Medtronic PLC (NYSE:MDT)

The analyzed financial data reveals several notable trends across multiple periods related to inventory, receivables, payables, and overall working capital efficiency.

Inventory Turnover

The inventory turnover ratio generally fluctuates within a range of approximately 1.9 to 2.5, showing a mild downward trend from mid-2020 through early 2023. In the more recent periods, there is a modest recovery, with the ratio moving back toward values around 2.1 by 2025, indicating a slight improvement in the frequency of inventory renewal.

Receivables Turnover

Receivables turnover demonstrates a gradual decline from over 6.2 in mid-2020 to levels around 5.2-5.4 in 2024 and onwards. This suggests a slightly slower collection process over time, which reflects an increase in the average receivable collection period.

Payables Turnover

The payables turnover ratio exhibits some variability, ranging mainly between 4.0 and 5.6. There are intermittent periods of increase and decrease, with no clear sustained trend, implying fluctuating payment terms with suppliers.

Working Capital Turnover

Working capital turnover shows a notable increase starting in late 2020 into 2021, peaking around 3.8, followed by some declines but generally maintains elevated levels above 2.4 in subsequent periods. This indicates improved efficiency in utilizing working capital over recent years compared to earlier periods.

Average Inventory Processing Period

This period ranged from approximately 150 to 190 days, showing a rising trend particularly from early 2022 to mid-2024, where it exceeded 180 days multiple times. The longer processing times could signal slower inventory movement or changes in inventory management strategies.

Average Receivable Collection Period

The average receivable collection period generally increased from about 59 days in mid-2020 to consistently near or above 67 days in recent periods, mirroring the decline in receivables turnover. This implies customers are taking longer to settle payments.

Operating Cycle

The operating cycle ranges roughly between 210 and 260 days, with a peak around 260 days in 2022–2023, followed by some reduction back toward approximately 240 days in 2024 and 2025. This reflects variations in the combined time needed to convert inventory and receivables into cash.

Average Payables Payment Period

The payables payment period shows fluctuations between about 64 and 91 days, with occasional spikes such as near 91 days in early 2023. These fluctuations indicate changes in payment schedules to suppliers, with some extensions of payment terms at times.

Cash Conversion Cycle

The cash conversion cycle varies mostly from 143 to 189 days, peaking during 2022–2023 at above 180 days, then slightly declining but remaining elevated compared to earlier periods. This signals that the net time to convert resource inputs into cash increased for a period before settling somewhat, potentially impacting liquidity.

Overall, the financial data depicts moderate variability and some cyclical behavior in turnover and cycle metrics over time. There is evidence of slower receivables collection and longer inventory processing and conversion periods during certain intervals, offset partially by improved working capital turnover. The trends suggest a dynamic operating environment with changes in asset efficiency and cash flow timing requiring continuous management attention.

The analysis of the quarterly financial data reveals several key trends in cost of products sold, inventories, and inventory turnover ratios over the observed periods.

Cost of Products Sold, Excluding Amortization of Intangible Assets

The cost of products sold demonstrated a generally increasing trend over the quarters. Initially, the values were around 2,366 million US dollars in mid-2019 with gradual fluctuations. There was a noticeable dip in April 2020 at 2,264 million, potentially reflecting the impact of external factors such as market disruptions. Following this, the cost increased steadily with some volatility, peaking at 3,146 million in October 2024. The upward trend suggests either an increase in the volume of goods sold, inflationary cost pressures, or a combination of these factors.

Inventories

Inventories showed a persistent upward trajectory across the reported periods, starting at 3,932 million US dollars in mid-2019 and increasing to 5,886 million by mid-2025. The steady increase indicates accumulation of stock, which might be attributed to increased production, stockpiling due to anticipated demand, or slower turnover. Notable is the steady climb without significant decline, demonstrating a buildup of inventory levels over time.

Inventory Turnover Ratio

The inventory turnover ratio displayed some variability, beginning with values around 2.23 in early 2020 and experiencing a general downward trend through 2023, reaching lows near 1.91. This suggests a slowing in the rate at which inventories were sold and replaced. However, from late 2023 to 2025, the ratio stabilized and slightly improved to about 2.12 before a small decline again, indicating some recovery in inventory management efficiency, although not returning to the early levels. The decreasing trend during the middle periods could imply accumulation of slower-moving stock or inefficiencies in inventory utilization.

Overall, the data points to increasing costs and inventories over the examined periods, with a corresponding decrease and partial recovery in inventory turnover. These patterns suggest rising production or procurement activity matched with challenges in inventory management efficiency during certain periods. The increased inventory levels alongside rising costs may warrant further examination of supply chain dynamics, demand forecasting, and cost control measures.

Net Sales

Over the observed periods, net sales exhibited a generally increasing trend with some fluctuations. Initially, there was a decline in the quarter ending April 2020, possibly reflecting an external disruption or market challenge, as sales dropped from a peak around 7,717 million US dollars to 5,997 million US dollars. Subsequently, net sales recovered steadily, reaching a high point of approximately 8,589 million US dollars by April 2024. However, there were periodic declines or flat periods, such as in mid-2022 and early 2025, indicating some volatility or cyclical influences in revenue generation. Overall, the long-term pattern indicates recovery and growth post the mid-2020 low.

Accounts Receivable, Less Allowances and Credit Losses

The accounts receivable balance showed a pattern somewhat aligned with net sales, but with less pronounced volatility. A notable decline occurred in April 2020, mirroring the net sales drop, with receivables falling from about 6,248 million US dollars to 4,645 million US dollars. After this trough, receivables increased steadily, peaking around 6,260 million US dollars in October 2024. This downward shift and recovery pattern reflects changes in credit terms or collection efficiency following the sales trend. The consistency of receivables remaining in the range of approximately 5,000 to 6,500 million US dollars suggests stable credit management practices despite sales fluctuations.

Receivables Turnover Ratio

The receivables turnover ratio, available from April 2020 onward, shows a moderate downward trend over time. Starting at around 6.22 in April 2020, the ratio gradually decreased to a low of approximately 5.15 in January 2025 before a slight improvement to 5.46 by July 2025. This decline indicates a lengthening collection period or a reduction in receivables management efficiency over the observed quarters. Although the ratio fluctuates, the overall trend suggests challenges in converting receivables into cash at the earlier, more frequent rates. The gradual decrease requires attention as it may impact liquidity.

Summary Insights

The data reveal a business that experienced a significant external impact during early 2020, leading to declines in sales and receivables. Both metrics recovered over the following years, demonstrating resilience and growth capacity. However, the continued gradual decline in receivables turnover ratio suggests a weakening in accounts receivable efficiency or potential shifts in credit policies. This could affect working capital management and should prompt further analysis of collection practices and customer creditworthiness. The overall sales growth juxtaposed with deteriorating turnover ratios may indicate a need for more balanced focus on revenue and cash flow optimization.

The financial data for the company over a series of quarterly periods reveals several discernible trends in cost of products sold, accounts payable, and payables turnover ratio.

Cost of Products Sold, Excluding Amortization of Intangible Assets

The cost of products sold shows variability, with an overall tendency toward increase in recent years. Beginning at approximately 2,366 million US dollars in July 2019, the cost fluctuated but generally trended upwards, reaching peaks such as 3,045 million in April 2024. Notable rises occurred from early 2022 onwards, reflecting potential factors such as increased production costs or higher sales volumes. Periodic dips are also evident, suggesting seasonal or operational influences impacting cost structures.

Accounts Payable

The accounts payable figures demonstrate a somewhat fluctuating pattern without a clear long-term direction. Starting near 1,906 million US dollars in July 2019, values moved irregularly, with highs such as 2,662 million in April 2023 and repeated fluctuations in the 2,000 to 2,500 million range in subsequent quarters. The volatility in accounts payable may indicate changing credit terms with suppliers, variations in purchasing activity, or adjustments in working capital management.

Payables Turnover Ratio

The payables turnover ratio, which measures how quickly the company pays its suppliers, exhibits significant quarter-to-quarter variability. Initial available data beginning in April 2020 shows a ratio of 4.72, rising to peaks above 5.6 in some periods (e.g., October 2021, April 2024), and also falling to lows near 4.03 (April 2023). The fluctuations suggest inconsistent payment cycles or shifts in supplier terms or procurement patterns, with no evident long-term trend toward acceleration or deceleration in payables turnover.

In summary, the cost of products sold generally increased over the reviewed periods, whereas accounts payable showed no definitive trend but varied within a certain range. The payables turnover ratio's variability points toward dynamic payment behaviors, reflecting operational or strategic changes in managing supplier obligations. These patterns may have implications for cash flow management and supplier relationships within the company.

The financial data reveals several notable trends and patterns over the analyzed periods.

Working Capital

The working capital exhibits significant fluctuations across the quarters. Initially, from July 2019 to January 2020, the working capital increased from approximately $14,187 million to $15,308 million. However, there was a considerable decline in the second quarter of 2020, dropping to around $11,665 million, likely reflecting external challenges during that period. Subsequently, working capital showed partial recovery through the remainder of 2020 and into early 2021 but experienced a sharp decline again in April 2022 to $10,665 million and subsequently to a low of $8,086 million in July 2022. Following this trough, a recovery trend is observed with working capital gradually increasing, reaching approximately $11,693 million by the most recent quarter in July 2025. Overall, the working capital has shown volatility with periods of both contraction and recovery, signaling dynamic operational needs or changes in short-term asset and liability management.

Net Sales

Net sales have generally fluctuated within a moderate range, showing resilience despite some volatility. Sales rose from $7,493 million in July 2019 to $7,775 million by January 2021, with a noticeable dip in the April 2020 quarter to $5,997 million, coinciding with the decreased working capital and likely external market pressures. Following this dip, sales steadily recovered and peaked at $8,544 million in April 2023. After this peak, sales volumes underwent some oscillations but remained relatively stable around $8,000 million to $8,900 million in subsequent quarters through to July 2025. The pattern indicates a recovery and modest growth phase after an initial disruption, reflecting either increased market demand or successful sales strategies during the latter periods.

Working Capital Turnover Ratio

The working capital turnover ratio reveals important efficiency insights but is only available from April 2020 onward. The ratio started at 2.48 in April 2020 and declined slightly over the next few quarters to about 2.00 in January 2021, indicating slower revenue generation relative to working capital. From mid-2021 through to early 2022, there was an increasing trend, with the ratio rising to as high as 3.84, implying improved efficiency in generating sales from working capital during this period. This peak in turnover corresponds with the period of lower working capital balances and recovering sales. Post the peak, the turnover ratio decreased somewhat but remained elevated above 2.4, showing sustained efficiency improvements relative to earlier periods.

Overall Observations

The data shows that the company faced a notable disruption around early 2020, likely due to external economic factors, as evidenced by drops in both working capital and net sales. Following this, there is a clear pattern of recovery and stabilization, with both working capital and net sales improving through 2023 and maintaining higher levels into 2025. The working capital turnover ratio suggests improvements in capital efficiency during the recovery phase, particularly when working capital was lower, which could point to better management of operational resources and inventory. However, the volatility in working capital signals potential ongoing challenges in balancing short-term assets and liabilities.

Inventory Turnover Ratio

The inventory turnover ratio begins from a value of 2.23 in July 2020 and fluctuates moderately over the subsequent periods. It initially decreases slightly to 2.1 in October 2020, then rises steadily to a peak of 2.47 in July 2021. Following this peak, there is a downward trend reaching as low as 1.91 in July 2023. After this low point, the ratio shows some recovery, increasing again to 2.15 by April 2024, before stabilizing around the 2.02 to 2.12 range towards the later periods through July 2025.

Average Inventory Processing Period (Days)

The average inventory processing period in days exhibits an opposite trend to the turnover ratio, starting at 164 days in July 2020. It increases gradually to a local maximum of 190 days around January to April 2023. Thereafter, it slightly decreases, reaching around 170 days by July 2024, before again trending marginally upwards to 181 days by July 2025. Overall, this period shows a generally increasing trend until early 2023, followed by moderate fluctuations in the subsequent quarters.

Trend Analysis

There is a clear inverse relationship between the inventory turnover ratio and the average inventory processing period, consistent with expectations. When the turnover ratio rises, the processing period shortens, indicating faster inventory movement. Conversely, when the turnover ratio declines, the processing period extends, reflecting slower inventory processing. The data suggests that inventory efficiency peaked around mid-2021, then declined through mid-2023, potentially indicating challenges in inventory management or changes in demand during this time. Slight improvements in turnover and reductions in processing period occur after mid-2023 but remain below the earlier peak performance.

The receivables turnover ratio demonstrates a downward trend initially, declining from 6.22 to a low point around 5.21, indicating a gradual decrease in the frequency at which receivables are collected over time. Following that period, the ratio stabilizes with minor fluctuations, generally maintaining around the 5.2 to 5.8 range. This pattern suggests that while collection efficiency decreased initially, the company's ability to collect receivables stabilized in later periods.

Correspondingly, the average receivable collection period, expressed in number of days, shows an increase from 59 days to a peak of 70 days, indicating a lengthening in the time the company takes to convert receivables into cash. After this peak, the collection period fluctuates around the 67 to 70-day mark, without a clear trend of improvement or deterioration. This reinforces the observation from the turnover ratio, suggesting that receivables are being collected more slowly during the initial periods and then remaining relatively steady in subsequent quarters.

Receivables Turnover Ratio

Initial decline from 6.22 to approximately 5.21, signaling decreased collection frequency.

Post-decline stabilization with values ranging roughly between 5.2 and 5.8.

Minor fluctuations indicate some variability, but no significant recovery to earlier higher turnover levels.

Average Receivable Collection Period

Increase from 59 days to 70 days, indicating slower collection during the earlier periods.

Subsequent fluctuations between 67 and 70 days, maintaining a relatively stable but elevated collection period.

Overall, the analysis of these metrics indicates a shift towards longer receivable cycles starting around the mid-2019 to early 2020 period. This could imply changes in credit policy, customer payment behavior, or external factors affecting collections. The stabilization of these figures in later quarters suggests an adaptation to this new norm without further significant deterioration or improvement.

The analysis of the average inventory processing period reveals a generally fluctuating trend over the observed timeframe. Beginning at 164 days in July 2020, the period increases steadily, reaching a peak of 190 days in October 2022. Following this peak, there is a slight decline, with values oscillating between 170 and 181 days in the most recent quarters. This pattern indicates some variability in how long inventory remains in processing, with periods of extended duration potentially reflecting operational delays or adjustments in inventory management practices.

Turning to the average receivable collection period, the data shows a moderate upward trend starting from 59 days in July 2020. It climbs to a high of 70 days on several occasions, including January 2021 and January 2023, before stabilizing around 67 to 69 days in subsequent quarters. The fluctuations within a narrow range suggest relatively consistent credit and collection policies, though slight increases may warrant monitoring to prevent cash flow impacts.

The operating cycle, which combines inventory processing and receivable collection periods, mirrors the patterns of the underlying components. From a low point of 216 days in July 2020, it rises progressively to a peak of 260 days in January 2023. Thereafter, a modest decrease is observed, with the cycle length settling near 240 to 248 days in the latest periods. The overall increase followed by a mild decline reflects the combined effects of extended inventory and receivable durations, highlighting the importance of managing both elements to optimize working capital efficiency.

Inventory Processing Period

Fluctuated between 150 and 190 days, peaking in late 2022, with a mild decline thereafter.

Receivable Collection Period

Gradually increased from 59 to around 70 days, maintaining stability in recent quarters.

Operating Cycle

Increased from 216 to 260 days by early 2023, with a slight reduction in the most recent data points.

Payables turnover

The payables turnover ratio exhibits variability over the observed periods, generally fluctuating between approximately 4.0 and 5.7 times. Initially available from April 2020 onwards, there is a noticeable peak in turnover occurring in the period ending October 2021, reaching around 5.67 times, suggesting a relatively faster payment cycle during this time. Subsequent quarters show moderate declines and recoveries, with the ratio maintaining a level mostly between 4.5 and 5.6, indicating some inconsistencies but overall stable efficiency in managing payables. Towards the most recent periods, the turnover remains within this range without extreme highs or lows, implying a steady approach to payables management.

Average payables payment period

The average payables payment period, expressed in days, inversely correlates with the payables turnover ratio as expected. Beginning with a shorter payment period of 66-77 days around mid-2020, the number of days paid shows fluctuations, with noticeable increases during certain quarters. For instance, the payment period lengthened to a high of 91 days in one quarter, indicating delayed payments relative to other periods. The data indicates cycles of both tightening and loosening of payment terms, with typical values ranging from the mid-60s to the low 80s days. In recent quarters, the payment period appears to stabilize near the upper 70s, consistent with a cautious payment strategy or evolving supplier terms.

Overall trend and insights

The dynamic between the two measures highlights periods of more aggressive payables management contrasted with times of relaxed payment schedules. The fluctuations in payables turnover and average payment days suggest adjustments possibly responding to operational needs or cash flow considerations. There is no sustained trend of continuous improvement or deterioration, indicating a balanced approach to supplier payments. The data also hints at normal seasonal or business cycle influences on payables management, with no abrupt or extraordinary shifts evident.

Average Inventory Processing Period

The average inventory processing period shows an overall increasing trend over the analyzed quarters. Starting from 164 days in July 2020, it experienced fluctuations but generally rose to peak values around 190 days in early 2023. Following this peak, it slightly decreased before increasing again, reaching 181 days by mid-2025. This indicates a lengthening duration in holding inventory over time, potentially reflecting changes in inventory management or demand conditions.

Average Receivable Collection Period

The average receivable collection period exhibits moderate variability but remains relatively stable around the mid-60s to low 70s days range. It began near 59 days in mid-2020, increased to approximately 70 days in early 2023, and then continued to fluctuate slightly around this level through mid-2025. This stability suggests consistent credit and collection policies with minor adjustments affecting the speed of receivables turnover.

Average Payables Payment Period

The average payables payment period demonstrates some fluctuation between 64 and 91 days. Initially, it decreased from 77 days in mid-2020 to lower values in late 2020, followed by oscillations with a notable peak of 91 days in early 2023. Subsequently, it moderated to a range between 70 and 79 days. The trends imply variability in the company's supplier payment practices, with periods of both extended and shorter payment durations.

Cash Conversion Cycle

The cash conversion cycle generally increased from 146 days in mid-2020 to a high of 189 days around early 2024, indicating a lengthening in the time taken for the company to convert its investments in inventory and receivables into cash. After peaking, it slightly declined to levels around 166-169 days by mid-2025. This pattern suggests that, despite some improvements toward the end of the period, the company experienced prolonged operational cash cycles during the timeframe analyzed.