Lowe’s Cos. Inc. (NYSE:LOW)

The analysis of the quarterly financial ratios and related periods reveals several trends over time.

Inventory Turnover

The inventory turnover ratio shows fluctuations within a range approximately between 3.0 and 3.9. Initially rising from around 3.5 to near 3.9 in late 2019 and early 2020, it subsequently declines to about 3.1 by mid-2023 with minor recoveries, ultimately stabilizing around 3.2 to 3.4 towards early 2025. This indicates some variability in how efficiently inventory is managed, with a tendency to slow turnover in more recent periods.

Payables Turnover

The payables turnover ratio exhibits higher volatility, ranging roughly between 4.1 and 6.6. The ratio fell significantly from 6.42 to around 4.18 between mid-2019 and late 2019, then oscillated steadily between roughly 4.5 and 6.1 in the following years. Peaks near 6.6 and lows around 4.6 suggest changing payment practices to suppliers, with occasional faster payment intervals offset by periods of slower payables turnover.

Working Capital Turnover

This ratio displays extreme volatility, with some exceptionally high values such as 530.5, 245.54, 290.03, and 82.22 at distinct intervals which may indicate data irregularities or unusual operational situations. Excluding those outliers, the typical range fluctuates roughly between 11.6 to 50.3. Sharp spikes and troughs suggest significant shifts in the efficiency of managing working capital relative to sales, with numerous abrupt changes rather than consistent trends.

Average Inventory Processing Period

The average inventory processing period (in days) largely oscillates between approximately 94 and 121 days. There is no clear long-term upward or downward trend, but shorter cycles near 94 to 100 days often alternate with longer stretches surpassing 110 days, reflecting varying inventory holding durations through the quarters. Periods around 2019 and late 2024 tend to have somewhat longer inventory processing times compared to other intervals.

Average Payables Payment Period

The average payables payment period demonstrates variability mainly between about 55 and 87 days. There was an increase from roughly 57 days to a peak near 87 days in late 2019, followed by declines and fluctuations with cycles typically lasting around two months. Occasionally shorter payment cycles below 60 days appear, interspersed with longer durations near 75 to 80 days, indicating periodic adjustments in payment terms or cash management strategies.

Overall, the data indicates a financial environment characterized by moderate but variable efficiency in managing inventory and payables. The working capital turnover is the most inconsistent, hinting at either unique operational events or reporting anomalies. Inventory and payables periods show cyclical behaviors without definitive long-term trends, suggesting management adapts these metrics seasonally or in response to market conditions. The quarterly dynamics captured highlight a focus on balancing liquidity with operational efficiency but with notable short-term volatility in key financial ratios.

The analysis of the quarterly financial data reveals several notable trends in the cost of sales, merchandise inventory, and inventory turnover ratio over the periods presented.

Cost of Sales

The cost of sales demonstrates significant fluctuation across the quarters. Beginning at approximately $12.2 billion in early 2019, the figure experienced a general upward movement, peaking multiple times with values exceeding $18 billion in mid to late 2021 and again in mid-2022. Thereafter, it shows some volatility with alternating increases and decreases but generally hovers in the range between approximately $12.5 billion and $16 billion.

Merchandise Inventory, Net

Merchandise inventory levels present an overall increasing trend from around $15 billion in early 2019 to peaks above $20 billion in the 2022 period. The inventory holdings fluctuate somewhat quarter to quarter but maintain higher average levels compared to the beginning of the dataset, indicating accumulation or higher stock levels over time. The inventory appears to dip intermittently, notably in some quarters of 2023 and 2024, but remains elevated relative to the earlier periods.

Inventory Turnover Ratio

The inventory turnover ratio, available starting from the November 2019 quarter, varies between approximately 3.0 and 3.9 throughout the dataset. It shows a tendency to decline slowly over the years, with higher turnover rates around 3.7 to 3.9 in the earlier periods and generally trending downward to around 3.0 in the latter periods. This decline suggests that inventory is turning over at a somewhat slower rate over time, which could imply changes in sales velocity or inventory management practices.

In summary, the data indicates rising inventory levels accompanied by fluctuations in the cost of sales and a gradual decrease in inventory turnover ratio. These trends might reflect strategic inventory accumulation or changes in demand patterns, while the decreasing turnover ratio suggests slowing inventory movement relative to sales over the analyzed quarters.

The analysis of the quarterly financial data reveals several notable trends in the cost of sales, accounts payable, and payables turnover ratios over the presented periods.

Cost of sales

The cost of sales exhibits considerable volatility, with notable peaks and troughs across the quarters. Initially, values fluctuate moderately between approximately US$11 billion and US$14 billion from mid-2019 through early 2020. Starting from mid-2020, the figures reach higher peaks exceeding US$18 billion in certain quarters, such as July 2020 and July 2022, indicating periods of increased sales-related expenditures. However, some subsequent quarters witness a retrenchment to lower levels around US$13 billion to US$15 billion, highlighting a cyclical or seasonal pattern. Overall, there is a mix of upward and downward trends that suggest variable business activity and cost management challenges across different quarters.

Accounts payable

Accounts payable values show a generally fluctuating pattern without a strong directional trend. Early periods from May 2019 to early 2020 indicate a declining trend from roughly US$11.5 billion to below US$8 billion. Thereafter, payables generally oscillate between US$9 billion and US$14 billion through mid-2023, reflecting changes in supplier obligations and possible adjustments in payment practices. Some quarters display significant increases, such as April 2021 and April 2022, followed by declines, highlighting variability in managing liabilities or supplier credit terms. Toward the latest periods, the payable values fluctuate between approximately US$9 billion and US$11 billion.

Payables turnover ratio

The payables turnover ratio, which measures how quickly the company pays off suppliers, varies significantly across the available data periods. Initially, turnover ratios start relatively high, around 6.4 in late 2019, decrease to values near 4.2-4.5 during much of 2020, and then demonstrate an upward movement to above 6.0 in certain later quarters such as early 2023 and mid-2024. These fluctuations indicate varying payment speeds, potentially influenced by cash management strategies, supplier negotiations, or shifts in working capital policy. Notably, higher turnover ratios suggest faster payments, while lower ratios imply slower payments and possibly extended credit terms.

In summary, the cost of sales reflects the company's cyclical operating environment with notable peaks during certain quarters. Accounts payable levels display considerable variation, suggesting dynamic management of supplier obligations. Payables turnover ratios vary, demonstrating shifts in payment practices that could be strategically aligned with liquidity management. Together, these patterns indicate a complex interplay between sales costs and payables management, impacting the company's operational and financial dynamics over the quarterly periods analyzed.

Working Capital

The working capital values exhibit substantial fluctuations across the periods. Initially, working capital decreased significantly from 1,554 million USD in early May 2019 to a low of 136 million USD by the end of January 2020. Thereafter, there is a sharp rebound with a notable peak reaching 7,352 million USD in late October 2020. Following this peak, working capital again declined substantially, accompanied by several periods of volatility. By mid-2024, values have moderated to a much lower range, fluctuating around 287 million USD to 1,017 million USD toward August 2025, suggesting increased variability and potential liquidity management challenges in the latter periods.

Net Sales

The net sales figures demonstrate a general pattern of volatility with some upward and downward movements. Starting at 17,741 million USD in May 2019, net sales experienced a significant increase reaching a notable high of 27,570 million USD in July 2021. After this peak, sales figures experienced a decline reaching around 18,603 million USD in May 2024. Overall, net sales appear to follow a cyclical trend with peaks approximately every 12 to 18 months, indicating seasonal or market-driven demand fluctuations. Despite the volatility, the higher sales values in mid-2021 and 2022 suggest periods of strong revenue generation.

Working Capital Turnover Ratio

The working capital turnover ratio data is partially missing in the early periods, but from May 2020 onward, the turnover ratio shows considerable variability. The ratio spikes dramatically to extremely high values such as 530.5 and 245.54 during isolated quarters, which may reflect temporary distortions caused by either very low or unusually high working capital or sales figures. Other values generally range between approximately 11.6 and 52.26, indicating moderate to high turnover rates. The presence of extreme outliers implies potential atypical financial events or accounting variations impacting working capital efficiency intermittently. Overall, this ratio suggests fluctuating efficiency in generating sales relative to working capital during the timeframe.

Overall Insights

The financial data reveals unstable working capital management with sharp rises and steep declines, contrasting with net sales that show cyclical but less volatile patterns. The high spikes in working capital turnover ratios correlate with periods of extreme working capital values, hinting at episodic operational or financial adjustments. The patterns indicate potential challenges in balancing liquidity with operational performance. Periods of high sales do not always correspond to improved working capital, underscoring a possible inefficiency in asset utilization or inventory and payables management. These trends suggest a company adapting dynamically to external conditions but facing difficulties in maintaining steady financial operational metrics.

Inventory Turnover

The inventory turnover ratio experienced fluctuations over the analyzed period. Starting in mid-2020, the ratio was approximately 3.73 and showed some variability, reaching a peak near 3.9 in October 2020 before declining to around 3.14 in April 2022. Following this decline, the ratio demonstrated some recovery and oscillation, generally remaining between 3.1 and 3.6 through to mid-2024. Toward the end of the period, slight decreases were observed, with the ratio moving close to 3.03 before slightly improving to 3.4 in August 2025.

Average Inventory Processing Period

The average inventory processing period, expressed in days, exhibited an inverse relationship to the inventory turnover ratio. Initially measured at 98 days in May 2020, this period extended to a peak of about 116 days by April 2022. Subsequently, values hovered in the range of 102 to 117 days, indicating a general prolongation in inventory holding times compared to the early part of the period. Notably, the period rose to approximately 121 days in August 2025, signifying an increasing trend in the duration inventory is held before being processed or sold.

Overall Analysis

The data suggest a moderate decline in inventory management efficiency over time, as evidenced by the decreasing inventory turnover ratio and the corresponding increase in the average inventory processing period. These patterns may reflect changes in operational practices, supply chain dynamics, or market conditions impacting inventory movement. The prolonged inventory periods and reduced turnover could signal potential challenges in inventory liquidity or demand fluctuations during the observed timeframe.

The analysis of the payables turnover ratio and the average payables payment period over the examined periods reveals fluctuating patterns with some notable trends.

Payables Turnover Ratio

The payables turnover ratio exhibits variability across the quarters, beginning at 6.42 in May 2020, then decreasing to a low of 4.18 in October 2020. Following that low, the ratio increases and fluctuates within a range of approximately 4.5 to 6.6. The ratio peaks at 6.61 in November 2023, indicating a period of relatively rapid payment of payables, before dipping again towards the middle quarters of 2024. Overall, the ratio does not demonstrate a consistent upward or downward trend but shows periodic spikes and dips, suggesting episodic changes in the company’s payment practices to suppliers or changes in purchasing volume relative to accounts payable.

Average Payables Payment Period

The average payables payment period, measured in number of days, moves inversely to the payables turnover ratio as expected. It starts at 57 days in May 2020 and increases to a peak of 87 days by October 2020, reflecting slower payment to suppliers during that period. Subsequent fluctuations are observed, with values moving between roughly 55 to 81 days through successive quarters. Notably, the payment period declines to a relatively low range around 55–60 days in early 2024, correlating with the higher payables turnover ratio seen at those times. Later quarters in 2024 and early 2025 show a slight increase again in the payment period, reaching up to 75 days.

Overall Patterns and Insights

The inverse relationship between the payables turnover ratio and the average payment period remains consistent throughout, reflecting typical financial behavior. The periods of longer payment days are accompanied by lower turnover ratios and vice versa. The marked increase in the payment period to nearly 87 days in late 2020, followed by subsequent reductions, could suggest adjustments in cash management strategy possibly influenced by external factors such as economic conditions or operational decisions. The repeated fluctuations in both metrics imply ongoing active management of payment terms rather than a steady state approach.