General Mills Inc. (NYSE:GIS)

Inventory turnover

The inventory turnover ratio shows fluctuations over the observed period without a clear upward or downward trend. Beginning around 7.4 in August 2014, it experienced minor variances generally staying between approximately 6.3 and 7.8. Though there are some peaks such as 8.12 in November 2015 and troughs near 6.28 in early 2018, the ratio remains relatively stable overall, indicating a consistent frequency of inventory renewals across quarters.

Receivables turnover

The receivables turnover ratio demonstrates a gradual decline over time, starting from around 12.07 in August 2014 and decreasing to approximately 9.47 by November 2019. This trend suggests a lengthening in the average collection period for receivables, implicating a slower conversion of credit sales into cash despite some minor short-term fluctuations.

Payables turnover

A notable decreasing trend is evident in the payables turnover ratio, dropping from about 7.16 in August 2014 to roughly 3.57 in November 2019. This points to an increasing duration in settling payables, implying the company is taking longer to pay its suppliers as time progresses.

Average inventory processing period

The average inventory processing period exhibits variability but generally fluctuates in a range from 45 to 60 days. There are periods of decrease, such as from 60 days in February 2014 to 47 days in August 2015, followed by increases and some oscillations, concluding around 57 days in November 2019. This variability aligns with the steady inventory turnover ratio, showing no significant acceleration or deceleration in inventory turnover times.

Average receivable collection period

Consistent with the declining receivables turnover, the average receivable collection period gradually lengthens, rising from about 30 days in August 2014 to near 39 days towards the end of the period in November 2019. This trend corroborates the indication of slower receivables collections.

Operating cycle

The operating cycle, which sums the inventory processing and receivables collection periods, mirrors their combined effects. It increases from approximately 79 days in August 2014 to a peak near 97 days in mid-2018 before stabilizing in the upper 80s and mid-90s towards the final quarters. This indicates a lengthening operational process required to convert raw materials into cash from sales.

Average payables payment period

The average payables payment period reveals a clear increasing trend over time. Starting at about 51 days in August 2014, it steadily extends to exceed 100 days by November 2019. This elongation of payables settlement suggests a strategy or necessity to defer outflows, potentially affecting cash flow management.

Cash conversion cycle

The cash conversion cycle, which calculates the net days from outlay for inventory to cash collected after receivables, shows a significant decline throughout the period. From about 28 days in August 2014, it drops progressively into negative territory by late 2017 and continues fluctuating near zero or below until the final quarter in November 2019. Negative or near-zero values of this cycle indicate improved liquidity positions by accelerating cash inflows relative to outflows or by extending payable durations.

The cost of sales demonstrates a fluctuating trend throughout the observed periods, with values generally oscillating around the 2.5 to 3.1 billion USD mark. Initial quarters show higher amounts, peaking around November 2013 and November 2014, followed by some decreases and subsequent rises. Notably, there is a visible reduction in cost of sales moving from mid-2015 to mid-2016, with a low point in May 2016. However, the latter periods show recurrent increases and decreases, with no clear long-term upward or downward trajectory established.

Inventories exhibit variability but generally remain within the range of approximately 1.35 billion to 1.9 billion USD. A pattern of decline is notable from August 2013 to February 2016, with some recovery afterward. Inventories peak around November 2014, followed by a significant downward movement towards early 2016. From mid-2016 onwards, inventories fluctuate moderately, with tendencies to increase slightly but without achieving earlier peak levels consistently.

The inventory turnover ratio is available starting from the period ending May 25, 2014. This ratio indicates a moderate cyclic pattern ranging approximately from 6.12 to 8.12. Peaks in inventory turnover ratios occur sporadically, suggesting intermittent improvements in inventory management or sales efficiency. The highest ratio recorded is at February 28, 2016, with a value above 8, indicating a period with efficient inventory turnover. Subsequent values demonstrate some decline and oscillation, reflecting challenges in maintaining consistently high turnover rates.

Cost of Sales

Exhibits cyclical fluctuations with no definitive long-term growth or decline, peaking at specific periods (notably Nov 2013 and Nov 2014), and showing temporary declines in mid-2015 to mid-2016.

Inventories

Show an initial downward trend from 2013 to early 2016, followed by moderate variability with slight increments but not surpassing previous peaks.

Inventory Turnover Ratio

Available from mid-2014, the ratio fluctuates between roughly 6.1 and 8.1, with notable peaks indicating improved inventory efficiency at certain points, but overall exhibiting no sustained increase or decrease.

The financial data reveals several notable patterns in net sales, receivables, and receivables turnover over the reported periods. Overall, the trend in net sales shows fluctuations with a general downward movement in the later years, while receivables present variability with some increase toward the end of the time frame. Receivables turnover exhibits a declining trend, suggesting changes in collection efficiency over time.

Net Sales

Net sales exhibit variability across quarters with peaks and troughs observable at several points. Initial data points show values above 4.3 million US$ thousands, with occasional rises above 4.8 million. From around 2016 onward, net sales tend to stabilize in the range of approximately 3.7 to 4.4 million, but with a slight downward tendency. The lowest sales values occurred during early 2017 and mid-2017, while intermittent recoveries occurred near the end of 2018 and into late 2019.

Receivables

The receivables value fluctuates but generally remains in a range between 1.3 million and 1.7 million US$ thousands. Notably, receivables decreased after the early 2014 period but gradually increased again starting in late 2017 through to the end of 2019. This uptick suggests accumulation or slower collection of receivables in the later periods. Peaks in receivables are evident toward the end of 2018 and 2019, reaching the higher end of the range.

Receivables Turnover Ratio

Receivables turnover ratio data, available from mid-2014 onward, shows a declining trend over the periods. Starting around 12.07 in mid-2014, the ratio decreases steadily, dropping below 10 in 2018 and further fluctuating near the 9 to 10 range into 2019. This decline signifies a slowing rate of accounts receivable collections relative to net sales, indicating a potential deterioration in collection efficiency or changes in credit policies.

In summary, net sales show some volatility with an overall easing in growth in the latter years. Receivables amounts have trended upward more recently, while the receivables turnover ratio has declined, pointing to longer collection periods or reduced efficiency in receivables management. These trends may warrant further analysis on credit terms, customer payment behavior, and revenue generation strategies to optimize working capital and sales performance.

The data reveals several trends in the financial metrics related to cost of sales, accounts payable, and payables turnover over the examined periods.

Cost of Sales

The cost of sales figures exhibit fluctuations across the quarters without a consistent directional trend. Early periods show values ranging between approximately 2,759,700 and 3,114,000 thousand US dollars. Subsequently, the values generally decrease to lower levels around 2,490,000 to 2,750,000 thousand US dollars, with occasional rises such as the peaks in August 2018 and November 2019. This pattern suggests volatility in production or procurement costs, possibly driven by seasonal effects or supply chain factors.

Accounts Payable

Accounts payable amounts steadily increase over the entire period, starting from about 1,425,500 thousand US dollars and rising to more than 3,063,000 thousand US dollars in the latter periods. This upward trend indicates extended credit terms or increased purchasing activity with suppliers. The growth in payables consistently outpaces the fluctuations in cost of sales, suggesting either delayed payments or accumulation of outstanding liabilities.

Payables Turnover

The payables turnover ratio, calculated as the frequency of payment cycles to suppliers, shows a pronounced downward trend from the highest observed values near 7.9 to a low of approximately 3.57. This decline implies longer payment periods, reducing the velocity at which accounts payable are settled. The steady decrease correlates with the rising accounts payable balance, reinforcing the interpretation of prolonged credit terms or slower payment cycles.

Overall, the combination of relatively stable or mildly declining cost of sales and increasing accounts payable alongside a decreasing payables turnover ratio suggests a strategic or operational shift toward extending payment durations. This approach could be aimed at optimizing working capital or managing cash flows more effectively. However, the decline in turnover ratio may also reflect potential stress on supplier relations or liquidity considerations that merit further monitoring.

Analysis of the quarterly financial data indicates several notable trends concerning working capital and net sales from August 2013 through November 2019.

Working Capital

The working capital consistently remained negative throughout the entire period, indicating that current liabilities exceeded current assets each quarter. In absolute terms, the negative working capital values fluctuate significantly but generally show an increasing magnitude of negativity over time. Early in the period, values ranged from approximately -769.7 million US dollars to around -1.1 billion US dollars in late 2013 and 2014. Moving toward 2017 and beyond, there is a marked deepening of negative working capital, with some quarters exceeding -3 billion US dollars, such as May 2018 (-3.22 billion) and November 2018 (-3.06 billion). This trend denotes a deterioration in short-term liquidity or potentially an aggressive management of payables and receivables.

Net Sales

Net sales demonstrate a relatively stable yet somewhat volatile pattern over the observed quarters. Values fluctuate within a range approximately between 3.79 billion US dollars and 4.87 billion US dollars. Sales peaked in the fourth quarter of 2013 (November) at approximately 4.88 billion US dollars. Following this peak, sales exhibit a cyclical quarterly pattern with periodic declines and recoveries, reflecting possible seasonality or market conditions affecting revenue. Notably, sales values in the second half of 2019 rebound strongly to over 4.4 billion US dollars in November 2019, comparable to some of the highest observed sales figures in the timeframe.

Working Capital Turnover

Data for working capital turnover ratio is completely absent across all periods, thus no direct assessment of efficiency in utilizing working capital to generate sales can be performed. This absence limits the ability to relate working capital levels directly to sales performance efficiency.

In summary, the sustained negative working capital suggests a persistent gap between current liabilities and current assets, increasing over time, which could signal liquidity management strategies or operational challenges. Net sales overall maintain a consistent level with expected quarterly variations, without clear long-term growth or decline trends. Without turnover ratio data, a comprehensive evaluation of asset efficiency is constrained.

The inventory turnover ratio demonstrates variability over the observed quarters without a clear consistent upward or downward trend. It initiates near 7.4 in August 2014, declines to around 6.37 by November 2014, and fluctuates subsequently. Notably, peaks close to 8.12 are reached in May 2016, indicating periods of improved turnover efficiency, followed by declines to values near 6.28 towards February 2018 and again near the end of the series in late 2019. This pattern suggests periodic shifts in inventory management effectiveness or demand fluctuations across different quarters.

The average inventory processing period, measured in number of days, inversely corresponds to shifts in the inventory turnover ratio. Initially around 49 days in August 2014, the processing period increases up to 60 days by February 2015, which aligns with a lower turnover ratio observed during the same timeframe. Following this, the processing period generally ranges between approximately 45 and 58 days, with shorter processing periods coinciding with higher turnover ratios and longer periods coinciding with lower turnover ratios.

Inventory Turnover Ratio

Exhibits fluctuations between roughly 6.1 and 8.1 across the quarters, indicative of variable inventory movement efficiency over time without persistent trend direction.

Average Inventory Processing Period

Varies between 45 and 60 days, reflecting alternate periods of quicker and slower inventory processing. The inverse relationship with turnover ratio is consistent with standard inventory management principles.

In summary, the data suggests that inventory management effectiveness experiences periodic changes, likely influenced by operational or market conditions. Efficiency peaks are interspersed with declines, showing neither prolonged deterioration nor sustained improvement but rather cyclical movement within a moderate range. Monitoring the causes of these fluctuations could yield opportunities to stabilize or improve inventory turnover performance.

The analysis of the receivables turnover ratio over the observed periods reveals a generally declining trend. Starting from a peak value of 12.07, the ratio decreases gradually across the quarters, reaching values below 10 in the later periods. This declining pattern indicates that the frequency at which the company collects its receivables has slowed down over time.

Correspondingly, the average receivable collection period, measured in days, follows an opposite yet complementary trend. It begins around 30 days in early periods and gradually increases, peaking at 39 days in the most recent periods. This increase in days suggests that it is taking longer for the company to collect payments from its customers.

Receivables Turnover Ratio

Initially stable and high around 12, the turnover ratio decreases gradually to below 10, indicating a reduction in the efficiency of receivables collection.

Average Receivable Collection Period

Starting at approximately 30 days, the collection period extends steadily, reaching up to 39 days, which points to longer credit periods or slower customer payments.

The inverse relationship between the two metrics is consistent with typical financial dynamics, where lower turnover ratios coincide with higher collection periods. This shift may imply a change in credit policies, a shift in customer payment behavior, or potential challenges in collection processes. It is advisable to further investigate underlying causes to assess the impact on cash flow and working capital management.

The analysis reveals several temporal trends across the key financial timing metrics of the company.

Average Inventory Processing Period

Data begins from the August 2014 period, showing noticeable fluctuations in the number of days held. The period initially increases significantly from 49 to 60 days within a year, suggesting slower inventory turnover. Subsequently, there is a decline to 45 days in early 2016, indicating improved efficiency in inventory management. From mid-2016 onwards, the period stabilizes mostly in the mid-50s range, with some variance between 51 and 58 days towards the end of the sequence. This pattern indicates a relatively consistent inventory processing time with seasonal or operational fluctuations.

Average Receivable Collection Period

Starting similarly in August 2014, the collection period trends upward from 30 days to a peak of 39 days by late 2018. The increase suggests a lengthening time to collect receivables, potentially impacting cash flow. The period remains elevated around the high 30s in the later dates, indicating a persistently longer collection cycle than at the outset. This trend points to possible changes in customer payment behavior or credit policies.

Operating Cycle

The operating cycle, which combines inventory and receivable periods, follows a pattern consistent with the component metrics. Beginning at 79 days, it rises to a high of 97 days in several later periods. The operating cycle peaks notably in late 2018 and early 2019, implying increased capital tie-up duration in working capital components. Despite some minor reductions, the cycle remains elevated compared to its initial values, signaling a lengthening cash conversion period over time.

Overall, the data suggests an upward trend in the duration of both inventory holding and receivable collection periods over the years analyzed, culminating in a longer operating cycle. These changes may reflect shifts in operational efficiency, market conditions, or credit management strategies. The extension in the operating cycle could have implications on liquidity and working capital requirements.

Over the observed periods, the payables turnover ratio exhibits a consistent declining trend. Initially, the ratio is recorded near 7.16 and fluctuates mildly through the earlier periods, maintaining values close to 7.0 to 6.3. However, starting from the May 29, 2016 period, the ratio drops more noticeably and continues to decrease steadily, reaching a low of 3.57 by November 24, 2019. This suggests that the rate at which the company pays off its suppliers has slowed significantly over time.

Corresponding to the decline in the payables turnover ratio, the average payables payment period shows a clear increasing pattern. Beginning around a range of 51 to 57 days for the periods where initial data is available, the number of days gradually extends over the years. By the latest periods ending in 2019, the average payment period extends to over 90 days, peaking at 102 days in the final observation.

Payables Turnover Ratio

Shows a downward trajectory from approximately 7.16 to 3.57, indicating slower payments to creditors.

Average Payables Payment Period

Increases from roughly 50-70 days initially to more than 90 days, reaching 102 days, signifying that the company is taking longer to settle its payables.

The inverse relationship between these two metrics is consistent with financial theory: as the payment period lengthens, the turnover ratio correspondingly declines. This trend could imply a strategic shift to extended credit terms from suppliers or potential cash flow management considerations. Such a change may allow the company to hold onto cash longer, but it also could affect supplier relations or creditworthiness if extended excessively.

Overall, the data reflect a significant elongation in the payment cycle over the analyzed periods, indicating a meaningful change in the company's working capital management practices concerning payables.

The analysis of the financial periods from August 2013 to November 2019 reveals several notable trends in key working capital metrics including inventory processing, receivable collection, payables payment periods, and the cash conversion cycle.

Average Inventory Processing Period

The average inventory processing period shows fluctuations throughout the observed quarters. Beginning near 49 days in mid-2014, it rises to approximately 60 days in early 2015 before declining to low 40s between mid-2015 and early 2016. Subsequently, it stabilizes and then trends upward to the mid-50 day range by late 2016 through 2017. Throughout 2018 and 2019, the period maintains around high 50s to low 50s days, indicating a moderate increase from earlier periods and a fairly consistent inventory turnover timeframe in the later years.

Average Receivable Collection Period

The receivable collection days demonstrate a mild but steady upward trend over the full period. Starting near 30 days in mid-2014, it gradually increases to the mid-30s range by 2017, moving up to near 39 days by late 2018 and maintaining roughly that level into 2019. This indicates that the company is taking slightly longer to collect receivables over time, suggesting possible changes in credit terms or collection efficiency.

Average Payables Payment Period

The payables payment period exhibits a clear upward trend. From approximately 51 days in mid-2014, this metric rises significantly, reaching roughly 70 days around mid-2016 and continuing to climb steadily to exceed 90 days by late 2018 and early 2019. By the end of the period analyzed, the figure is around 102 days, which reflects a notable extension in the time the company takes to pay its suppliers, possibly indicating improved supplier financing or changes in payment policies.

Cash Conversion Cycle

The cash conversion cycle (CCC) shows a marked downward trend, improving from a positive 28 days in mid-2014 to approaching zero and then negative figures from about 2017 onwards. Several quarters exhibit negative CCC values, particularly in late 2017 through 2019, with the lowest near -7 days. This trend suggests enhanced cash flow efficiency, as the company is able to free cash faster by effectively managing inventory, receivables, and payables. The negative cycle implies that payables are being utilized to finance receivables and inventory positions effectively, reducing the company's need for working capital investment.