Analysis of Short-term (Operating) Activity Ratios
Quarterly Data
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
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- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- Analysis of Solvency Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Total Asset Turnover since 2005
- Price to Sales (P/S) since 2005
- Analysis of Debt
- Aggregate Accruals
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Short-term Activity Ratios (Summary)
McKesson Corp., short-term (operating) activity ratios (quarterly data)
Based on: 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-K (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-K (reporting date: 2015-03-31), 10-Q (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-K (reporting date: 2014-03-31), 10-Q (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-K (reporting date: 2013-03-31), 10-Q (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-K (reporting date: 2012-03-31), 10-Q (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30).
The analysis of the financial ratios over the given periods reveals several noteworthy trends in the company's operational efficiency and liquidity management.
- Inventory Turnover
- The inventory turnover ratio displayed relative stability with minor fluctuations, maintaining values mostly between approximately 10.5 and 11.7. There was a slight decline observed around early 2014, reaching a low near 9.7, followed by a recovery and gradual increase back to nearly 12 by late 2016. This indicates consistent effectiveness in inventory management, with a temporary dip suggesting slower inventory movement during the early 2014 period.
- Receivables Turnover
- The receivables turnover ratio remained generally stable around 12 from mid-2011 until early 2013, after which there was a significant decrease starting 2014, dropping to below 10 at one point, before modestly recovering to approximately 10.5 by late 2016. This decline suggests some weakening in collection efficiency or changes in credit policies over the later periods.
- Payables Turnover
- Payables turnover showed a gradual decreasing trend over the timeframe. Starting around 7.4 in mid-2011, it declined to near 5.9 by late 2016. This trend implies a lengthening average payment period to suppliers, indicating possibly more favorable or extended credit terms or slower payments over time.
- Working Capital Turnover
- Working capital turnover experienced considerable volatility, with spikes particularly in the quarters ending March 2012 and March 2013, reaching above 60 and even 67, which is substantially higher compared to earlier and later periods. The metric showed some dips in 2014, but overall remained elevated post-2012, suggesting periods of higher operational efficiency in generating revenue from working capital, albeit with inconsistency.
- Average Inventory Processing Period
- This metric fluctuated within a narrow band, generally from 30 to 38 days, indicating a fairly steady inventory holding period. There was a gradual upward shift into the high 30s in 2014, returning to around 30 days by late 2016, aligning with the inventory turnover ratio trends.
- Average Receivable Collection Period
- The period for collecting receivables was stable near 30 days up to early 2013, then increased to a peak of 38 days around early 2014, before gradually normalizing back close to mid-30s days by late 2016. The extended collection period parallels the drop in receivables turnover observed during the same time frame, indicating slower cash inflow from customers.
- Operating Cycle
- The operating cycle metric hovered generally between 59 and 76 days, with a notable increase to the mid-70s during 2014 followed by a reduction toward the mid-60s by the end of the analyzed period. This reflects fluctuations in the combined time the company takes to convert inventory and receivables into cash.
- Average Payables Payment Period
- The payables payment period underwent a clear upward trend, lengthening from around 49 days in 2011 to over 60 days by 2016. This corroborates the decline in payables turnover and may indicate strategic negotiation for longer credit terms or delayed payments to suppliers, improving short-term cash management.
- Cash Conversion Cycle
- The cash conversion cycle exhibited a general downward trend, starting from about 13 days in 2011 and gradually declining to as low as 2 days by late 2016. This shortening suggests improved efficiency in managing the overall cash flow cycle, accelerating the time from cash outflow to inflow, despite the lengthening payables period.
Overall, the company demonstrated steady operational efficiency in inventory management with some challenges in receivables collection around 2014. The extension of payables suggests tactical cash flow management improvements. The reduction in the cash conversion cycle over time confirms enhanced effectiveness in working capital management, contributing positively to the liquidity position.
Turnover Ratios
Average No. Days
Inventory Turnover
McKesson Corp., inventory turnover calculation (quarterly data)
| Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||||||||
| Inventories, net | |||||||||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||||||||
| Inventory turnover1 | |||||||||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||||||||
| Inventory Turnover, Competitors2 | |||||||||||||||||||||||||||||
| Abbott Laboratories | |||||||||||||||||||||||||||||
| Intuitive Surgical Inc. | |||||||||||||||||||||||||||||
| Medtronic PLC | |||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-K (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-K (reporting date: 2015-03-31), 10-Q (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-K (reporting date: 2014-03-31), 10-Q (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-K (reporting date: 2013-03-31), 10-Q (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-K (reporting date: 2012-03-31), 10-Q (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30).
1 Q2 2017 Calculation
Inventory turnover
= (Cost of salesQ2 2017
+ Cost of salesQ1 2017
+ Cost of salesQ4 2016
+ Cost of salesQ3 2016)
÷ Inventories, net
= ( + + + )
÷ =
2 Click competitor name to see calculations.
- Cost of Sales
- The cost of sales demonstrates a generally increasing trend over the examined periods. Starting at approximately $28.5 billion in mid-2011, it fluctuates slightly but exhibits notable growth by early 2014, reaching over $35 billion. From mid-2014 through late 2016, the cost of sales continues to increase, peaking around $47 billion by the end of the dataset. Occasional quarter-to-quarter declines are observed but are relatively minor compared to the overall upward trajectory.
- Inventories
- The net inventories display a consistent upward progression from around $9.5 billion in mid-2011 to approximately $15.3 billion by late 2016. There are some short-term fluctuations, with inventories occasionally declining slightly from one quarter to the next. However, the long-term trend is a growth in inventory levels, with more pronounced increases occurring after 2012, indicating an accumulation of inventory assets over time.
- Inventory Turnover Ratio
- The inventory turnover ratio shows some variability, generally moving between approximately 9.7 and 12 times per year. Early in the period, the ratio remains relatively stable around 11 to 12, suggesting efficient inventory management. However, there is a noticeable dip in turnover during 2013 and early 2014, reaching lows around 9.7. Following this dip, the ratio rebounds, gradually increasing again to values close to 12 by late 2016. This suggests a recovery in inventory efficiency, aligning with the gradual increases in cost of sales and inventory levels.
- Overall Analysis
- The data indicates that the company has been experiencing growth in both cost of sales and inventory holdings over the timeframe, which may reflect expanding operations or increasing market demand. The temporary decrease in inventory turnover during 2013 to early 2014 could indicate slower inventory movement or accumulation beyond sales growth during that period, but efficiency appears to have improved subsequently. The increase in inventory alongside cost of sales without a sustained drop in turnover suggests the company is managing to maintain reasonably consistent inventory utilization despite growing scale.
Receivables Turnover
McKesson Corp., receivables turnover calculation (quarterly data)
| Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||
| Receivables, net | |||||||||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||||||||
| Receivables turnover1 | |||||||||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||||||||
| Receivables Turnover, Competitors2 | |||||||||||||||||||||||||||||
| Abbott Laboratories | |||||||||||||||||||||||||||||
| Elevance Health Inc. | |||||||||||||||||||||||||||||
| Intuitive Surgical Inc. | |||||||||||||||||||||||||||||
| Medtronic PLC | |||||||||||||||||||||||||||||
| UnitedHealth Group Inc. | |||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-K (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-K (reporting date: 2015-03-31), 10-Q (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-K (reporting date: 2014-03-31), 10-Q (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-K (reporting date: 2013-03-31), 10-Q (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-K (reporting date: 2012-03-31), 10-Q (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30).
1 Q2 2017 Calculation
Receivables turnover
= (RevenuesQ2 2017
+ RevenuesQ1 2017
+ RevenuesQ4 2016
+ RevenuesQ3 2016)
÷ Receivables, net
= ( + + + )
÷ =
2 Click competitor name to see calculations.
The quarterly financial data shows several noticeable trends in revenues, receivables, and receivables turnover over the observed period.
- Revenues
- Revenues generally exhibit an upward trend throughout the period, rising from approximately $29.98 billion in June 2011 to nearly $49.96 billion by September 2016. Seasonal fluctuations are evident, with peaks often occurring toward the end of the calendar year and troughs typically in the first or second quarters. A marked increase is observed starting from early 2014, with revenues surpassing $40 billion and continuing to grow steadily, indicating a period of accelerated revenue growth during the latter part of the timeline.
- Receivables, net
- Net receivables follow a broadly increasing pattern, moving from around $9.37 billion in mid-2011 to over $18.3 billion by the third quarter of 2016. The upward trajectory is more pronounced after 2013, with substantial increases during 2013 and 2014, reflecting a growing volume of credit extended to customers or lengthier collection periods. This rise in receivables corresponds roughly with the increasing revenues, though the rate of growth in receivables appears to accelerate somewhat faster during certain intervals.
- Receivables turnover
- The receivables turnover ratio, measuring the efficiency of collection, demonstrates a declining trend from a high of approximately 12.39 times in late 2011 to around 10.6 times by late 2016. Initially stable around 12 to 12.5, turnover ratios drop notably in the period between 2012 and 2014, reaching a low near 9.7 times in early 2013. Although there is some recovery afterward, the ratio remains generally lower than the earlier period. This decline indicates a modest decrease in collection efficiency or longer credit terms extended to customers over time.
In summary, the data reflects consistent revenue growth accompanied by increasing receivables balances. However, the receivables turnover ratio has decreased, suggesting that receivables are being collected at a slower pace or that credit terms may have been extended. This combination points to a potential shift in working capital dynamics, with growing sales but somewhat less efficient receivables management.
Payables Turnover
McKesson Corp., payables turnover calculation (quarterly data)
| Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||||||||
| Drafts and accounts payable | |||||||||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||||||||
| Payables turnover1 | |||||||||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||||||||
| Payables Turnover, Competitors2 | |||||||||||||||||||||||||||||
| Abbott Laboratories | |||||||||||||||||||||||||||||
| Elevance Health Inc. | |||||||||||||||||||||||||||||
| Intuitive Surgical Inc. | |||||||||||||||||||||||||||||
| Medtronic PLC | |||||||||||||||||||||||||||||
| UnitedHealth Group Inc. | |||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-K (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-K (reporting date: 2015-03-31), 10-Q (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-K (reporting date: 2014-03-31), 10-Q (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-K (reporting date: 2013-03-31), 10-Q (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-K (reporting date: 2012-03-31), 10-Q (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30).
1 Q2 2017 Calculation
Payables turnover
= (Cost of salesQ2 2017
+ Cost of salesQ1 2017
+ Cost of salesQ4 2016
+ Cost of salesQ3 2016)
÷ Drafts and accounts payable
= ( + + + )
÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several key trends related to cost of sales, drafts and accounts payable, and payables turnover over the examined periods.
- Cost of Sales
- The cost of sales generally shows an upward trajectory from June 2011 through September 2016. Beginning at approximately $28.5 billion in mid-2011, the cost of sales undergoes moderate fluctuations but exhibits sustained growth, reaching around $47.2 billion by the end of the examined period. Some quarters, such as between March 2014 and June 2014, show marked increases, indicating periods of accelerated expenditure or higher purchase volumes. There are minor dips in certain quarters, for example between December 2015 and March 2016, though the overall trend remains strongly positive.
- Drafts and Accounts Payable
- Drafts and accounts payable follow a similar rising pattern. Starting at roughly $14.5 billion in June 2011, this liability measure steadily increases to over $31 billion by the final quarter observed. Notably, a significant jump is seen between December 2013 and March 2014, suggesting a substantial rise in outstanding payables which may correlate with changes in purchasing, credit terms, or inventory management. The trend of growth is consistent, with no major declines, indicating increasing obligations owed to suppliers or vendors over the time span.
- Payables Turnover
- The payables turnover ratio shows a declining trend over the periods. Initially around 7.4 in mid-2011, the ratio decreases progressively to below 6 by mid-2016, ending near 5.9. This decline implies that the company is taking longer, on average, to pay its suppliers as time progresses. The lowest points in the ratio correspond to the quarters soon after the spikes in drafts and accounts payable, indicating potential shifts in payment policies or cash management strategies focused on extending payables. The reduction in turnover suggests a lengthening in the accounts payable cycle, which might impact liquidity and supplier relationships.
Overall, the data presents a picture of increasing scale in operations, as evidenced by rising costs and payables, combined with a tendency to extend payment periods to suppliers. This may reflect strategic financial management aimed at optimizing cash flow or could indicate operational pressures necessitating longer credit terms.
Working Capital Turnover
McKesson Corp., working capital turnover calculation (quarterly data)
| Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||||||||||||||||||||||||
| Current assets | |||||||||||||||||||||||||||||
| Less: Current liabilities | |||||||||||||||||||||||||||||
| Working capital | |||||||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||||||||
| Working capital turnover1 | |||||||||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||||||||
| Working Capital Turnover, Competitors2 | |||||||||||||||||||||||||||||
| Abbott Laboratories | |||||||||||||||||||||||||||||
| Elevance Health Inc. | |||||||||||||||||||||||||||||
| Intuitive Surgical Inc. | |||||||||||||||||||||||||||||
| Medtronic PLC | |||||||||||||||||||||||||||||
| UnitedHealth Group Inc. | |||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-K (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-K (reporting date: 2015-03-31), 10-Q (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-K (reporting date: 2014-03-31), 10-Q (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-K (reporting date: 2013-03-31), 10-Q (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-K (reporting date: 2012-03-31), 10-Q (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30).
1 Q2 2017 Calculation
Working capital turnover
= (RevenuesQ2 2017
+ RevenuesQ1 2017
+ RevenuesQ4 2016
+ RevenuesQ3 2016)
÷ Working capital
= ( + + + )
÷ =
2 Click competitor name to see calculations.
The financial data over the reported periods reveal several patterns and shifts in key operational metrics. Working capital exhibits fluctuations with notable peaks and troughs, which suggest variability in liquidity management across quarters. From mid-2011 through late 2012, working capital remained mostly in the range of approximately $1.9 billion to $3.8 billion, with marked decreases during certain quarters such as March 2012 and March 2013. The period from mid-2013 to mid-2014 shows an overall upward trend, peaking near $4.7 billion by mid-2014 before experiencing declines towards early 2016, followed by a rebound at the end of the dataset.
Revenues display a general upward trajectory throughout the observed quarters. Starting around $30 billion in mid-2011, the figure progresses steadily, with some periods of accelerated growth, reaching close to $50 billion in mid to late 2016. This consistent increase indicates expansion in the company's sales volume or pricing power over time, despite some quarter-to-quarter variability.
The working capital turnover ratio, which measures the efficiency with which working capital generates revenues, exhibits considerable volatility. Initial values in 2011 range from about 31 to 35, but there's a significant spike in early 2012, with ratios exceeding 60 and even reaching beyond 67. These surges correspond to quarters where working capital amounts dramatically declined while revenues remained comparatively steady, causing the ratio to inflate. Following this period, the ratio experiences alternating decreases and increases without a clear sustained trend, though ratios generally remain elevated relative to the early years, frequently ranging between 30 and 56. Exceptionally high spikes appear around mid-2016, suggesting periods of very efficient use of working capital or potential working capital contraction.
- Working Capital Trends
- Fluctuating values with cyclical rises and falls; significant peaks near mid-2014; overall variability pointing to changes in liquidity management.
- Revenue Growth
- Consistent upward trend from approximately $30 billion to nearly $50 billion, indicating strong sales growth or market expansion over the period.
- Working Capital Turnover Ratio
- Marked volatility with spikes concurrent to low working capital levels and steady revenues; generally higher turnover ratios in later periods signaling improved efficiency or leaner capital usage.
In summary, the data reflect robust revenue growth paired with more variable working capital balances. The fluctuations in working capital turnover highlight periods of considerable changes in operational efficiency or capital structure. These patterns suggest active management responses to shifting business conditions, with an overall positive growth in business scale and evolving capital utilization strategies.
Average Inventory Processing Period
McKesson Corp., average inventory processing period calculation (quarterly data)
| Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||||||||
| Inventory turnover | |||||||||||||||||||||||||||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||||||||||
| Average inventory processing period1 | |||||||||||||||||||||||||||||
| Benchmarks (no. days) | |||||||||||||||||||||||||||||
| Average Inventory Processing Period, Competitors2 | |||||||||||||||||||||||||||||
| Abbott Laboratories | |||||||||||||||||||||||||||||
| Intuitive Surgical Inc. | |||||||||||||||||||||||||||||
| Medtronic PLC | |||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-K (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-K (reporting date: 2015-03-31), 10-Q (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-K (reporting date: 2014-03-31), 10-Q (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-K (reporting date: 2013-03-31), 10-Q (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-K (reporting date: 2012-03-31), 10-Q (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30).
1 Q2 2017 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data indicates consistent fluctuations in the inventory turnover ratio and the average inventory processing period over the periods observed. The inventory turnover ratio demonstrates a pattern of slight variability but generally maintains a range between approximately 9.7 and 12.0 times per year. There is a noticeable dip in the turnover ratio around early 2014, with the lowest value reaching 9.72, followed by a recovery and an upward trend approaching the end of the dataset in late 2016, culminating near 11.97.
The average inventory processing period inversely correlates with the inventory turnover ratio, showing the number of days inventory remains before being sold. The days range mostly between 30 and 38, with an increase evident around early 2014, peaking at 38 days. After this peak, the processing period decreases, reflecting improved inventory management efficiency with shorter holding periods, reaching 30 days by the last recorded quarter.
- Inventory Turnover Ratio
- The ratio remained relatively stable with moderate fluctuations, suggesting steady efficiency in managing inventory relative to sales.
- A temporary decline occurred in early 2014, potentially indicating slower inventory movement during that period.
- The ratio regained strength thereafter, signaling improved turnover efficiency toward the latter part of the timeline.
- Average Inventory Processing Period
- Generally inversely related to the turnover ratio, the processing period lengthened to a peak in early 2014, aligning with the turnover dip.
- The subsequent decrease in processing days suggests enhanced operational performance in managing inventory levels.
- The shortest processing periods recorded toward the end of 2016 reflect more rapid inventory cycles, possibly due to better demand forecasting or supply chain optimizations.
Overall, the trends imply a period of temporary inventory management challenges around early 2014, which were subsequently addressed, leading to stabilized and improved turnover rates and reduced inventory holding days. This reflects positively on the operational efficiencies achieved over the term analyzed.
Average Receivable Collection Period
McKesson Corp., average receivable collection period calculation (quarterly data)
| Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||||||||
| Receivables turnover | |||||||||||||||||||||||||||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||||||||||
| Average receivable collection period1 | |||||||||||||||||||||||||||||
| Benchmarks (no. days) | |||||||||||||||||||||||||||||
| Average Receivable Collection Period, Competitors2 | |||||||||||||||||||||||||||||
| Abbott Laboratories | |||||||||||||||||||||||||||||
| Elevance Health Inc. | |||||||||||||||||||||||||||||
| Intuitive Surgical Inc. | |||||||||||||||||||||||||||||
| Medtronic PLC | |||||||||||||||||||||||||||||
| UnitedHealth Group Inc. | |||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-K (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-K (reporting date: 2015-03-31), 10-Q (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-K (reporting date: 2014-03-31), 10-Q (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-K (reporting date: 2013-03-31), 10-Q (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-K (reporting date: 2012-03-31), 10-Q (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30).
1 Q2 2017 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
The analysis of the quarterly financial ratios related to receivables over the period from mid-2011 to late 2016 reveals notable trends in both the receivables turnover and the average receivable collection period.
- Receivables Turnover Ratio
- This ratio generally remained stable around the range of approximately 12.1 to 12.9 from June 2011 through December 2013, indicating a relatively consistent efficiency in collecting receivables during this timeframe. However, starting in the first quarter of 2014, the turnover ratio experienced a significant decline, dropping sharply to around 9.7. Though there was a modest recovery to values between roughly 10.4 and 11.25 in the subsequent quarters, the turnover did not return to earlier peak levels by the end of the period analyzed.
- Average Receivable Collection Period (Number of Days)
- This metric inversely correlates with the turnover ratio, showing a steady collection period of about 28 to 30 days through the end of 2013. Beginning in March 2014, there is a marked increase in the average collection period, rising to a peak of 38 days and fluctuating thereafter within the range of 32 to 37 days. This increase suggests a lengthening of the time taken to collect receivables, which aligns with the concurrent decline in the receivables turnover ratio during this later period.
- Overall Trends and Implications
- The period before 2014 reflects stable receivables management with quick collections, contributing positively to liquidity and cash flow efficiency. The significant deterioration in both ratios starting in early 2014 points to potential challenges in credit policies, customer payment behaviors, or operational factors affecting collections. The inability to fully recover the previous levels of turnover and the sustained higher collection periods through 2016 could signal ongoing collection inefficiencies that may impact working capital management.
Operating Cycle
McKesson Corp., operating cycle calculation (quarterly data)
No. days
| Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||||||||
| Average inventory processing period | |||||||||||||||||||||||||||||
| Average receivable collection period | |||||||||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||||||||
| Operating cycle1 | |||||||||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||||||||
| Operating Cycle, Competitors2 | |||||||||||||||||||||||||||||
| Abbott Laboratories | |||||||||||||||||||||||||||||
| Intuitive Surgical Inc. | |||||||||||||||||||||||||||||
| Medtronic PLC | |||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-K (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-K (reporting date: 2015-03-31), 10-Q (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-K (reporting date: 2014-03-31), 10-Q (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-K (reporting date: 2013-03-31), 10-Q (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-K (reporting date: 2012-03-31), 10-Q (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30).
1 Q2 2017 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= + =
2 Click competitor name to see calculations.
- Average Inventory Processing Period
- The average inventory processing period remained relatively stable between 30 and 34 days for most of the quarters, with a slight increase reaching 38 days in March 2014. After this peak, the period generally decreased again, returning to approximately 30 days by September 2016. The fluctuations indicate some variability in inventory turnover efficiency, with a brief period of slower processing around early 2014.
- Average Receivable Collection Period
- The average receivable collection period stayed close to 30 days initially, showing consistency in the company's ability to collect receivables promptly. However, there was a notable increase to 38 days in March 2014, followed by a gradual decline but remaining above the earlier levels, fluctuating between 32 and 35 days thereafter. This suggests a temporary extension in the collection period around early 2014, potentially indicating slower cash recovery during that timeframe.
- Operating Cycle
- The operating cycle, representing the combined duration of inventory processing and receivable collection, mirrored the trends seen in the other two metrics. It was stable around 62 days initially, then rose sharply to 76 days in March 2014, reflecting delays in inventory turnover and receivables collection. Subsequently, the operating cycle decreased but remained somewhat elevated compared to earlier periods, fluctuating between 63 and 68 days. This pattern indicates that the overall operational efficiency was relatively consistent for most of the period, experienced a temporary slowdown around early 2014, and partially recovered afterward.
- Overall Insights
- The data reveals a distinct pattern of operational slowdown occurring primarily in the first half of 2014, characterized by extended inventory processing and receivable collection periods, which in turn increased the operating cycle. Before and after this period, the company maintained relatively efficient operations with stable processing and collection times. These trends may suggest external factors or internal changes impacting operational efficiency around early 2014 that were mitigated in subsequent quarters.
Average Payables Payment Period
McKesson Corp., average payables payment period calculation (quarterly data)
| Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||||||||
| Payables turnover | |||||||||||||||||||||||||||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||||||||||
| Average payables payment period1 | |||||||||||||||||||||||||||||
| Benchmarks (no. days) | |||||||||||||||||||||||||||||
| Average Payables Payment Period, Competitors2 | |||||||||||||||||||||||||||||
| Abbott Laboratories | |||||||||||||||||||||||||||||
| Elevance Health Inc. | |||||||||||||||||||||||||||||
| Intuitive Surgical Inc. | |||||||||||||||||||||||||||||
| Medtronic PLC | |||||||||||||||||||||||||||||
| UnitedHealth Group Inc. | |||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-K (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-K (reporting date: 2015-03-31), 10-Q (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-K (reporting date: 2014-03-31), 10-Q (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-K (reporting date: 2013-03-31), 10-Q (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-K (reporting date: 2012-03-31), 10-Q (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30).
1 Q2 2017 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ =
2 Click competitor name to see calculations.
The analysis of the payables turnover ratio over the examined periods reveals a general decline in the efficiency with which payables are managed. Starting from a ratio of approximately 7.46 in mid-2011, the rate fluctuates slightly but exhibits a noticeable downward trend, reaching around 5.89 by late 2016. This decrease suggests that the company is taking longer to pay its suppliers compared to earlier periods.
Complementing this, the average payables payment period, expressed in number of days, strengthens the observation of a lengthening payment cycle. Initially, the payment period hovers around 49–51 days up to early 2013. However, from 2014 onward, there is a clear increase, peaking at 62 days by September 2016. This trend further confirms that the company is extending the duration it holds payables before settling them.
- Payables Turnover Ratio
- Demonstrates a moderate yet steady decline from approximately 7.46 times per year to 5.89 times per year across the measured timeframe.
- Average Payables Payment Period
- Increases from roughly 49 days to over 60 days, indicating a trend toward longer payment terms or slower payment practices.
Combining these indicators, it is observable that the company is gradually stretching its payables cycle. This could imply a strategic shift to optimize cash flow by delaying payments, or it might reflect changes in supplier agreements or financial constraints. The consistent increase in days payable outstanding, along with the decrease in turnover, highlights a notable shift in the company's working capital management approach over the reported quarters.
Cash Conversion Cycle
McKesson Corp., cash conversion cycle calculation (quarterly data)
No. days
| Sep 30, 2016 | Jun 30, 2016 | Mar 31, 2016 | Dec 31, 2015 | Sep 30, 2015 | Jun 30, 2015 | Mar 31, 2015 | Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||||||||||
| Average inventory processing period | |||||||||||||||||||||||||||||
| Average receivable collection period | |||||||||||||||||||||||||||||
| Average payables payment period | |||||||||||||||||||||||||||||
| Short-term Activity Ratio | |||||||||||||||||||||||||||||
| Cash conversion cycle1 | |||||||||||||||||||||||||||||
| Benchmarks | |||||||||||||||||||||||||||||
| Cash Conversion Cycle, Competitors2 | |||||||||||||||||||||||||||||
| Abbott Laboratories | |||||||||||||||||||||||||||||
| Intuitive Surgical Inc. | |||||||||||||||||||||||||||||
| Medtronic PLC | |||||||||||||||||||||||||||||
Based on: 10-Q (reporting date: 2016-09-30), 10-Q (reporting date: 2016-06-30), 10-K (reporting date: 2016-03-31), 10-Q (reporting date: 2015-12-31), 10-Q (reporting date: 2015-09-30), 10-Q (reporting date: 2015-06-30), 10-K (reporting date: 2015-03-31), 10-Q (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-K (reporting date: 2014-03-31), 10-Q (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-K (reporting date: 2013-03-31), 10-Q (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-K (reporting date: 2012-03-31), 10-Q (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30).
1 Q2 2017 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= + – =
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several notable trends in the company's operational efficiency and cash management metrics over the observed periods.
- Average Inventory Processing Period
- The average inventory processing period generally fluctuated between 30 and 38 days. Initially, it remained relatively stable around 31 to 33 days in 2011 and 2012, with a peak observed at 38 days in March 2014. Following this peak, there was a gradual decrease back to around 30 days by late 2016. This pattern suggests that the company faced some inventory management challenges in early 2014 but subsequently improved its inventory turnover efficiency.
- Average Receivable Collection Period
- This metric showed moderate variability, with values mostly ranging from 28 to 38 days. There was a slight downward trend from 30 days in mid-2011 to the upper 20s by the end of 2012, indicating improved receivables collection efficiency. However, a notable increase occurred in mid-2014, reaching 38 days in March 2014, before declining gradually back towards the low to mid-30s in subsequent quarters. This indicates temporary delays in receivables collections that somewhat normalized over time.
- Average Payables Payment Period
- The payables payment period generally increased during the period, starting near 49-51 days in 2011 and moving up to around 60 days by early 2014. Thereafter, it remained elevated, fluctuating between 55 and 62 days through 2016. This trend suggests a strategic extension in payment terms to suppliers, possibly to enhance cash preservation.
- Cash Conversion Cycle
- The cash conversion cycle showed a consistent improvement over time, decreasing from approximately 13 days in mid-2011 to nearly 2 days by late 2016. There were fluctuations along the way, with a small peak in early 2014 at 16 days, coinciding with the inventory and receivables period increases. The steady decline from 16 days to 2 days indicates an increasingly efficient conversion of inventory and receivables into cash, reflecting strengthening working capital management.
In summary, although temporary setbacks were evident around early 2014 with increased inventory, receivables, and an extended cash conversion cycle, the overall trend from 2011 through 2016 points to improved operational efficiency. Notably, the company extended its payables period to optimize cash flows while simultaneously reducing the cash conversion cycle to minimal levels, signifying enhanced liquidity and working capital effectiveness.