Stock Analysis on Net

Johnson & Johnson (NYSE:JNJ)

Analysis of Short-term (Operating) Activity Ratios 

Microsoft Excel

Short-term Activity Ratios (Summary)

Johnson & Johnson, short-term (operating) activity ratios

Microsoft Excel
Dec 29, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Turnover Ratios
Inventory turnover 2.21 2.37 2.49 2.87 3.04
Receivables turnover 5.98 5.73 5.88 6.14 6.08
Payables turnover 2.66 2.76 2.66 2.70 2.99
Working capital turnover 15.94 11.81 5.95 9.44
Average No. Days
Average inventory processing period 165 154 147 127 120
Add: Average receivable collection period 61 64 62 59 60
Operating cycle 226 218 209 186 180
Less: Average payables payment period 137 132 137 135 122
Cash conversion cycle 89 86 72 51 58

Based on: 10-K (reporting date: 2024-12-29), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).


The financial data reveals distinct trends in turnover ratios and corresponding period metrics over the five-year span.

Inventory Turnover
There is a consistent decline in inventory turnover from 3.04 in 2020 to 2.21 in 2024, indicating slower inventory movement over the years.
Receivables Turnover
Receivables turnover remained relatively stable, fluctuating slightly but maintaining a range between 5.73 and 6.14, signaling a mostly steady efficiency in collecting receivables.
Payables Turnover
Payables turnover shows minor volatility, dropping from 2.99 in 2020 to a low of 2.66 in 2022 and 2024, with a brief increase in 2023, suggesting slight fluctuations in payment timing to suppliers.
Working Capital Turnover
Working capital turnover experienced a sharp decrease in 2021 to 5.95 from 9.44 in 2020, data for 2022 is missing, followed by significant increases in 2023 (11.81) and 2024 (15.94), indicating improved efficiency in using working capital in recent years.
Average Inventory Processing Period
There is a notable upward trend in the average inventory processing period, extending from 120 days in 2020 to 165 days in 2024, consistent with the declining inventory turnover and suggesting increased holding periods for inventory.
Average Receivable Collection Period
This period remains relatively stable, fluctuating around 60 to 64 days, aligning with the steady receivables turnover and indicating consistent credit collection practices.
Operating Cycle
The operating cycle lengthened over the period, rising from 180 days in 2020 to 226 days in 2024, reflecting increased time invested in inventory and receivables before cash liquidation.
Average Payables Payment Period
The average payment period to suppliers increased from 122 days in 2020 to a peak of 137 days in 2022 and 2024, with a slight reduction in 2023, implying a tendency to extend payment terms or delays in payments.
Cash Conversion Cycle
The cash conversion cycle exhibits an increasing trend, growing from 58 days in 2020 to 89 days in 2024. This suggests a lengthening time between cash outflows to suppliers and cash inflows from customers, potentially impacting liquidity.

Turnover Ratios


Average No. Days


Inventory Turnover

Johnson & Johnson, inventory turnover calculation, comparison to benchmarks

Microsoft Excel
Dec 29, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Cost of products sold 27,471 26,553 31,089 29,855 28,427
Inventories 12,444 11,181 12,483 10,387 9,344
Short-term Activity Ratio
Inventory turnover1 2.21 2.37 2.49 2.87 3.04
Benchmarks
Inventory Turnover, Competitors2
AbbVie Inc. 4.04 4.98 4.87 5.58 4.65
Amgen Inc. 1.84 0.89 1.30 1.58 1.58
Bristol-Myers Squibb Co. 5.46 4.02 4.33 4.74 5.68
Danaher Corp. 4.15 3.80 4.03 4.16 4.28
Eli Lilly & Co. 1.11 1.23 1.54 1.88 1.38
Gilead Sciences Inc. 3.66 3.64 3.75 4.08 2.72
Merck & Co. Inc. 2.49 2.54 2.95 2.29 2.45
Pfizer Inc. 1.65 2.45 3.82 3.40 1.08
Regeneron Pharmaceuticals Inc. 0.64 0.70 0.65 1.25 0.58
Thermo Fisher Scientific Inc. 5.06 5.06 4.60 3.88 4.02
Vertex Pharmaceuticals Inc. 1.27 1.71 2.35 2.56 2.62
Inventory Turnover, Sector
Pharmaceuticals, Biotechnology & Life Sciences 2.46 2.55 3.06 3.11 2.63
Inventory Turnover, Industry
Health Care 9.50 9.18 9.22 9.17 8.17

Based on: 10-K (reporting date: 2024-12-29), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 2024 Calculation
Inventory turnover = Cost of products sold ÷ Inventories
= 27,471 ÷ 12,444 = 2.21

2 Click competitor name to see calculations.


Cost of Products Sold
The cost of products sold showed an overall increasing trend from 2020 through 2022, rising from 28,427 million US dollars to 31,089 million US dollars. However, in the subsequent years 2023 and 2024, this figure declined, reaching 26,553 million and then slightly increasing again to 27,471 million US dollars. This pattern indicates an initial growth phase followed by a reduction and stabilization in the cost of goods sold.
Inventories
Inventories consistently increased over the five-year period, starting at 9,344 million US dollars in 2020 and reaching 12,444 million US dollars in 2024. Despite some fluctuations, the general upward trend suggests either growing stock levels or increasing value per unit, which could be indicative of changes in purchasing, production volume, or inventory management strategies.
Inventory Turnover Ratio
The inventory turnover ratio declined steadily from 3.04 in 2020 to 2.21 in 2024. This decreasing ratio suggests that the company is selling and replacing its inventory less frequently over time. This trend may reflect slower product sales, larger inventory accumulation, or possible inefficiencies in inventory management, possibly correlating with the rising inventory levels observed.

Receivables Turnover

Johnson & Johnson, receivables turnover calculation, comparison to benchmarks

Microsoft Excel
Dec 29, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Sales to customers 88,821 85,159 94,943 93,775 82,584
Accounts receivable trade, less allowances 14,842 14,873 16,160 15,283 13,576
Short-term Activity Ratio
Receivables turnover1 5.98 5.73 5.88 6.14 6.08
Benchmarks
Receivables Turnover, Competitors2
AbbVie Inc. 5.16 4.87 5.16 5.63 5.19
Amgen Inc. 4.72 3.70 4.46 4.96 5.36
Bristol-Myers Squibb Co. 5.19 4.93 5.48 5.65 5.72
Danaher Corp. 6.75 6.09 6.40 6.36 5.51
Eli Lilly & Co. 4.09 3.75 4.14 4.24 4.18
Gilead Sciences Inc. 6.47 5.78 5.65 6.01 4.98
Merck & Co. Inc. 6.24 5.81 6.27 5.28 6.11
Pfizer Inc. 5.55 5.33 9.24 7.16 5.38
Regeneron Pharmaceuticals Inc. 2.29 2.31 2.28 2.66 2.07
Thermo Fisher Scientific Inc. 5.23 5.21 5.53 4.92 5.61
Vertex Pharmaceuticals Inc. 6.85 6.31 6.19 6.66 7.01
Receivables Turnover, Sector
Pharmaceuticals, Biotechnology & Life Sciences 5.26 4.96 5.76 5.54 5.34
Receivables Turnover, Industry
Health Care 8.42 8.15 8.84 8.65 8.64

Based on: 10-K (reporting date: 2024-12-29), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 2024 Calculation
Receivables turnover = Sales to customers ÷ Accounts receivable trade, less allowances
= 88,821 ÷ 14,842 = 5.98

2 Click competitor name to see calculations.


Sales to customers
Sales experienced an upward trend from 2020 through 2022, increasing from approximately $82.6 billion to nearly $94.9 billion. However, a noticeable decline occurred in 2023, with sales dropping to around $85.2 billion. In 2024, there was a partial recovery with sales rising again to approximately $88.8 billion, though still below the peak of 2022.
Accounts receivable trade, less allowances
The accounts receivable balance showed steady growth from 2020 to 2022, increasing from about $13.6 billion to $16.2 billion. Subsequently, the balance decreased in 2023 to roughly $14.9 billion and remained nearly stable into 2024 at $14.8 billion, indicating a potential improvement in collections or changes in credit terms after 2022.
Receivables turnover
The receivables turnover ratio slightly increased from 6.08 in 2020 to a peak of 6.14 in 2021, suggesting effective collection practices during that period. However, the ratio declined gradually over the next two years to 5.73 in 2023, potentially reflecting slower collections or extended payment terms. In 2024, the ratio rose again to 5.98, indicating some improvement in turnover efficiency but not returning to earlier levels.

Payables Turnover

Johnson & Johnson, payables turnover calculation, comparison to benchmarks

Microsoft Excel
Dec 29, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Cost of products sold 27,471 26,553 31,089 29,855 28,427
Accounts payable 10,311 9,632 11,703 11,055 9,505
Short-term Activity Ratio
Payables turnover1 2.66 2.76 2.66 2.70 2.99
Benchmarks
Payables Turnover, Competitors2
AbbVie Inc. 5.74 5.54 5.94 6.05 6.76
Amgen Inc. 6.74 5.32 4.08 4.72 4.33
Bristol-Myers Squibb Co. 3.88 3.28 3.33 3.37 4.34
Danaher Corp. 5.52 5.58 5.45 4.48 4.79
Eli Lilly & Co. 2.61 2.73 3.43 4.38 3.41
Gilead Sciences Inc. 7.50 11.81 6.25 9.36 5.42
Merck & Co. Inc. 3.72 4.11 4.08 2.96 3.37
Pfizer Inc. 3.17 3.72 5.04 5.53 2.02
Regeneron Pharmaceuticals Inc. 2.50 2.99 2.65 4.32 2.36
Thermo Fisher Scientific Inc. 8.18 8.97 7.67 6.83 7.45
Vertex Pharmaceuticals Inc. 3.71 3.46 3.55 4.64 4.75
Payables Turnover, Sector
Pharmaceuticals, Biotechnology & Life Sciences 4.08 4.25 4.28 4.23 3.86
Payables Turnover, Industry
Health Care 8.12 7.96 7.50 7.61 7.48

Based on: 10-K (reporting date: 2024-12-29), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 2024 Calculation
Payables turnover = Cost of products sold ÷ Accounts payable
= 27,471 ÷ 10,311 = 2.66

2 Click competitor name to see calculations.


Analysis of the annual financial data reveals several key trends and observations regarding the company's cost of products sold, accounts payable, and payables turnover ratio over the five-year period.

Cost of Products Sold
There is an overall increasing trend in the cost of products sold from 2020 to 2022, rising from $28,427 million to $31,089 million. However, in 2023, a noticeable decline occurred with the cost dropping significantly to $26,553 million before a slight rebound to $27,471 million in 2024. This pattern suggests variability in production or procurement costs, possibly influenced by market or operational factors during this period.
Accounts Payable
Accounts payable increased steadily from $9,505 million in 2020 to a peak of $11,703 million in 2022. Similar to the cost of products sold, a decrease was observed in 2023, with values falling to $9,632 million, followed by a recovery to $10,311 million in 2024. This trend reflects fluctuations in the company's short-term obligations, which may be correlated with changes in procurement volume or payment policies.
Payables Turnover Ratio
The payables turnover ratio demonstrates a declining trend from 2.99 in 2020 to 2.66 in 2022, indicating a slower rate of paying off suppliers over this period. Although a slight improvement to 2.76 occurred in 2023, the ratio returned to 2.66 in 2024. The lower payables turnover ratio suggests that the company may be taking longer to settle its payables, which could have implications for supplier relationships and cash flow management.

Overall, the data exhibits a cyclical pattern with peaks in 2022 for both costs and payables, followed by reductions in 2023 and partial recoveries in 2024. The decreasing trend in the payables turnover ratio indicates a possible change in payment practices or cash management strategy during these years. These insights can inform further examination of operational efficiency and financial management policies.


Working Capital Turnover

Johnson & Johnson, working capital turnover calculation, comparison to benchmarks

Microsoft Excel
Dec 29, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Current assets 55,893 53,495 55,294 60,979 51,237
Less: Current liabilities 50,321 46,282 55,802 45,226 42,493
Working capital 5,572 7,213 (508) 15,753 8,744
 
Sales to customers 88,821 85,159 94,943 93,775 82,584
Short-term Activity Ratio
Working capital turnover1 15.94 11.81 5.95 9.44
Benchmarks
Working Capital Turnover, Competitors2
AbbVie Inc.
Amgen Inc. 5.40 2.25 3.82 3.37 2.55
Bristol-Myers Squibb Co. 7.79 4.60 8.30 3.95 3.72
Danaher Corp. 8.85 4.22 4.20 8.40 3.48
Eli Lilly & Co. 10.32 31.84 8.33 4.93
Gilead Sciences Inc. 3.99 5.61 8.42 8.54 5.30
Merck & Co. Inc. 6.19 9.29 5.16 7.62 109.83
Pfizer Inc. 8.64 11.09 4.83 4.67
Regeneron Pharmaceuticals Inc. 0.97 0.82 0.96 1.59 1.20
Thermo Fisher Scientific Inc. 4.87 4.05 5.46 5.87 2.76
Vertex Pharmaceuticals Inc. 1.83 0.93 0.85 1.02 0.99
Working Capital Turnover, Sector
Pharmaceuticals, Biotechnology & Life Sciences 7.86 6.68 7.25 5.87 5.34
Working Capital Turnover, Industry
Health Care 19.80 16.59 15.34 11.93 11.78

Based on: 10-K (reporting date: 2024-12-29), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 2024 Calculation
Working capital turnover = Sales to customers ÷ Working capital
= 88,821 ÷ 5,572 = 15.94

2 Click competitor name to see calculations.


Working Capital
The working capital experienced significant fluctuations over the analyzed period. It nearly doubled from 8,744 million US dollars at the end of 2020 to 15,753 million US dollars by the end of 2021. However, in 2022, working capital sharply declined, becoming negative at -508 million US dollars. It partially recovered in 2023 to 7,213 million US dollars and slightly decreased again to 5,572 million US dollars by the end of 2024. This variability indicates potential operational or liquidity challenges during 2022, followed by some stabilization afterward.
Sales to Customers
Sales showed a general upward trend from 82,584 million US dollars in 2020 to a peak of 94,943 million US dollars in 2022. A decline occurred in 2023 with sales falling to 85,159 million US dollars, followed by a moderate recovery to 88,821 million US dollars in 2024. Despite fluctuations, overall sales remained relatively strong with variation possibly reflecting market or external economic conditions impacting revenue generation.
Working Capital Turnover
The working capital turnover ratio exhibits notable instability. Beginning at 9.44 in 2020, it dropped to 5.95 in 2021, with no value provided for 2022. It then climbed significantly to 11.81 in 2023 and further increased to 15.94 by the end of 2024. This upward trend in the later years suggests improving efficiency in using working capital to generate sales, especially after the negative working capital recorded in 2022 was addressed.

Average Inventory Processing Period

Johnson & Johnson, average inventory processing period calculation, comparison to benchmarks

Microsoft Excel
Dec 29, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data
Inventory turnover 2.21 2.37 2.49 2.87 3.04
Short-term Activity Ratio (no. days)
Average inventory processing period1 165 154 147 127 120
Benchmarks (no. days)
Average Inventory Processing Period, Competitors2
AbbVie Inc. 90 73 75 65 79
Amgen Inc. 199 411 281 231 231
Bristol-Myers Squibb Co. 67 91 84 77 64
Danaher Corp. 88 96 91 88 85
Eli Lilly & Co. 329 298 237 194 265
Gilead Sciences Inc. 100 100 97 89 134
Merck & Co. Inc. 147 144 124 159 149
Pfizer Inc. 222 149 95 107 338
Regeneron Pharmaceuticals Inc. 572 519 562 292 625
Thermo Fisher Scientific Inc. 72 72 79 94 91
Vertex Pharmaceuticals Inc. 287 214 156 143 139
Average Inventory Processing Period, Sector
Pharmaceuticals, Biotechnology & Life Sciences 149 143 119 117 139
Average Inventory Processing Period, Industry
Health Care 38 40 40 40 45

Based on: 10-K (reporting date: 2024-12-29), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 2024 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 2.21 = 165

2 Click competitor name to see calculations.


The financial data reveals several notable trends related to inventory management over the five-year period under review. A clear inverse relationship is observable between the inventory turnover ratio and the average inventory processing period.

Inventory Turnover Ratio
The inventory turnover ratio exhibited a downward trend, decreasing consistently from 3.04 in 2020 to 2.21 in 2024. This decline suggests that the company is selling and replenishing its inventory less frequently each year.
Average Inventory Processing Period
The average inventory processing period showed an upward progression, rising from 120 days in 2020 to 165 days in 2024. This increase indicates that inventory remains on hand for longer durations before being sold or used.

The trends illustrate that inventory turnover slowed progressively while inventory holding periods lengthened. These changes may imply challenges in inventory management efficiency, possibly indicating slower sales or overstocking issues. Monitoring these metrics closely is advisable to optimize inventory levels and improve turnover rates in future periods.


Average Receivable Collection Period

Johnson & Johnson, average receivable collection period calculation, comparison to benchmarks

Microsoft Excel
Dec 29, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data
Receivables turnover 5.98 5.73 5.88 6.14 6.08
Short-term Activity Ratio (no. days)
Average receivable collection period1 61 64 62 59 60
Benchmarks (no. days)
Average Receivable Collection Period, Competitors2
AbbVie Inc. 71 75 71 65 70
Amgen Inc. 77 99 82 74 68
Bristol-Myers Squibb Co. 70 74 67 65 64
Danaher Corp. 54 60 57 57 66
Eli Lilly & Co. 89 97 88 86 87
Gilead Sciences Inc. 56 63 65 61 73
Merck & Co. Inc. 58 63 58 69 60
Pfizer Inc. 66 69 40 51 68
Regeneron Pharmaceuticals Inc. 160 158 160 137 177
Thermo Fisher Scientific Inc. 70 70 66 74 65
Vertex Pharmaceuticals Inc. 53 58 59 55 52
Average Receivable Collection Period, Sector
Pharmaceuticals, Biotechnology & Life Sciences 69 74 63 66 68
Average Receivable Collection Period, Industry
Health Care 43 45 41 42 42

Based on: 10-K (reporting date: 2024-12-29), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 2024 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 5.98 = 61

2 Click competitor name to see calculations.


Receivables Turnover
The receivables turnover ratio exhibits a slight decreasing trend from 6.14 in 2021 to 5.73 in 2023, before rebounding somewhat to 5.98 in 2024. This indicates a modest decline in the efficiency of collecting receivables over the years 2021 to 2023, followed by a partial recovery in 2024.
Average Receivable Collection Period
The average receivable collection period shows a generally increasing pattern from 59 days in 2021 to 64 days in 2023, suggesting that on average it took longer to collect receivables during this period. Thereafter, a decrease to 61 days in 2024 signals an improvement in collection speed, aligning with the improved receivables turnover ratio observed in the same year.
Overall Analysis
The temporal relationship between the two metrics supports the interpretation of a temporary weakening in receivables management efficiency between 2021 and 2023, with some recovery in 2024. The inverse movement of turnover ratio and collection period is consistent with typical financial behavior, reflecting changes in the company's effectiveness in converting receivables to cash.

Operating Cycle

Johnson & Johnson, operating cycle calculation, comparison to benchmarks

No. days

Microsoft Excel
Dec 29, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data
Average inventory processing period 165 154 147 127 120
Average receivable collection period 61 64 62 59 60
Short-term Activity Ratio
Operating cycle1 226 218 209 186 180
Benchmarks
Operating Cycle, Competitors2
AbbVie Inc. 161 148 146 130 149
Amgen Inc. 276 510 363 305 299
Bristol-Myers Squibb Co. 137 165 151 142 128
Danaher Corp. 142 156 148 145 151
Eli Lilly & Co. 418 395 325 280 352
Gilead Sciences Inc. 156 163 162 150 207
Merck & Co. Inc. 205 207 182 228 209
Pfizer Inc. 288 218 135 158 406
Regeneron Pharmaceuticals Inc. 732 677 722 429 802
Thermo Fisher Scientific Inc. 142 142 145 168 156
Vertex Pharmaceuticals Inc. 340 272 215 198 191
Operating Cycle, Sector
Pharmaceuticals, Biotechnology & Life Sciences 218 217 182 183 207
Operating Cycle, Industry
Health Care 81 85 81 82 87

Based on: 10-K (reporting date: 2024-12-29), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 2024 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= 165 + 61 = 226

2 Click competitor name to see calculations.


The financial data reveals several notable trends over the reported periods from 2020 to 2024, particularly concerning Johnson & Johnson's operational efficiency metrics.

Average Inventory Processing Period
The average inventory processing period has exhibited a steady increase each year, rising from 120 days in 2020 to 165 days in 2024. This upward trend suggests a lengthening in the time inventory remains within the company before being processed, potentially indicating slower inventory turnover or increased stock levels.
Average Receivable Collection Period
The average receivable collection period has remained relatively stable throughout the years, fluctuating modestly between 59 and 64 days. Starting at 60 days in 2020, it peaked at 64 days in 2023 before slightly decreasing to 61 days in 2024. This stability implies consistent management of accounts receivable and a relatively steady collection process.
Operating Cycle
The operating cycle, which combines inventory processing and receivable collection periods, has shown a continuous increase, moving from 180 days in 2020 to 226 days in 2024. This lengthening cycle reflects the combined effects of the increasing inventory processing period and the relatively stable receivable collection period. A longer operating cycle can indicate slower conversion of resources into cash, which may impact liquidity or cash flow management.

Overall, the data highlights a growing inventory processing duration as a primary driver for the increased operating cycle, while the receivable collection period remains well-managed. Attention to inventory management efficiency could be beneficial in addressing the extension of the operating cycle.


Average Payables Payment Period

Johnson & Johnson, average payables payment period calculation, comparison to benchmarks

Microsoft Excel
Dec 29, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data
Payables turnover 2.66 2.76 2.66 2.70 2.99
Short-term Activity Ratio (no. days)
Average payables payment period1 137 132 137 135 122
Benchmarks (no. days)
Average Payables Payment Period, Competitors2
AbbVie Inc. 64 66 61 60 54
Amgen Inc. 54 69 90 77 84
Bristol-Myers Squibb Co. 94 111 109 108 84
Danaher Corp. 66 65 67 82 76
Eli Lilly & Co. 140 134 106 83 107
Gilead Sciences Inc. 49 31 58 39 67
Merck & Co. Inc. 98 89 89 123 108
Pfizer Inc. 115 98 72 66 181
Regeneron Pharmaceuticals Inc. 146 122 138 84 155
Thermo Fisher Scientific Inc. 45 41 48 53 49
Vertex Pharmaceuticals Inc. 98 106 103 79 77
Average Payables Payment Period, Sector
Pharmaceuticals, Biotechnology & Life Sciences 90 86 85 86 95
Average Payables Payment Period, Industry
Health Care 45 46 49 48 49

Based on: 10-K (reporting date: 2024-12-29), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 2024 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 2.66 = 137

2 Click competitor name to see calculations.


The analysis of the payables-related financial ratios over the five-year period reveals distinct patterns in the company's payment behavior and management of payables.

Payables Turnover Ratio
The payables turnover ratio shows a general declining trend from 2.99 in 2020 to 2.66 in 2022, with a slight increase to 2.76 in 2023, before settling back to 2.66 in 2024. This fluctuation suggests the company is taking longer to pay its suppliers compared to 2020, indicating a slower rate of payables turnover overall.
Average Payables Payment Period
The average payment period measured in days reveals an upward trend, increasing from 122 days in 2020 to 135 days in 2021, then slightly rising to 137 days in 2022. It declined somewhat to 132 days in 2023 but returned to 137 days in 2024. This pattern corresponds inversely with the payables turnover ratio, confirming that the company has extended the time it takes to settle payables, which may reflect a strategic effort to manage cash flow by delaying payments within allowable limits.

Overall, the data indicate a consistent tendency toward longer payment periods over the examined timeframe, except for a minor relaxation in 2023. This behavior could suggest a deliberate management decision to optimize working capital management and liquidity, albeit with the potential risk of supplier relationship strain if payment delays persist.


Cash Conversion Cycle

Johnson & Johnson, cash conversion cycle calculation, comparison to benchmarks

No. days

Microsoft Excel
Dec 29, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data
Average inventory processing period 165 154 147 127 120
Average receivable collection period 61 64 62 59 60
Average payables payment period 137 132 137 135 122
Short-term Activity Ratio
Cash conversion cycle1 89 86 72 51 58
Benchmarks
Cash Conversion Cycle, Competitors2
AbbVie Inc. 97 82 85 70 95
Amgen Inc. 222 441 273 228 215
Bristol-Myers Squibb Co. 43 54 42 34 44
Danaher Corp. 76 91 81 63 75
Eli Lilly & Co. 278 261 219 197 245
Gilead Sciences Inc. 107 132 104 111 140
Merck & Co. Inc. 107 118 93 105 101
Pfizer Inc. 173 120 63 92 225
Regeneron Pharmaceuticals Inc. 586 555 584 345 647
Thermo Fisher Scientific Inc. 97 101 97 115 107
Vertex Pharmaceuticals Inc. 242 166 112 119 114
Cash Conversion Cycle, Sector
Pharmaceuticals, Biotechnology & Life Sciences 128 131 97 97 112
Cash Conversion Cycle, Industry
Health Care 36 39 32 34 38

Based on: 10-K (reporting date: 2024-12-29), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).

1 2024 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 165 + 61137 = 89

2 Click competitor name to see calculations.


The financial data over the five-year period indicates distinct trends in the company's operational efficiency, particularly in inventory management, receivables, payables, and overall cash conversion cycle.

Average Inventory Processing Period
The average inventory processing period has consistently increased from 120 days at the end of 2020 to 165 days at the end of 2024. This upward trend suggests that inventory turnover has slowed, indicating either growing inventory levels or longer time to sell inventory, which could affect working capital utilization.
Average Receivable Collection Period
The receivable collection period shows minor fluctuations but remains relatively stable over the five years. It decreased slightly from 60 days in 2020 to 59 days in 2021, then rose to 64 days in 2023 before settling at 61 days by the end of 2024. This pattern implies stable collection efficiency with no significant deterioration or improvement.
Average Payables Payment Period
The payables payment period expanded notably from 122 days in 2020 to a peak of 137 days at the end of 2022 and again in 2024, with a slight dip in 2023 to 132 days. The lengthening payables period suggests the company is taking longer to settle its obligations, which could be a strategy to preserve cash but may affect supplier relations.
Cash Conversion Cycle
The cash conversion cycle, which measures the net time between cash outflow and inflow, increased from 58 days in 2020 to 89 days in 2024. This rise indicates a reduction in cash flow efficiency, largely driven by the longer inventory processing and receivables collection periods relative to the extended payables period. An increasing cash conversion cycle typically signals higher working capital requirements.

Overall, the trends suggest the company is experiencing slower inventory turnover and extended payment terms with suppliers, leading to a longer cash conversion cycle. Receivables management remains relatively stable, which partially mitigates potential cash flow impacts. The lengthening of the cash conversion cycle should be monitored as it may have implications for liquidity and operational efficiency.