Monsanto Co. (NYSE:MON)

Inventory Turnover

The inventory turnover ratio exhibited fluctuations throughout the analyzed periods, ranging roughly between 1.64 and 2.48. Initial increases were observed from late 2012 through mid-2013, indicating improved efficiency in inventory management. However, this ratio then experienced a general downward trend with intermittent rebounds, suggesting varying inventory levels or changes in sales volume affecting turnover rates.

Receivables Turnover

Receivables turnover showed significant volatility, with values spanning from as low as approximately 3.65 to highs around 9.17. This variability points to fluctuating effectiveness in collecting receivables, potentially impacted by credit policies or customer payment behavior, with periods of both rapid and slower collections.

Payables Turnover

Payables turnover displayed a generally broad range between around 5.58 and 10.35, indicating inconsistent payment patterns to suppliers. Periods of higher turnover suggest faster payments, while lower figures imply extended payment periods, reflecting variability in managing supplier liabilities.

Working Capital Turnover

A notable upward surge was evident around early to mid-2016, where the ratio peaked significantly before returning to lower yet elevated levels compared to previous years. This suggests a temporary increase in the efficiency of using working capital to generate revenues during that time frame, followed by stabilization at a higher utilization rate.

Average Inventory Processing Period

The average inventory processing period generally ranged between approximately 147 and 222 days. There were considerable increases during late 2014 and again towards the end of the data series, indicating longer holding times for inventory. Peaks in this period suggest potential challenges in moving inventory efficiently during those quarters.

Average Receivable Collection Period

Receivable collection periods varied substantially, fluctuating from about 40 to 100 days. These changes imply irregularities in customer payment timing or credit terms, with certain quarters exhibiting markedly prolonged collection durations, adversely affecting cash flow cycles.

Operating Cycle

The operating cycle consistently fell within a broad range of approximately 141 to 289 days, reflecting the combined length of inventory processing and receivables collection periods. Trends showed periodic elongations and contractions, suggesting shifts in operational efficiencies and cash flow timing throughout the periods.

Average Payables Payment Period

The average payables payment period varied from roughly 35 up to 65 days. Longer payment periods noted at specific points, particularly in late 2017 and early 2018, indicate extended time taken to pay suppliers, possibly as a strategy to optimize cash flows.

Cash Conversion Cycle

The cash conversion cycle followed a fluctuating pattern between approximately 141 and 252 days. Peaks in the cycle were often associated with increases in inventory or receivables periods and/or reductions in payables periods. Such variability points to changing cash flow management efficiency, with longer cycles representing greater capital tied up in operations.

The analysis of the quarterly financial trends reveals several noteworthy patterns in cost of goods sold, net inventory levels, and inventory turnover ratios over the observed periods.

Cost of Goods Sold (COGS)

The cost of goods sold exhibits a cyclic pattern with recurring fluctuations every year. Peaks are generally observed in the February and May quarters, with values frequently exceeding 2,000 million US dollars during these periods. Conversely, lower COGS figures tend to occur in the August quarters, often dropping below 1,500 million US dollars. This seasonality suggests cyclical demand or production schedules impacting the company's costs. Over the long term, the values do not show a strong upward or downward trend but rather fluctuate within a range, indicating relatively stable operational activity with seasonal variations.

Net Inventory

Inventory levels also show seasonal fluctuations, often peaking around the November or February quarters and declining somewhat in the subsequent quarters. Notably, inventory values range approximately between 2,800 million and 4,300 million US dollars. There is an observable increase in inventory levels around the end of several years, likely reflecting stock accumulation strategies ahead of peak sales seasons. While some quarters demonstrate a build-up in inventory, subsequent quarters depict depletion, possibly due to product sales or inventory management policies. Overall, the inventory trend indicates active management aligned with the cyclic business rhythm.

Inventory Turnover Ratio

The inventory turnover ratio fluctuates between approximately 1.6 and 2.5 across the periods, indicating the frequency with which inventory is sold and replaced during the quarter. Higher turnover rates generally correspond to quarters with elevated cost of goods sold and somewhat lower inventory levels, particularly noticeable in the May and August quarters. Conversely, turnover ratios tend to be lower in the November and February quarters when inventories peak. The ratio shows moderate variation but remains within these historical bounds, implying a consistent inventory management efficiency with seasonal impacts.

In summary, the data reflect consistent seasonal patterns affecting cost of goods sold, inventory levels, and inventory turnover. The synchronization of higher inventory and lower turnover during certain quarters, coupled with elevated COGS during others, suggests planned inventory accumulation and subsequent sales cycles. No clear long-term upward or downward trends are evident, indicating operational stability across the examined periods with typical seasonal fluctuations inherent to the business model.

The analyzed financial data reveals significant fluctuations in net sales, trade receivables, and receivables turnover ratios over the observed quarterly periods.

Net Sales

Net sales exhibit pronounced seasonality and volatility. The highest values typically occur in the quarters ending in February, such as US$ 5472 million in February 2013 and US$ 5832 million in February 2014, indicating strong sales performance in early calendar years. Conversely, sales tend to dip significantly in the third quarter of each year, with figures such as US$ 2202 million in August 2013 and US$ 2355 million in August 2015 reflecting seasonal downturns.

Over the total observed period, there is no clear upward or downward trend in net sales. Instead, the values oscillate within a range, suggesting a cyclical market or operational pattern.

Trade Receivables, Net

Trade receivables parallel net sales in displaying seasonal patterns but with less pronounced fluctuations. Peaks in trade receivables occur typically in periods immediately following high sales quarters, illustrating the lag between sales recognition and cash collection. For example, high receivables values like US$ 4229 million in May 2014 and US$ 3998 million in May 2015 follow strong sales quarters.

Despite some volatility, trade receivables tend to stabilize during the mid-year and end-of-year quarters. This pattern indicates active management of accounts receivable cycles, though seasonal influences persist.

Receivables Turnover Ratio

The receivables turnover ratio, which measures the efficiency of receivables collection, exhibits inverse seasonality to net sales and trade receivables. Higher turnover ratios are frequently observed in quarters with lower sales and receivable balances, such as 9.17 in August 2015 and 8.67 in August 2013, indicating faster collection during these periods.

Conversely, in quarters with peak sales and high receivables, the turnover ratio declines, sometimes sharply—for example, 3.65 in May 2014 and 3.71 in May 2017. This pattern suggests that the company requires more time to collect receivables when sales volume is elevated.

While the turnover ratio fluctuates considerably quarter to quarter, it consistently reverses the seasonal trends observed in sales and receivables, supporting an expected operational cycle of sales, receivables accumulation, and cash collection.

In summary, the data reflects a company with strong seasonality in revenue generation and credit sales management. The periodic variations in sales and receivables impact collection efficiency, as evidenced by the fluctuating turnover ratios. There is no discernible long-term trend of growth or decline across the reported periods, suggesting that operations and market conditions maintain a steady but cyclical pattern.

The analyzed financial data reveals several key trends regarding cost management and supplier payment efficiency over the observed periods.

Cost of Goods Sold (COGS)

The cost of goods sold exhibits a cyclical pattern with recurring fluctuations at regular intervals. Initial values start around 1500 to 2400 million US dollars, demonstrating peaks approximately every four to five quarters. Higher values occur consistently around the first quarter of each fiscal year, suggesting seasonality or period-specific factors affecting production costs. Despite these variations, the overall level of COGS remains relatively stable with no strong, sustained upward or downward trend over the entire timeline.

Accounts Payable

The accounts payable figures show moderate volatility, ranging roughly between 600 million and 1200 million US dollars. Peaks tend to occur intermittently, with some of the highest payable amounts corresponding roughly to the periods of increased COGS. This alignment indicates plausible synchronization between purchasing activity and payable balances, though the correlation is not perfectly consistent throughout all quarters. The data also reflects periods where payables remain relatively flat or decrease slightly before rising again.

Payables Turnover Ratio

The payables turnover ratio displays marked fluctuations without a clear linear trend. Values oscillate between lows slightly above 5 and highs exceeding 10, emphasizing variations in the frequency with which payables are settled during different quarters. Higher turnover ratios suggest periods of faster payment to suppliers, whereas lower ratios indicate slower payment cycles. Notably, some of the lowest turnover values correlate with quarters where accounts payable are at their highest, implying lengthened payment terms or delayed settlements in those periods. Conversely, increased payables turnover ratios often occur when accounts payable are lower, reflecting quicker payment processing.

Overall, the observed data suggests a cyclical business environment with periodic changes in production costs and corresponding supplier payment patterns. The relationship between accounts payable and payables turnover highlights dynamic payment practices that may be influenced by operational or strategic decisions across quarters. No definitive trend in cost efficiency or payment speed is apparent, but the variability points to adaptive financial management responsive to seasonal or market conditions.

The analysis of the quarterly financial data reveals several notable trends in the company's working capital, net sales, and working capital turnover over the observed periods.

Working Capital

The working capital values exhibit considerable fluctuations over the quarters. Initially, there is an upward trend from approximately 5,899 million USD at the end of November 2012, reaching a peak near 7,327 million USD by May 2013. This is followed by a general decline with some variability, particularly evident in the latter half of 2014 and early 2015, where values drop significantly to levels around 2,000 million USD. Subsequently, working capital shows modest increases and decreases but remains predominantly lower than the earlier peaks, oscillating between roughly 2,000 and 3,000 million USD towards the end of the period in early 2018.

Net Sales

Net sales display a cyclical pattern with some seasonal characteristics. Initial quarters show sales figures ranging from about 2,200 to 5,400 million USD, with the highest sales usually occurring between the first and second quarters of each year. This cyclical nature continues consistently, with notable peaks in February 2013, February 2014, and February 2015. Despite the fluctuations, there is no clear long-term upward or downward trend in sales, as values alternate between approximately 2,200 million and over 5,000 million USD throughout the periods.

Working Capital Turnover

The working capital turnover ratio, which measures the efficiency of working capital utilization in generating sales, exhibits considerable variation over time. In the early reported quarters, turnovers range between 2.0 and 2.6, suggesting moderate efficiency. However, starting from late 2014 through 2017, there is a marked increase in this ratio, peaking at an exceptionally high value of 9.46 in August 2016. This suggests a significant improvement in working capital efficiency during this time frame, potentially due to reduced working capital relative to sales. The ratio remains elevated (generally above 4) through the end of the observed period, indicating sustained enhanced efficiency compared to the initial quarters.

Collectively, these patterns suggest that while sales maintain a somewhat consistent cyclical behavior, working capital levels have decreased considerably from their early highs, contributing to a substantially higher turnover ratio over time. This implies increased effectiveness in the use of working capital resources to generate sales, possibly reflecting strategic operational adjustments or changes in asset management practices throughout the period.

Inventory Turnover

The inventory turnover ratio exhibits fluctuations across the observed periods without a clear long-term upward or downward trend. Beginning at 1.86, the ratio reaches a peak of 2.48 in May 2013 before declining and then generally oscillating around values between 1.6 and 2.2 in subsequent periods. Notably, there is a decline after November 2014, bringing the ratio closer to the lower end of the observed range by February 2018 at 1.64. This suggests periods of both improved and weakened inventory efficiency, but no sustained trend toward either significant improvement or deterioration.

Average Inventory Processing Period

The average inventory processing period, measured in days, moves inversely relative to the inventory turnover ratio, as expected. Starting at 196 days, it decreases to a low of 147 days in May 2013, corresponding to the peak inventory turnover during the same timeframe. After that, the processing period increases again, peaking at 222 days in February 2018. This indicates that the time taken to process inventory has lengthened over the long term, suggesting a decline in inventory management efficiency or changes in sales patterns that result in longer holding periods.

Overall Analysis

The data reflects variability in inventory management effectiveness over the analyzed timeframe. Initial improvements in inventory turnover and reductions in processing period early in the series are followed by reversals that lead to longer processing times and lower turnover rates in later periods. This pattern may be indicative of cyclical business conditions, alterations in product mix, supply chain factors, or changes in market demand affecting inventory handling. The opposite directional trends of the turnover ratio and processing period confirm expected inventory dynamics but point to a general easing of efficiency in inventory management by the end of the examined interval.

The analysis of the receivables turnover ratio over the observed periods reveals a fluctuating pattern with no clear long-term upward or downward trend. The ratio frequently oscillates between higher values around 6 to 9 and lower values near 3 to 4. This variability suggests inconsistent efficiency in collecting receivables across quarters. Notably, some quarters such as May 31, 2013, May 31, 2014, May 31, 2015, and May 31, 2017 exhibit pronounced dips in the turnover ratio, indicating slower collection in those periods.

Correspondingly, the average receivable collection period displays an inverse pattern, as expected, given the relationship between these two metrics. The number of days to collect receivables fluctuates significantly from as low as 40 days to as high as 100 days. Periods with reduced turnover ratios coincide with extended collection periods, reaching near or above three months. These peaks in collection duration suggest challenges in accounts receivable management during specific quarters.

Overall, the data indicates intermittent inefficiencies in receivable collections that vary by quarter without a sustained improvement or deterioration. This cyclic variability may be influenced by seasonal factors, changes in credit terms, or collection practices. The presence of higher turnover ratios and shorter collection periods in certain quarters demonstrates that improved receivable management is possible, but consistent application appears lacking.

Inventory Processing Period

The average inventory processing period displayed significant fluctuations over the examined quarters. Initially, this period decreased from 196 days to a low of 147 days within the first half of 2013, indicating improved inventory turnover. However, subsequent quarters saw an increase, peaking at 222 days by February 2018. This upward trend in later periods suggests a lengthening in the time required to process inventory, potentially impacting working capital and operational efficiency negatively.

Receivable Collection Period

The period for collecting receivables showed notable volatility. Starting from 57 days, it rose sharply to 89 days by May 2013, then decreased again to around 40-55 days in other quarters. The pattern reveals intermittent spikes, particularly in May 2013, May 2014, and May 2017, where collection periods approached or exceeded 90 days. While some quarters exhibited shorter collection cycles, the inconsistency might point to challenges in accounts receivable management or customer payment behaviors at different points.

Operating Cycle

The operating cycle, combining both inventory processing and receivable collection periods, reflected similar variability. The cycle shortened from 253 days in late 2012 to 191 days in mid-2013, denoting improved overall operating efficiency. However, it extended again to nearly 289 days in mid-2015 and fluctuated around 270-280 days in later periods. This extended cycle duration implies that the company required more time to convert resources into cash, potentially straining liquidity and tying up capital.

Summary of Trends and Implications

Overall, the data indicate that although there were periods of improved efficiency in inventory management and receivable collection, these were often followed by reversals resulting in longer processing and collection periods. The increasing average inventory days and the irregular receivable periods contributed to an extended operating cycle in recent years. These trends may suggest inefficiencies in working capital management, which could affect cash flow and operational flexibility. Management attention to inventory turnover and receivables collection processes may be warranted to enhance financial performance and liquidity.

Payables Turnover

The payables turnover ratio exhibits notable fluctuation throughout the observed periods. Initially, it begins at a moderate level around 8.48 and peaks intermittently, reaching values above 10 in some quarters such as May 2015 and February 2016. However, there are recurring declines, with significant troughs observed around August 2013, August 2014, and late 2016. Toward the end of the timeline, the ratio trends downward, falling to approximately 7.53 by February 2018. This pattern indicates varying efficiency in managing payables, with periods of faster turnover alternating with slower payment rates.

Average Payables Payment Period

The average payables payment period, measured in days, inversely mirrors the payables turnover dynamics. Early periods reflect a moderately short payment interval near 43 days, with occasional decreases to approximately 35-38 days, indicating prompt payments. In contrast, several spikes occur, most notably reaching 56 to 65 days during August 2014, November 2016, and February 2018, suggesting delayed payment practices in these quarters. The overall tendency demonstrates that while the company sometimes accelerates payments, there are recurrent extensions in payment duration, which may affect creditor relationships or cash flow management.

Summary of Trends and Insights

The data reveals a cyclical pattern between payables turnover and payment period, consistent with the formulaic relationship where a higher turnover corresponds to fewer days payable and vice versa. The company's payment behavior shows variability rather than a steady trend, possibly reflecting tactical adjustments in working capital management or responses to operational needs over time. Notably, the increased payment periods in several later quarters may denote strategic liquidity conservation or shifts in supplier negotiation outcomes.

While periods of efficient payables management are evident, the recurrence of extended payment durations warrants attention, as prolonged payables can affect supplier trust and may have implications for credit terms. Overall, fluctuations across quarters suggest a balancing act between maintaining liquidity and optimizing payables turnover, emphasizing the importance of continuous monitoring to ensure alignment with financial and operational objectives.

Inventory Management

The average inventory processing period exhibits notable fluctuations across the quarters. Starting at 196 days, it declined to a low of 147 days, then increased significantly to peak around 221-222 days in the later periods. This suggests periodic challenges in inventory turnover, with some quarters indicating slower movement of inventory and potential overstocking issues.

Receivables Collection

The average receivable collection period shows considerable variability as well. It frequently oscillates between approximately 40 and 100 days, indicating irregularity in the speed at which the company collects payments from customers. High spikes around 89, 96, and 98 days punctuate periods of slower collection, which could impact cash flow management negatively.

Payables Payment

The average payables payment period appears relatively more stable but still demonstrates some variation. The cycle ranges mainly between 35 and 65 days, with a general tendency toward longer payment periods in the latter quarters. This implies a possible strategic extension of payment terms, potentially to optimize working capital.

Cash Conversion Cycle

The cash conversion cycle (CCC) follows a pattern of fluctuation similar to the inventory and receivables periods. The CCC varies from a low of 141 days to a high exceeding 250 days in some quarters, indicating inconsistent efficiency in converting investments in inventory and receivables into cash. The periods with elevated CCC values likely represent increased operational inefficiency or delays in cash collection and inventory turnover, impacting liquidity.

Overall Insights

The data reveal that the company experiences significant variability in its working capital components, leading to an unstable cash conversion cycle. The irregularity in receivables collection combined with fluctuating inventory turnover contributes to inconsistent cash flow performance. Efforts to standardize collection processes and improve inventory management might yield improved liquidity and operational efficiency. Meanwhile, the relatively steady but gradually increasing payables period may serve as a counterbalance to cash outflows, suggesting some level of deliberate working capital optimization.