Home Depot Inc. (NYSE:HD)

The financial ratios and periods reflect notable fluctuations and trends over the observed quarters.

Inventory Turnover

This ratio exhibits moderate volatility, initially improving from 4.93 to a peak of 5.83, followed by a gradual decline that reaches a low near 3.96. Subsequently, it recovers slightly to oscillate around the 4.2 to 4.85 range before settling just above 4.2 towards the last periods. This pattern suggests fluctuations in inventory management efficiency, with periods of faster and slower inventory turnover.

Receivables Turnover

Receivables turnover displays significant variation, beginning with high levels near 52.34, then declining sharply to a low around 26.74 in the latest period. Intermediate values oscillate between the upper 30s and mid-40s. The downward trend indicates a lengthening of the time customers take to pay, reflecting potential changes in credit policies or customer payment behavior.

Payables Turnover

This ratio shows a downward trend from a high of about 9.33 early in the dataset to levels generally fluctuating between 6.4 and 8.9. The turnover temporarily peaks again above 9 before retreating below 8 towards the end. These changes imply variability in how quickly the company pays its suppliers, with occasional acceleration in payment pace but a general tendency toward slower payables turnover.

Working Capital Turnover

Exhibiting substantial volatility, this ratio swings dramatically from an initial 76.81 down to lows near 13.79, then spikes significantly to a high of 417.56 before falling back to a lower level. The subsequent period data show continued fluctuations in the range of 15 to 55. Such swings suggest inconsistent efficiency in utilizing working capital relative to sales, possibly impacted by extraordinary items or operational shifts.

Average Inventory Processing Period

The duration for inventory processing lengthens over the timeline, starting around 63-74 days, then rising steadily to a peak near 91-92 days, before slightly improving to mid-80s days in the most recent quarters. This trend indicates a gradual increase in inventory turnover time, which may point to slower-moving stock or changes in inventory strategies.

Average Receivable Collection Period

The collection period for receivables stabilizes around 8 to 9 days initially, with intermittent increases reaching up to 13-14 days in later periods. These increments align with the declining receivables turnover ratio, signifying a lengthening in collection times and potential impacts on cash flow.

Operating Cycle

The operating cycle broadly follows the trends in inventory and receivables periods, fluctuating between approximately 70 and 100 days. It peaks around the periods with the longest average inventory and receivable durations, indicating the combined impact of changes in both inventory management and receivables collection on the overall cash-to-cash cycle.

Average Payables Payment Period

The payment period to suppliers shows a fluctuating but generally upward trend early on, rising from around 39 to above 57 days, then reducing to mid-40s before varying in the 40-day range toward the end. These shifts suggest changes in the company's payment management, possibly leveraging longer payables days to optimize working capital.

Cash Conversion Cycle

The cash conversion cycle demonstrates variation from an initial high of 41 days down to around 17 days, then rising steadily again to near 50-56 days. The cycle's fluctuations mirror the combined effect of inventory, receivables, and payables timing, reflecting oscillations in the net time cash is tied up in operations.

Overall, the financial data display significant variability across key working capital management metrics. Inventory processing and receivables collection periods tend to lengthen over time, indicating slower turnover and cash recovery. Payables payment periods fluctuate, suggesting varying strategies in supplier payments. These dynamics collectively influence the cash conversion cycle, which experiences both contraction and expansion phases, highlighting the evolving efficiency and operational cash flow management during the periods analyzed.

Cost of sales

The cost of sales exhibited notable fluctuations over the reported quarters. Beginning at approximately $17.4 billion in May 2019, the figure increased to a peak of about $29.3 billion by July 2022. Subsequently, there was a general decline and stabilization around the $26 billion to $28 billion range toward the end of 2024. This pattern suggests periods of increased sales activity or rising input costs, followed by a settling phase.

Merchandise inventories

Merchandise inventories displayed a rising trend throughout the period. Starting near $15.5 billion in May 2019, inventories increased steadily, reaching a maximum of roughly $26 billion in May 2025. Some short-term decreases and plateaus can be observed, but the overall progression indicates inventory accumulation or strategic stockpiling, possibly in response to anticipated demand or supply chain considerations.

Inventory turnover ratio

The inventory turnover ratio showed variations across the quarters with values ranging between approximately 3.96 and 5.83. Early data from 2019 is unavailable; however, starting from the end of 2019 through early 2020, the turnover ratio was near 5, indicating relatively efficient inventory management. From early 2021 onwards, the ratio gradually decreased to around 4 or below by mid-2022, signaling slower turnover. Subsequently, there was a moderate recovery with ratios rising back to around 4.5 by early 2025. This pattern may reflect operational adjustments in managing inventory levels relative to sales.

Overall insights

The data reveals a general increase in both cost of sales and inventory levels over the examined time frame, suggesting growth in scale or expansion of the business. The inventory turnover ratio's decline during mid-period indicates potential challenges in converting inventory to sales as quickly as previously, possibly due to external factors or changes in demand dynamics. The partial recovery in turnover ratios toward the end of the period might reflect improved operational efficiency or adjustments to inventory management strategies. The interplay between increasing inventories and fluctuating turnover highlights the importance of monitoring stock levels and sales velocity to optimize working capital and profitability.

The analysis of the quarterly financial data reveals several notable trends and patterns over the considered periods.

Net Sales

Net sales exhibit a fluctuating pattern throughout the observed quarters. Starting from approximately 26.4 billion USD in May 2019, there is a generally increasing trend with some volatility. A significant peak occurs around August 2020 with sales reaching over 38 billion USD, followed by various fluctuations. The sales peak again near 43 billion USD in July 2022 and October 2024. Despite periodic declines, the data shows a tendency towards higher sales figures over the entire period, suggesting overall growth with seasonal or cyclical variations.

Receivables, net

Receivables show an increasing trend from about 2.3 billion USD in May 2019 to more than 5.8 billion USD by October 2024. This increase is generally steady, with occasional small declines, but the overall trajectory indicates a growing amount of net receivables over the examined quarters. This suggests either an expansion in credit sales or changes in collection practices. Peaks and troughs appear to coincide loosely with net sales fluctuations, implying some correlation between sales volume and receivables levels.

Receivables Turnover

The receivables turnover ratio, which measures how efficiently the company collects its receivables, shows considerable variation over time. Initial reported values start from around 52.34, declining to the high 20s in some later quarters such as October 2024. This downward trend indicates a reduction in the efficiency of receivables collection, meaning the company takes longer to collect outstanding amounts as time progresses. The ratio exhibits a cyclical pattern but generally trends downward, which could be a concern if it reflects deteriorating credit management or changes in customer payment behavior.

In summary, the company demonstrates growing sales and receivables, indicative of business expansion. However, the declining receivables turnover ratio suggests potential challenges in receivables management efficiency. Monitoring these trends is essential to ensure sustained operational performance and effective cash flow management.

The cost of sales shows a fluctuating but generally upward trend over the examined periods. Starting from approximately $17.4 billion in May 2019, there is a noticeable increase reaching peaks near $29.3 billion in July 2022 and again approaching similar levels in October 2024. Despite some decreases between certain quarters, the overall trajectory suggests rising costs associated with sales activities over time.

Accounts payable reveals variability in its values, fluctuating between roughly $7.8 billion and $15.4 billion across the quarters. Initially, accounts payable decreased until early 2020, followed by a period of growth peaking in May 2022. Subsequently, the values oscillate without a clear sustained direction, indicating variability in the company's short-term obligations to suppliers.

The payables turnover ratio, available from February 2020 onwards, exhibits considerable fluctuations across the reported quarters. It starts at 9.33 and decreases to its lowest point around 6.42 within the year 2020. Later values generally oscillate between 7 and 9, with occasional peaks above 9 and a notable high of 10.13 in the early 2024 period. This pattern suggests variations in how efficiently the company is managing its payments to suppliers, with periods of both quicker and slower turnover.

Overall, the data indicates that cost of sales is growing over time, potentially reflecting increased operational scale or inflationary pressures. Accounts payable values do not present a consistent trend, highlighting fluctuating payment practices or supplier terms. The payables turnover ratios further emphasize variable payment efficiency, with intervals of improved and reduced turnover speed.

The analysis of the quarterly financial data reveals several notable trends and fluctuations across the reported periods.

Working Capital

Working capital values exhibit significant volatility over the observed timeframe. Starting at 880 million US dollars in early 2019, the figure increased markedly to a peak of 9,401 million US dollars in May 2023. This peak is followed by a general decline with intermittent fluctuations, culminating in a reduced level of 2,940 million US dollars by May 2025. Such variation suggests varying levels of current asset and liability management, with periods of enhanced liquidity as well as times of contraction.

Net Sales

Net sales demonstrate consistent growth with some fluctuations. Beginning at 26,381 million US dollars in May 2019, sales rose to 43,792 million by July 2022, marking the highest sales point. Thereafter, net sales experienced some decreases and stabilization, remaining around the 39,000 to 43,000 million range through 2024, ending at 39,856 million in May 2025. This pattern indicates overall growth in revenue with seasonal or cyclical variations potentially influenced by market conditions or operational factors.

Working Capital Turnover

The working capital turnover ratio exhibits extensive variability and some irregularities in the data. After missing or unreported ratios in the initial periods, a very high ratio of 76.81 was recorded in May 2020. This was followed by a sharp downward trend, falling to as low as 13.79 in early 2021. Subsequently, the ratio increased again reaching a peak of 417.56 in May 2022, an unusually high figure that may indicate data inconsistency or extraordinary short-term movement in working capital relative to sales. After this anomalous peak, the ratio moderated and fluctuated mostly between 16 and 55 through subsequent periods, ending at 55.43 in May 2025. The fluctuating turnover ratio reflects varying efficiency in utilizing working capital to generate sales and potential timing differences in sales and current asset management.

Overall, the company shows growth in net sales over the longer term paired with unstable but generally high levels of working capital. The working capital turnover ratio's inconsistency suggests that efficiency in working capital utilization varies substantially, warranting further investigation into operational or accounting factors that drive such fluctuations. Monitoring this ratio closely could provide insights into liquidity management and sales efficiency as the company continues to evolve its financial structure.

Inventory Turnover Ratio

The inventory turnover ratio displays some variability over the examined quarterly periods. Initially, there is an increase from 5.00 to 5.83, suggesting a period of improved inventory efficiency. However, following that peak, the ratio generally trends downward, dropping to lows near 3.96 and stabilizing mostly around the 4.00 to 4.50 range in subsequent quarters. This indicates a decrease in the frequency with which inventory is sold and replaced over time.

Average Inventory Processing Period (Number of Days)

The average inventory processing period presents an inverse pattern to the inventory turnover ratio, which is logically consistent. The period begins around 73 days, briefly improves (shortens) to 63 days, and then exhibits a clear increasing trend, reaching a peak just above 90 days. Following this peak, there is a mild reduction, but the period remains elevated between 80 and 90 days for most subsequent quarters. The increasing days imply that inventory is being held longer before sale, indicating a slowdown in inventory movement speed over the course of the dataset.

Overall Insights

The data reflects fluctuations in inventory management efficiency. The early periods show some indications of increased management efficiency with higher turnover and shorter processing times. However, in later periods, the trends suggest a gradual reduction in turnover rates coupled with longer average inventory days, possibly indicating challenges in inventory clearance or shifts in operational practices. These trends may warrant further examination of underlying causes such as supply chain changes, demand fluctuations, or strategic adjustments in stocking policies.

The receivables turnover ratio exhibits fluctuations over the examined periods, showing a general downward trend with intermittent recoveries. Initially, the turnover ratio remains relatively high, peaking around 52.34 in early 2020, before experiencing a gradual decline to as low as 26.74 in late 2024. The periods following this low point indicate a slight improvement, with the ratio increasing to approximately 32.53 and then decreasing slightly to 27.68 by mid-2025. This pattern suggests variability in the efficiency of receivables collection, with a notable weakening in the latter periods indicating potentially slower collections or changes in credit policy.

The average receivable collection period, expressed in days, mirrors the inverse of the turnover trend, with values starting as low as 7 days and steadily increasing over time. Early on, the collection period stabilizes around 8 to 9 days, then gradually lengthens, reaching peaks of 13 to 14 days toward the end of the dataset. This extension in collection days corroborates the decline in receivables turnover and implies a slowdown in the company's ability to collect outstanding receivables promptly.

Overall, the analysis reveals a progressive deterioration in receivables management efficiency over the examined quarters, highlighting a need for further scrutiny into credit policies and collection processes to reverse the trend toward longer collection periods and lower turnover ratios.

Receivables turnover ratio

Started from a high of around 52.34 in early 2020.

Exhibited a general declining pattern with fluctuations.

Dipped to a low near 26.74 in late 2024.

Saw a modest rebound to about 32.53 before slightly decreasing again.

Average receivable collection period

Initially recorded at approximately 7 days.

Gradually increased over time, peaking at 13 to 14 days in later periods.

Reflected a lengthening of the collection cycle coinciding with the reduction in turnover ratio.

The financial data reveals notable trends in inventory processing, receivable collection, and the overall operating cycle over the reported periods.

Average Inventory Processing Period

This metric demonstrates variability with a general upward trend over time. Initial data from early 2020 indicates an average inventory processing period fluctuating between 63 and 77 days, but from 2021 onward, there is a clear increase, peaking at 92 days in mid-2022. Although there is some reduction in later quarters, values remain elevated compared to the early periods, indicating that inventory turnover has slowed over the years.

Average Receivable Collection Period

In contrast to inventory processing, the receivable collection period remains relatively stable but shows a subtle increasing trajectory. The period mostly ranges between 7 and 9 days in early 2020, gradually elevating to a range of 9 to 14 days by 2024. This increase suggests a slight elongation in the time taken to collect receivables, potentially impacting cash flow management.

Operating Cycle

The operating cycle, which combines both inventory processing and receivable collection periods, exhibits a pattern consistent with the trends observed in the underlying components. Starting from roughly 71 days in early 2020, the cycle lengthens steadily, reaching a peak of 101 days in mid-2022. Although there is a moderate decrease thereafter, the values consistently remain above the earlier levels, indicating an extended overall operating cycle. This implies that the company takes increasingly more time to convert inventory and receivables into cash.

Overall, the data suggests a gradual lengthening in the duration of key operational processes, with inventory management experiencing the largest increase, followed by a mild increase in receivable collection time. The extended operating cycle may warrant attention to improve efficiency and working capital utilization going forward.

The payables turnover ratio exhibits a fluctuating trend over the analyzed quarters. Starting from a value of 9.33, it declines steadily to reach a low point around 6.42 before experiencing several increases and decreases. Notably, there is a peak at 10.13 in the quarter ending October 29, 2023, followed by a subsequent decline and moderate fluctuations through to the last recorded quarter at 7.39.

Concurrently, the average payables payment period, measured in number of days, shows an inverse relationship with the payables turnover ratio. It starts at approximately 39 days and increases to a peak of 57 days during early periods, indicating slower payment cycles. Following this peak, the payment period decreases to about 36 days around the fourth quarter of 2023, before rising again moderately and ending at 49 days in the last quarter.

Payables turnover ratio

Displays a general pattern of initial decline followed by variable increases and decreases, peaking near 10.13 before settling in the mid-to-high single digits.

Average payables payment period

Complements the turnover ratio with an initial increase signaling delayed payments, then a decrease indicating faster payments, followed by moderate variability ending near 49 days.

Relationship and implications

The data suggests a cyclical pattern in payment management, where periods of faster payables turnover correspond with shorter payment periods, and vice versa. This pattern may reflect strategic cash flow management decisions balancing supplier relations and liquidity needs.

The financial data reveals several patterns and fluctuations in the operational efficiency metrics over the given periods.

Average Inventory Processing Period

This metric shows an initial rise from 63 days in November 2019 to a peak of 92 days in July 2022, indicating a lengthening time to process inventory. After this peak, there is a gradual decline to 81 days by May 2025, suggesting some improvement in inventory turnover in more recent periods.

Average Receivable Collection Period

The receivable collection period remained relatively stable in the earlier periods, fluctuating mostly between 7 and 9 days until mid-2021. From late 2023 onwards, there is a noticeable increase, peaking at 14 days in October 2024 before slightly declining again. This pattern indicates a trend toward slower collection of receivables in the later periods, potentially affecting cash inflows.

Average Payables Payment Period

The payables payment period exhibits volatility throughout the periods. Starting around 39 days in May 2020, it increased to values around 54 to 57 days through early 2021, then declined to the low 40s from early 2022 to mid-2023. Towards the end of the dataset, it fluctuates between 41 and 49 days. This inconsistency suggests variable payment strategies or changing supplier terms.

Cash Conversion Cycle

The cash conversion cycle starts at 17 days in November 2019, reaches a trough, then steadily increases, peaking at 56 days in October 2022, reflecting an elongation in working capital tied up. Following this peak, the cycle remains elevated in the mid-50s before slightly reducing but still staying around 50 days by May 2025. This longer cash conversion cycle indicates more time between cash outflows and inflows, potentially impacting liquidity.