Mosaic Co. (NYSE:MOS)

Inventory turnover

The inventory turnover ratio shows fluctuations over the five-year period, starting at 4.24 in 2017, declining to a low of 3.34 in 2021 after peaking at 4.38 in 2020. This indicates a variability in the efficiency of inventory management, with a notable drop in turnover in the latest year, suggesting slower inventory movement.

Receivables turnover

The receivables turnover ratio exhibits a steady decline from 11.53 in 2017 to 8.07 in 2021. This trend points to a lengthening in the time taken to collect receivables, potentially impacting cash flow efficiency negatively.

Payables turnover

Payables turnover also trends downward from 12.14 in 2017 to 7.26 in 2021, reflecting longer payment periods to suppliers. This could signify improved cash retention but might affect supplier relations.

Working capital turnover

Working capital turnover shows a strong upward trend, increasing from 2.87 in 2017 to 22.97 in 2021. This sharp increase suggests a significant improvement in the utilization of working capital to generate sales, especially prominent from 2019 onward.

Average inventory processing period

The average inventory processing period varies but displays a worsening trend in 2021, reaching 109 days, the highest in the period. After decreasing to 83 days in 2020, the rise suggests slower inventory processing and possibly a build-up of stock.

Average receivable collection period

The receivable collection period lengthens consistently from 32 days in 2017 to 45 days in 2021, corroborating the decrease in receivables turnover and indicating extended credit terms or delays in collection.

Operating cycle

The operating cycle experiences fluctuations, increasing overall from 118 days in 2017 to 154 days in 2021, with a low point of 120 days in 2020. The extension implies a longer duration for the full process of inventory purchase, sale, and collection.

Average payables payment period

An increase is observed in the average payables payment period, rising from 30 days in 2017 to 50 days in 2021. This lengthening indicates that the company is taking more time to settle its payables, which aligns with the decline in payables turnover.

Cash conversion cycle

The cash conversion cycle has fluctuated, decreasing from 88 days in 2017 to 83 days in 2020 but increasing again to 104 days in 2021. The increase in the latest year reflects extended time tied up in working capital, potentially stressing liquidity.

Cost of Goods Sold (COGS)

The cost of goods sold exhibits fluctuations over the five-year period. Starting at 6,566,600 thousand US dollars in 2017, it increased significantly to 8,088,900 thousand US dollars in 2018. It then marginally decreased to 8,009,000 thousand US dollars in 2019 and further declined to 7,616,800 thousand US dollars in 2020. However, in 2021, the COGS rose sharply to 9,157,100 thousand US dollars, marking the highest point in the period analyzed.

Inventories

Inventories showed an overall increasing trend but with variability across the years. Beginning at 1,547,200 thousand US dollars in 2017, inventories rose substantially to 2,270,200 thousand US dollars in 2018. In 2019, they declined slightly to 2,076,400 thousand US dollars, followed by a more pronounced drop to 1,739,200 thousand US dollars in 2020. The year 2021 saw a considerable increase to 2,741,400 thousand US dollars, reaching the highest inventory level during the period.

Inventory Turnover Ratio

The inventory turnover ratio reveals fluctuations in operational efficiency related to inventory management. The ratio started at 4.24 in 2017, decreased to 3.56 in 2018, and climbed moderately to 3.86 in 2019. In 2020, the ratio improved notably to 4.38, the highest value in the given timeframe, suggesting enhanced efficiency. However, in 2021, the ratio declined sharply to 3.34, indicating slower movement of inventory despite the increase in cost of goods sold and inventories.

Summary of Observations

Overall, the data reveals a pattern of increasing cost of goods sold with some short-term decreases, particularly in 2019 and 2020. Inventories experienced notable volatility, with large increases in 2018 and 2021, contrasting with declines in 2019 and 2020. The inventory turnover ratio generally decreased over time with an exception in 2020 when it peaked, indicating temporary improved inventory management. The decline in turnover ratio in 2021, despite a rise in inventories and COGS, may point to challenges in efficiently converting inventory into sales or potential overstocking at the end of the period.

Net Sales

Net sales exhibited a generally increasing trend over the five-year period, with a notable dip in 2020. Starting at 7,409,400 thousand US dollars in 2017, net sales rose to 9,587,300 thousand in 2018. This was followed by a slight decrease to 8,906,300 thousand in 2019 and a further decline to 8,681,700 thousand in 2020. However, in 2021, net sales surged significantly to 12,357,400 thousand, marking the highest value in the analyzed period and indicating a strong recovery and growth.

Receivables, Net

Net receivables showed a consistent upward trajectory throughout the period. Beginning at 642,600 thousand US dollars in 2017, receivables increased steadily each year, reaching 1,531,900 thousand by the end of 2021. This nearly two-and-a-half-fold increase reflects a growing amount of credit extended to customers or longer collection periods.

Receivables Turnover

The receivables turnover ratio demonstrated a declining trend from 2017 to 2021. Starting at 11.53 in 2017, the ratio slightly decreased each year to 8.07 in 2021. This decrease suggests that the company’s efficiency in collecting receivables has weakened over time, possibly implying longer collection periods or challenges in receivables management despite higher sales volumes and increasing receivables balances.

The analysis of the financial data over the five-year period reveals several key trends related to the company's operational expenses and payment efficiency.

Cost of Goods Sold (COGS)

The cost of goods sold exhibits an overall increasing trend from 2017 through 2021. Starting at $6.57 billion in 2017, COGS rose significantly to approximately $8.09 billion in 2018, remaining relatively stable in 2019 at around $8.01 billion, before a slight decline to $7.62 billion in 2020. This decrease in 2020 is followed by a notable increase in 2021, reaching approximately $9.16 billion, the highest in the period under review. This pattern suggests fluctuating cost pressures, potentially influenced by market conditions or operational changes, culminating in a substantial rise in costs by the end of 2021.

Accounts Payable

Accounts payable show a general upward trend throughout the period. Beginning at $541 million in 2017, the figure increased substantially to $781 million in 2018. It then dipped slightly to $680 million in 2019 but rose again to $769 million in 2020. By 2021, accounts payable surged to $1.26 billion, representing the highest point in the five-year span. This increase in accounts payable may indicate extended credit terms with suppliers or increased purchasing activities.

Payables Turnover Ratio

The payables turnover ratio demonstrates a declining trend from 12.14 in 2017 to 7.26 in 2021. After a drop to 10.36 in 2018, the ratio partially rebounded to 11.77 in 2019 but then steadily decreased in the following years to 9.9 in 2020 and further to 7.26 in 2021. A decreasing payables turnover ratio indicates that the company is taking longer to pay its suppliers, which may suggest liquidity management strategies or changing payment policies.

In summary, the company has experienced increasing costs of goods sold and rising accounts payable balances over the period, while its payables turnover ratio has consistently declined. Together, these trends suggest that while operational costs have escalated, the company has simultaneously extended its payment periods to suppliers, potentially as a cash flow management tactic or response to market conditions. Further analysis would be required to assess the impact on overall financial health and supplier relationships.

Working Capital

The working capital shows a consistent downward trend from 2017 to 2020, decreasing significantly from 2,585,400 thousand USD in 2017 to 374,700 thousand USD in 2020. In 2021, there is a moderate recovery to 537,900 thousand USD, yet the value remains considerably below the level observed in 2017. This pattern indicates a reduction in short-term liquidity and available operational funds over the period, with a slight improvement in the latest year.

Net Sales

Net sales increase from 7,409,400 thousand USD in 2017 to a peak of 9,587,300 thousand USD in 2018, followed by a slight decline in 2019 and 2020 to 8,906,300 and 8,681,700 thousand USD respectively. In 2021, there is a strong rebound, with net sales rising sharply to 12,357,400 thousand USD, indicating robust revenue growth exceeding prior years' levels.

Working Capital Turnover

The working capital turnover ratio exhibits a strong upward trajectory over the five-year period, rising from 2.87 in 2017 to 23.17 in 2020, with a slight dip to 22.97 in 2021. The increasing ratio suggests a significant improvement in the efficiency with which the company utilizes its working capital to generate sales, particularly notable given the declining working capital levels during the same period.

Overall Analysis

The financial data reveal a strategic shift towards higher efficiency in working capital use. Despite a marked reduction in working capital, the company managed to sustain and ultimately grow net sales substantially by 2021. The growing working capital turnover ratio corroborates enhanced operational efficiency, suggesting better management of current assets and liabilities relative to sales volume. The moderate recovery in working capital in 2021, alongside strong sales growth, could be indicative of reinvestment or improved liquidity to support expanded business activities.

Inventory Turnover Ratio

The inventory turnover ratio fluctuated over the five-year period. It started at 4.24 in 2017 and declined to 3.56 in 2018, indicating a slowdown in the frequency of inventory being sold and replaced. A slight recovery occurred in 2019 to 3.86, followed by a more pronounced increase in 2020 reaching 4.38, the highest point during the period. However, in 2021, the ratio decreased significantly to 3.34, the lowest level in the analyzed timeframe. This pattern suggests variability in inventory management efficiency, with possible influences from operational changes or market conditions, culminating in a less efficient turnover in the last year.

Average Inventory Processing Period

The average inventory processing period showed an inverse trend to the inventory turnover ratio, as expected. It increased from 86 days in 2017 to 102 days in 2018, indicating that inventory was held longer before being processed. Subsequently, the processing period shortened to 95 days in 2019 and further to 83 days in 2020, reflecting improvements in inventory management or faster sales cycles. In 2021, a sharp increase occurred, with the period extending to 109 days, the longest duration recorded in the period analyzed. This suggests a slowdown in inventory movement or changes in operational dynamics that led to increased inventory holding times.

Summary of Trends

Overall, there is a clear inverse relationship between inventory turnover and the average inventory processing period, consistent with typical inventory dynamics. The company experienced variability in both ratios, with an initial deterioration in 2018, improvements through 2019 and 2020, followed by a marked decline in turnover efficiency and a rise in processing days in 2021. Such trends may reflect external market factors, supply chain disruptions, or internal operational adjustments affecting inventory management. The data points to a need for investigation into the factors causing longer inventory holding periods and reduced turnover in the latest year to enhance operational efficiency.

Receivables Turnover

The receivables turnover ratio exhibits a declining trend from 11.53 in 2017 to 8.07 in 2021. This reduction indicates a decreasing efficiency in collecting receivables over the five-year period, suggesting that the company is taking longer to convert its accounts receivable into cash.

Average Receivable Collection Period

The average collection period has increased steadily from 32 days in 2017 to 45 days in 2021. This growth in the number of days indicates that, on average, the company is taking more time to collect payment from its customers, which aligns with the observed decline in receivables turnover.

Overall Analysis

The inverse relationship between the receivables turnover ratio and the average collection period is evident, reflecting a consistent pattern where slower collections correspond with a reduced turnover. This trend may point to loosening credit policies, operational inefficiencies, or external factors affecting customers' payment timelines. Monitoring and addressing the increased collection period is important to manage liquidity and working capital effectively.

The analysis of the annual financial metrics reveals notable fluctuations in the company's operating efficiency over the five-year period.

Average Inventory Processing Period

The duration of inventory processing initially increased from 86 days in 2017 to a peak of 102 days in 2018. Following this, the period showed a decline to 95 days in 2019 and further to 83 days in 2020, indicating improved inventory turnover efficiency during these years. However, in 2021, the period rose sharply to 109 days, surpassing all prior years and signaling a significant slowdown in inventory processing efficiency.

Average Receivable Collection Period

The collection period remained stable at 32 days during 2017 and 2018, with a marginal increase to 33 days in 2019. The trend continued upward in subsequent years, reaching 37 days in 2020 and accelerating to 45 days in 2021. This indicates a progressively longer time for the company to collect receivables, potentially impacting cash flow and liquidity.

Operating Cycle

The overall operating cycle, combining inventory processing and receivables collection, expanded from 118 days in 2017 to 134 days in 2018, reflecting a lengthening of the time to convert resources into cash. It decreased somewhat to 128 days in 2019 and further to 120 days in 2020, indicating some operational improvements. However, in 2021, the operating cycle extended markedly to 154 days, the longest observed in the five-year span, suggesting increased operational delays and potential challenges in working capital management.

Overall, the data highlight a deterioration in both inventory management and receivables collection efficiency in 2021, which collectively contributed to a significant increase in the operating cycle. These trends may warrant closer attention to optimize asset turnover and preserve liquidity moving forward.

Payables Turnover

The payables turnover ratio exhibited a downward trend over the five-year period. Starting at 12.14 in 2017, it decreased to 7.26 by the end of 2021. This reduction suggests a slowing rate of payments to suppliers, indicating that the company took longer to settle its payables as time progressed.

Average Payables Payment Period

The average payables payment period increased consistently from 30 days in 2017 to 50 days in 2021. This indicates that the company extended the time it took to pay its creditors, reflecting a lengthening in its payment cycle over the analyzed period.

Overall Analysis

There is a clear inverse relationship between the payables turnover ratio and the average payment period, consistent with standard financial principles. The downward trend in payables turnover, coupled with the rising number of days to pay suppliers, suggests a strategic shift toward longer payment terms or possibly cash flow management practices that delay creditor payments. This pattern may impact supplier relationships and working capital management.

Inventory Processing Period

The average inventory processing period showed variability over the five-year span. It initially increased from 86 days in 2017 to 102 days in 2018, indicating a slower turnover of inventory. Following this peak, the period decreased to 95 days in 2019 and further declined to 83 days in 2020, suggesting improved inventory management efficiency. However, in 2021, the period sharply increased to 109 days, representing a significant slowdown in inventory processing.

Receivable Collection Period

The average receivable collection period remained stable at 32 days during 2017 and 2018 but exhibited a gradual upward trend thereafter. It rose slightly to 33 days in 2019, followed by a more pronounced increase to 37 days in 2020, culminating in a substantial rise to 45 days in 2021. This pattern indicates that the company took progressively longer to collect receivables, which could impact liquidity negatively.

Payables Payment Period

The average payables payment period increased steadily over the period analyzed. Starting at 30 days in 2017, the payment period extended to 35 days in 2018, dropped slightly to 31 days in 2019, then climbed to 37 days in 2020, and reached a notable 50 days in 2021. This extension indicates that the company delayed payments to suppliers more over time, which might suggest efforts to conserve cash or changes in supplier terms.

Cash Conversion Cycle

The cash conversion cycle (CCC) reflects the net time taken to convert investments in inventory and other resources into cash flows from sales. This metric followed a similar trajectory to the inventory and receivables periods. It increased from 88 days in 2017 to a peak of 99 days in 2018, then slightly improved to 97 days in 2019, and showed the best performance at 83 days in 2020. Nevertheless, the CCC expanded significantly to 104 days in 2021. The prolonged CCC in recent years signals a lengthening in the time the company’s capital is tied up before realizing cash, which may affect operational liquidity and efficiency.