnover over the observed periods.

Working Capital

Working capital exhibits notable fluctuations throughout the periods. Initially, there is a decline from 2,413 million US dollars in March 2012 to a low of 1,443 million in September 2012, followed by an increase, peaking significantly at 6,665 million in June 2013. Subsequently, working capital trends downward until it stabilizes with moderate fluctuations around 4,000–5,000 million in 2014. A decline occurs again in early 2015, dropping to approximately 1,400 million by September 2015. From late 2015 onward, working capital shows a recovery trend, rising back to over 5,000 million by June 2016.

Revenues

Revenues generally display a pattern of growth over the course of the timeline, with certain periods of volatility. Revenues start at 5,094 million US dollars in March 2012 and fluctuate moderately until a more pronounced increase occurs toward the end of 2012 and early 2013. A steady rise is apparent through 2013, reaching values above 6,000 million in December of that year. Most quarters in 2014 and 2015 maintain values close to or exceeding 6,000 million, with a peak of 7,015 million in December 2015. Revenues slightly decrease in the first half of 2016 but remain above 5,400 million.

Working Capital Turnover

The working capital turnover ratio shows an inverse relationship in some periods relative to working capital levels. Initially, the ratio rises from 8.49 in March 2012 to a high of 14.74 in September 2012, reflecting increased efficiency in using working capital relative to revenues as working capital decreased. This ratio then declines sharply to 3.35 by June 2013 at the time of peak working capital. Post mid-2013, a gradual increase is noted through 2014, reaching above 6.0. The ratio peaks again at 17.35 in September 2015, coinciding with the working capital trough, indicating a significant increase in efficiency or potentially lower investment in working capital relative to revenues. Following that point, the ratio declines notably, ending around 4.78 in June 2016.

Overall, the data suggest periods of both increased liquidity and investment in working capital and phases of intensified revenue generation efficiency. The inverse movements between working capital and its turnover suggest operational adjustments impacting capital management and possibly sales strategies. The revenue growth trend, despite some short-term declines, indicates a generally expanding business activity over the period analyzed.

The analysis of the inventory turnover ratio and the average inventory processing period over the observed quarterly periods reveals discernible trends and fluctuations that provide insights into inventory management efficiency.

Inventory Turnover Ratio

The inventory turnover ratio shows a gradual decline from 7.65 in March 2012 to a low around 6.13 in September 2013, indicating a slowing in the frequency with which inventory is sold and replaced during this period. Following this trough, there is a recovery trend as the ratio increases steadily from late 2013 through mid-2016, reaching 7.83 by March 2016 and slightly decreasing to 7.66 by June 2016. This pattern suggests an initial decrease in operational efficiency or sales relative to inventory levels, followed by an improvement in inventory turnover rates, reflecting enhanced inventory management or stronger sales performance in the latter periods.

Average Inventory Processing Period

The average inventory processing period exhibits an inverse pattern relative to the inventory turnover ratio, as expected due to their mathematical relationship. Starting at 48 days in March 2012, it gradually increases to a peak of 60 days in September 2013. This lengthening of the processing period implies that inventory remains in stock longer, which may point to slower sales or inefficiencies in inventory movement during this timeframe.

After this peak, the period shortens consistently, reaching a low of 47 days by December 2015, a level that is maintained through mid-2016. The reduction in days indicates that inventory is turned over more quickly, which aligns with the improving turnover ratio seen in the same period, suggesting a return to more effective inventory management and a potential increase in sales velocity.

Overall, the observed data indicates a transitional phase within the company's inventory management performance over the analyzed timeframe, characterized by a temporary decline in turnover efficiency followed by a recovery and stabilization at improved levels. These trends may be reflective of operational adjustments, market conditions, or strategic initiatives impacting inventory control and sales throughput.

The analysis of the receivables turnover ratio over the observed periods reveals a fluctuating but generally stable trend with some moderate variation. Starting at 7.7 in March 2012, the ratio experienced a gradual decline through December 2012, reaching a low point near 6.01 in December 2013. After this, there was a recovery phase with the ratio increasing and showing some peaks above 8.0, particularly in March 2015, March 2016, and June 2016, indicating periods of improved efficiency in receivables management.

Corresponding to these fluctuations in the turnover ratio, the average receivable collection period displays an inverse pattern, as expected given the relationship between these metrics. Initially starting around 47 days in March 2012, the collection period lengthened to approximately 61 days by the end of 2013. Subsequently, a decrease to the mid-40s and below 50 days was observed in most quarters of 2015 and 2016, reflecting quicker collection times during these periods.

Receivables Turnover Ratio Trends

There is an oscillation around the mid-to-high 7 range with inflection points indicating temporary declines and recoveries. The lowest ratio was observed in December 2013 (6.01), while the highest level appears in the first and second quarters of 2016, reaching above 8.3.

Average Receivable Collection Period Trends

The collection period inversely tracks the turnover ratio, increasing up to 66 days in December 2014 and then improving significantly in subsequent periods. The shortest collection times occur in 2016, with values as low as 43 days.

Relationship between Metrics

The inverse relationship between receivables turnover and collection period is maintained consistently, indicating coherent financial management in receivables. When the turnover ratio declines, collection days increase, suggesting slower cash inflows from receivables, and vice versa.

Overall Insights

The data reflects periodic challenges in receivables management, especially in late 2013 and 2014, where turnover ratios dipped and collection periods lengthened significantly. However, the subsequent recovery in 2015 and 2016 suggests improved credit control and possibly more effective collection policies or a change in sales dynamics. The ability to reduce average collection days below 45 in some quarters of 2016 indicates a strengthened liquidity position with respect to accounts receivable.

The analysis of the quarterly financial data reveals several key trends in the company's inventory, receivable collection, and overall operating cycle over the observed periods.

Average Inventory Processing Period

The average inventory processing period generally fluctuated between 47 and 60 days. Initially, it showed a gradual increase from 48 days in early 2012 to a peak of 60 days by the third quarter of 2013, indicating slower inventory turnover during this period. However, from late 2013 onwards, there is a noticeable decline in this metric, reaching a lower level of 47 days in mid to late 2015 and maintaining stability around that figure through mid-2016. This suggests an improvement in inventory management efficiency in the latter part of the analyzed timeline.

Average Receivable Collection Period

The average receivable collection period showed greater variability over the analyzed quarters. Starting from 47 days in early 2012, it peaked at 61 days by the fourth quarter of 2012, indicating lengthier customer payment periods. Subsequently, this metric fluctuated between the mid-40s and mid-60s days across the quarters, with notable spikes to 66 days in late 2014 and elevated levels around 59 days in late 2015. Despite the fluctuations, near the end of the period the collection period declines to 44 days by mid-2016, reflecting a positive trend in receivables management and improved cash collection efficiency.

Operating Cycle

The operating cycle, which combines the inventory processing and receivable collection periods, mirrors the patterns observed in the individual components. It increased from 95 days in early 2012 to a peak of 117 days in the fourth quarter of 2012 and again in late 2014, indicating extended time to convert resources into cash during these intervals. Thereafter, a reduction trend is apparent as the operating cycle decreased to 91 days by mid-2016, underscoring enhanced overall working capital management and operational efficiency in the latest periods.

In summary, the data points to a period of operational challenges with longer inventory and receivable cycles up to 2013-2014, followed by measurable improvements in both inventory turnover and receivables collection efficiency. These improvements have contributed to a shortening of the overall operating cycle, which is favorable for cash flow and liquidity management.

Payables Turnover Ratio

The payables turnover ratio exhibited fluctuations across the observed periods, with values generally ranging between approximately 5.4 and 9.3. Initial readings near 8.5 were followed by some declines, notably in December 2013 and December 2014, where the ratio reached lows of 6.1 and 5.42 respectively. Recoveries were seen following these dips, with a peak of 9.3 recorded in March 2016. This pattern indicates varying efficiency in payables management over time, with intervals of slower turnover suggesting delays or extended payment terms.

Average Payables Payment Period

The average payables payment period showed an inverse pattern to the turnover ratio, as expected. The number of days typically ranged from the high 30s to the mid-60s. Periods with lower turnover ratios correspond to longer payment periods, such as December 2013 (60 days) and December 2014 (67 days). The shortest payment periods, around 39-42 days, appeared in March 2016 and other select quarters. Overall, the data reflects oscillations between faster and slower payment cycles, with no sustained trend towards consistently shorter or longer payment periods.

Summary Insights

The relationship between payables turnover and payment periods remained consistent, with inverse movements confirming standard financial behavior. The company experienced variability in its payables management, with some quarters reflecting efficient payment processing and others indicating extended payment timelines. No clear linear improvement or deterioration trend emerged, suggesting that external factors or operational changes might have influenced the observed fluctuations in payables activity over the reviewed timeframe.

The financial data reveals several noteworthy trends in the company's operational efficiency over the analyzed periods.

Average Inventory Processing Period

This metric generally exhibited moderate fluctuations but with a slight declining trend in the latter periods. Starting at 48 days in early 2012, the period increased to a peak of 60 days by September 2013, indicating slower inventory turnover during this interval. Subsequently, the processing period decreased steadily to 47-48 days by mid-2016, suggesting an improvement in inventory management and turnover efficiency.

Average Receivable Collection Period

The receivable collection period showed a pattern of volatility throughout the timeline. It ranged between 43 to 66 days, with a notable peak of 66 days at the end of 2014, reflecting slower collections. After this peak, the collection period generally shortened, reaching its lowest values of 43-44 days in the mid-2016 quarters. This implies enhanced effectiveness in collecting receivables in recent periods compared to earlier ones.

Average Payables Payment Period

This period demonstrated high variability, ranging from 39 to 67 days. There was a marked increase towards the end of 2014, peaking at 67 days, which might indicate a strategic delay in payments to suppliers. Following this peak, the payment period decreased but remained somewhat elevated compared to the earliest periods, fluctuating around the low 40s to low 60s range, indicating inconsistent payment practices.

Cash Conversion Cycle

The cash conversion cycle (CCC) largely mirrored the trends in inventory, receivables, and payables periods. It increased from 52 days in early 2012 to a peak of 65 days by the end of 2012, indicating an elongation in the time taken to convert resources into cash. After fluctuating through subsequent periods, the CCC demonstrated a declining trend from the beginning of 2015, tapering down to 44-47 days by mid-2016. This reduction suggests improved overall cash flow efficiency during the recent periods.

Overall, the data indicates that while the company experienced fluctuating efficiency in managing inventory, receivables, and payables over the years, there is discernible improvement in operational efficiency and cash flow management in the most recent quarters analyzed. The decline in both the average processing periods and the cash conversion cycle towards mid-2016 points to better working capital management and a stronger cash conversion process.