Kimberly-Clark Corp. (NYSE:KMB)

Inventory Turnover

The inventory turnover ratio displayed some fluctuations over the five-year period, beginning at 6.88 in 2016, declining to 6.54 in 2017, then peaking at 7.11 in 2018. It slightly decreased to 6.94 in 2019 and further declined to 6.47 in 2020, indicating a moderate variability but an overall slight decrease in the efficiency of inventory management by the end of the period.

Receivables Turnover

The receivables turnover ratio experienced some volatility but generally remained stable, with values close to 8 throughout the period. It declined slightly from 8.36 in 2016 to 7.89 in 2017, increased to 8.54 in 2018, dipped again to 8.15 in 2019, and then rose to 8.56 in 2020. This suggests consistent management of receivables with minor fluctuations.

Payables Turnover

A gradual decline in payables turnover occurred, dropping from 4.43 in 2016 to 3.69 in 2020. This steady reduction indicates that the company took longer to settle its payables over time, potentially reflecting extended payment terms or changes in supplier relationships.

Average Inventory Processing Period

The average inventory processing period fluctuated slightly between 51 and 56 days during the period. It began at 53 days in 2016, increased to 56 days in 2017, decreased to 51 days in 2018, returned to 53 days in 2019, and rose again to 56 days in 2020. This trend suggests some inconsistency in how long inventory is held but no significant long-term improvement or deterioration.

Average Receivable Collection Period

The average receivable collection period ranged from 43 to 46 days, with a peak of 46 days in 2017 and lows of 43 days in 2018 and 2020. Overall, this indicates steady collection practices with minor improvements in 2018 and 2020.

Operating Cycle

The operating cycle, representing the total time for inventory turnover and receivables collection, varied modestly. It peaked at 102 days in 2017, dropped to 94 days in 2018, then rose to 98 and 99 days in 2019 and 2020, respectively. This shows some fluctuation but generally a stable operating cycle length.

Average Payables Payment Period

The average payables payment period lengthened progressively, from 82 days in 2016 to 99 days in 2020. This increase aligns with the decreasing payables turnover ratio, indicating an extended timeframe to pay suppliers, possibly to optimize cash flow.

Cash Conversion Cycle

The cash conversion cycle, which measures the net time between cash outflow and inflow, decreased notably from 15 days in 2016 to a low of 4 days in 2018. It then slightly increased to 8 days in 2019, with no data provided for 2020. This trend suggests an improvement in managing working capital components, reducing the period funds are tied up.

The annual financial data reflects several key trends relating to cost of products sold, inventory levels, and inventory turnover ratios over the five-year period.

Cost of Products Sold

The cost of products sold experienced a general upward trend from 2016 to 2018, increasing from $11,551 million to $12,889 million. This was followed by a slight decline in 2019 and 2020, with values decreasing to $12,415 million and $12,318 million respectively. Overall, costs increased by approximately 6.6% from 2016 to 2020, with a peak in 2018.

Inventories

Inventory levels demonstrated a gradual increase throughout the period. Starting at $1,679 million in 2016, inventories rose steadily to $1,903 million by 2020. This represents an increase of about 13.3% over the five years, indicating a modest buildup of stock over time.

Inventory Turnover Ratio

The inventory turnover ratio showed variability but lacked a clear upward or downward trend. The ratio was 6.88 in 2016, dipped to 6.54 in 2017, rose significantly to 7.11 in 2018, then decreased again to 6.94 in 2019, and further down to 6.47 in 2020. The fluctuations suggest changes in inventory management efficiency or sales dynamics rather than consistent improvement or deterioration.

In summary, the data indicates that while product costs have generally increased with a peak in 2018 before a slight decline, inventory levels have consistently grown. The inventory turnover ratio's fluctuations hint at variable operational efficiency or shifts in demand and supply chain management across these years.

Net Sales

Net sales exhibited relative stability from 2016 to 2019, maintaining values around 18,200 to 18,500 million US dollars. A noticeable increase occurred in 2020, reaching 19,140 million US dollars, indicating a positive growth trend in the final year of the period analyzed.

Accounts Receivable, Net

Accounts receivable showed moderate fluctuations during the period. After an initial increase from 2,176 million US dollars in 2016 to 2,315 million in 2017, there was a decline to 2,164 million in 2018. The figure then rose again to 2,263 million in 2019 before slightly decreasing to 2,235 million in 2020. Overall, accounts receivable remained relatively stable with minor variability.

Receivables Turnover

The receivables turnover ratio displayed some variability within the observed timeframe. Starting at 8.36 in 2016, the ratio declined to 7.89 in 2017, suggesting slower collection efficiency that year. It rebounded to 8.54 in 2018, then slightly decreased to 8.15 in 2019 before increasing again to 8.56 in 2020. These fluctuations suggest adjustments in collection practices or credit policies over time, with a generally stable and moderately high turnover ratio maintained by the end of the period.

Cost of Products Sold

The cost of products sold displayed a general upward trend from 2016 to 2018, increasing from 11,551 million US dollars to 12,889 million US dollars. Subsequently, there was a slight decline in 2019 to 12,415 million US dollars, followed by a marginal decrease in 2020 to 12,318 million US dollars. This indicates that while costs rose notably in the earlier years, they slightly contracted in the latter years of the period analyzed.

Trade Accounts Payable

Trade accounts payable consistently increased throughout the five-year span. The figure rose from 2,609 million US dollars in 2016 to 3,336 million US dollars in 2020. This steady growth suggests a progressive increase in short-term liabilities to suppliers and creditors associated with trade activities.

Payables Turnover Ratio

The payables turnover ratio gradually decreased over the period, falling from 4.43 in 2016 to 3.69 in 2020. This decline indicates that the company took longer to pay off its suppliers, which could reflect changes in credit terms or cash management strategies aiming to extend payment periods.

Overall Trends and Insights

The data reveals that while the cost structure experienced a rise and then a slight reduction, the company’s obligations to suppliers grew continuously. Concurrently, the elongation in payables turnover ratio suggests a shift towards slower payments. Taken together, these patterns may imply a strategic approach to managing working capital by balancing cost control with extended accounts payable periods to optimize cash flow.

The financial data reveals several noteworthy trends over the five-year period. Net sales exhibited a slight upward trend, increasing gradually from $18,202 million in 2016 to $19,140 million in 2020. This represents a modest growth trajectory in revenue generation, although the annual increments remained relatively small, indicating stable sales performance without significant volatility.

Working capital displayed a consistently negative value throughout the period, starting at -$731 million in 2016 and fluctuating to reach -$1,269 million in 2020. The negative working capital balance intensified over the years, most notably in 2018 and 2019, where it reached -$1,495 million and -$1,862 million respectively, before slightly improving in 2020. This persistent negative working capital suggests that current liabilities exceed current assets, pointing to a potential reliance on short-term financing or efficient management of payables and receivables. The fluctuations signify varying liquidity positions within these years, with 2019 marking the lowest liquidity point in the timeframe reviewed.

The absence of data for the working capital turnover ratio restricts further analysis of efficiency concerning the utilization of working capital in relation to sales. However, the trends in net sales combined with the working capital figures imply that the company maintained sales growth while managing a negative working capital balance, which could reflect business structural characteristics such as rapid inventory turnover or supplier payment terms favoring the company.

Inventory Turnover Ratio

The inventory turnover ratio demonstrates some fluctuations over the five-year span. It began at 6.88 in 2016, decreased slightly to 6.54 in 2017, then increased to 7.11 in 2018. Following that, it slightly declined to 6.94 in 2019 before falling again to 6.47 in 2020. Overall, the trend indicates a moderate variability, with the highest turnover observed in 2018 and a decline toward 2020, suggesting a potential slowdown in inventory movement in the most recent year.

Average Inventory Processing Period

The average inventory processing period, measured in days, exhibits a somewhat inverse pattern to the inventory turnover ratio, which is consistent with typical operational relationships. It started at 53 days in 2016, rose to 56 days in 2017, then decreased to 51 days in 2018. Subsequently, it increased again to 53 days in 2019 and returned to 56 days in 2020. This indicates a slightly longer duration to process inventory in the initial and final years analyzed, with the shortest processing period observed in 2018.

Combined Insights

The data suggests that the company experienced its most efficient inventory management in 2018, characterized by the highest inventory turnover and the shortest processing period. However, by 2020, there appears to be a slight decline in efficiency, with turnover falling and processing time increasing. This could indicate changes in demand, supply chain dynamics, or inventory strategies impacting the company’s operations.

Receivables Turnover

The receivables turnover ratio exhibits some fluctuations over the analyzed period, starting at 8.36 in 2016, decreasing to 7.89 in 2017, and then rising again to 8.54 in 2018. This was followed by a slight decline to 8.15 in 2019, and an increase to 8.56 in 2020. Overall, the ratio demonstrates a pattern of minor variability but remains relatively stable around the value of 8, suggesting a consistent efficiency in the company’s ability to collect receivables.

Average Receivable Collection Period

The average collection period, denoted in days, shows an inverse relation to the receivables turnover ratio as expected. It started at 44 days in 2016, increased slightly to 46 days in 2017, then decreased to 43 days in both 2018 and 2020, with a minor increase to 45 days in 2019. These fluctuations indicate that the time taken to collect receivables varied marginally year over year, but consistently remained in the low-to-mid 40s range. This stability suggests that the company's credit policies and collection efficiency did not undergo significant changes.

Insight Summary

Both financial metrics reflect a stable receivables management performance over the five years. Despite some volatility, the company’s receivables turnover and collection period have maintained levels indicative of consistent credit and collection practices. There is no evident deterioration or significant improvement in these ratios, implying reliability in managing receivable assets.

Average Inventory Processing Period

The average inventory processing period fluctuated moderately over the five-year span. Starting at 53 days in 2016, it increased to 56 days in 2017, then declined to 51 days in 2018, followed by a rise to 53 days in 2019 and returned to 56 days in 2020. This indicates a cyclical pattern with its highest point reached twice in 2017 and 2020, suggesting variability in how quickly inventory was processed annually.

Average Receivable Collection Period

The average receivable collection period demonstrated a relatively stable trend with slight fluctuations. Beginning at 44 days in 2016, it increased slightly to 46 days in 2017, then decreased to 43 days by 2018. It rose again to 45 days in 2019 before dropping back to 43 days in 2020. Overall, the collection period remained within a narrow range of 43 to 46 days, indicating consistent credit and collection policies.

Operating Cycle

The operating cycle, representing the total time in days for converting inventory into cash, showed moderate variation across the observed years. It peaked at 102 days in 2017 before declining to 94 days in 2018. The cycle increased again to 98 days in 2019 and slightly to 99 days in 2020. The operating cycle was longest in 2017 and reached its shortest duration in 2018, illustrating changes in the combined efficiency of inventory management and receivables collection.

Payables Turnover

The payables turnover ratio exhibited a gradual decline over the five-year period, decreasing from 4.43 in 2016 to 3.69 in 2020. This downward trend suggests that the company is experiencing a slower rate of payment to its suppliers or vendors, indicating a potential lengthening of the credit period or changes in payment policies.

Average Payables Payment Period

The average number of days taken to pay payables increased consistently each year, starting at 82 days in 2016 and reaching 99 days by 2020. This increase aligns inversely with the declining payables turnover ratio, reinforcing the observation that the company extended its payment terms or delayed payments to suppliers over this timeframe.

Overall Analysis

The combined data indicate a clear shift towards longer payment cycles within the company’s accounts payable processes. By lengthening the average payables payment period, the company may be strategically managing its cash flow by retaining cash longer. However, the slower payables turnover might also imply potential impacts on supplier relationships if prolonged payment terms affect supplier confidence or bargaining power.

Average Inventory Processing Period

The inventory processing period fluctuated over the five-year span, beginning at 53 days in 2016, increasing to 56 days in 2017, then declining to 51 days in 2018. It rose slightly to 53 days in 2019 and returned to 56 days in 2020. Overall, the period exhibited modest variability without a clear trend towards efficiency improvement or deterioration.

Average Receivable Collection Period

The receivable collection period showed minor variation within the range of 43 to 46 days. Starting at 44 days in 2016, it increased to 46 days in 2017, decreased to 43 days in 2018, rose again to 45 days in 2019, and finally dropped back to 43 days in 2020. This pattern suggests consistent management of receivables with slight adjustments year-over-year.

Average Payables Payment Period

The payables payment period demonstrated a clear increasing trend, rising steadily from 82 days in 2016 to 88 days in 2017, then advancing to 90 days in both 2018 and 2019, and reaching 99 days in 2020. This upward movement indicates an extension in the company's payment cycle, potentially reflecting improved negotiation terms with suppliers or strategic cash flow management.

Cash Conversion Cycle

The cash conversion cycle experienced a marked reduction from 15 days in 2016 to 14 days in 2017, followed by a substantial decline to 4 days in 2018. It then slightly increased to 8 days in 2019, with data unavailable for 2020. The significant decrease around 2018 suggests enhanced efficiency in working capital management, though the slight uptick in 2019 indicates a possible reversal or adjustment.