Newmont Corp. (NYSE:NEM)

Inventory Turnover

The inventory turnover ratio increased steadily from 5.12 in 2019 to a peak of 6.61 in 2022, indicating an improvement in the efficiency with which inventory is sold or used. However, in 2023, there is a notable decline to 4.03, suggesting a slower movement of inventory during that year.

Receivables Turnover

The receivables turnover ratio experienced fluctuations. It decreased slightly from 26.11 in 2019 to 25.61 in 2020, then rose significantly to 36.27 in 2021 before dropping again to 32.55 in 2022. In 2023, there was a sharp decline to 16.09, reflecting a longer collection period and potentially increased credit risk or weaker collection efforts.

Payables Turnover

The payables turnover ratio showed gradual improvement from 9.64 in 2019 to 10.49 in 2021, indicating quicker payments to suppliers. The ratio remained relatively stable in 2022 at 10.22 but then declined markedly to 6.98 in 2023, which may suggest slower payment practices or changes in supplier terms.

Working Capital Turnover

This ratio largely declined from 2.51 in 2019 to 2.24 in 2020 but then began rising, reaching 2.42 in 2021 and a significant jump to 3.32 in 2022. In 2023, the ratio experienced a substantial increase to 7.8, indicating much higher efficiency in generating sales from working capital.

Average Inventory Processing Period

The average inventory processing period shortened consistently from 71 days in 2019 to 55 days in 2022, reflecting improved inventory management or faster turnover rates. Conversely, in 2023, this period lengthened substantially to 91 days, which corresponds with the decline in inventory turnover and might indicate excess stock or slower sales.

Average Receivable Collection Period

The days sales outstanding remained steady at 14 days in 2019 and 2020 but improved to 10 days in 2021. It moved slightly higher to 11 days in 2022 before more than doubling to 23 days in 2023, consistent with the lower receivables turnover and suggesting delayed collections in the most recent period.

Operating Cycle

The operating cycle, which combines the inventory processing and receivables collection periods, decreased from 85 days in 2019 to 66 days in 2022, reflecting overall operational improvements. However, there was a marked increase to 114 days in 2023, indicating longer cash tied up in operating assets.

Average Payables Payment Period

The average time taken to pay suppliers shortened gradually from 38 days in 2019 to 35 days in 2021, remaining stable in 2022. In 2023, it extended sharply to 52 days, indicating that the company may have delayed payments to suppliers, potentially managing cash flow more conservatively or experiencing liquidity constraints.

Cash Conversion Cycle

The cash conversion cycle improved from 47 days in 2019 to 30 days in 2022, revealing enhanced efficiency in converting investments in inventory and receivables back into cash. However, in 2023, it rose significantly to 62 days due to longer inventory and receivables periods combined with a longer payables payment period, implying less efficient cash flow management in the latest year.

Costs applicable to sales

The costs applicable to sales showed a decreasing trend from 2019 to 2020, declining from 5195 million US dollars to 5014 million US dollars. However, from 2020 onwards, these costs increased steadily each year, reaching 5435 million in 2021, 6468 million in 2022, and 6699 million in 2023. This indicates a general upward trend in costs associated with sales over the last four years after an initial decrease.

Inventories

The inventory levels demonstrated a declining pattern from 2019 to 2021, moving from 1014 million to 930 million US dollars. In 2022, there was a slight increase to 979 million, followed by a significant rise to 1663 million US dollars in 2023. This substantial increase in inventory at the end of 2023 may suggest either stockpiling or slower turnover relative to previous years.

Inventory turnover ratio

The inventory turnover ratio rose steadily from 5.12 in 2019 to 6.61 in 2022, reflecting an improvement in inventory management efficiency or faster sales relative to inventory levels during this period. However, in 2023, the ratio dropped markedly to 4.03, corresponding with the large increase in inventory levels noted earlier. This decline suggests a slowdown in the frequency of inventory replacement or poorer inventory utilization efficiency in 2023.

The annual financial data reveals several key trends concerning sales, trade receivables, and receivables turnover over the five-year period from 2019 to 2023.

Sales

Sales showed a general upward trend from 2019 to 2021, increasing from $9,740 million to a peak of $12,222 million. However, sales slightly declined thereafter, reaching $11,915 million in 2022 and further decreasing to $11,812 million in 2023. This indicates a stabilization or mild contraction in revenue after a period of growth.

Trade Receivables

Trade receivables exhibited variability over the period. Initially, they increased from $373 million in 2019 to $449 million in 2020, then declined to $337 million in 2021. Subsequently, they rose modestly to $366 million in 2022 before experiencing a significant jump to $734 million in 2023. The substantial increase in 2023 suggests a potential buildup of outstanding customer balances or changes in credit policies during that year.

Receivables Turnover

Receivables turnover, which measures how efficiently the company collects its receivables, demonstrated notable fluctuations. It remained relatively stable around 26 ratios in 2019 and 2020, surged sharply to 36.27 in 2021, then declined to 32.55 in 2022. In 2023, however, it plummeted to 16.09, the lowest ratio in the observed timeframe. This significant decrease aligns with the large increase in trade receivables, indicating slower collection efforts or challenges in converting receivables to cash that year.

Overall, while sales maintained a relatively stable level after initial growth, the dramatic increase in trade receivables and the concurrent decline in receivables turnover in 2023 may reflect operational or market challenges impacting cash flow management and credit control.

Costs applicable to sales

The costs applicable to sales show an overall increasing trend from 2019 to 2023. Beginning at 5,195 million US dollars in 2019, costs decreased slightly to 5,014 million US dollars in 2020, likely reflecting a brief cost reduction or operational impact during that year. From 2020 onward, the costs rose steadily, reaching 6,468 million US dollars in 2022 and further increasing to 6,699 million US dollars in 2023. This upward trend indicates growing expenses related to sales, which could be driven by higher production volumes, increased raw material prices, or inflationary factors.

Accounts payable

Accounts payable exhibited a fluctuating but upward movement across the examined periods. Starting at 539 million US dollars in 2019, payables decreased to 493 million in 2020, then rose modestly to 518 million in 2021. A more pronounced increase occurred in the subsequent years, climbing to 633 million in 2022 and sharply to 960 million in 2023. The marked rise in payables in the last two years may suggest extended credit terms from suppliers, greater purchasing activity, or a strategic decision to hold more payables.

Payables turnover

The payables turnover ratio initially increased from 9.64 in 2019 to a peak of 10.49 in 2021, indicating faster payment to suppliers relative to purchases. However, after 2021, the turnover ratio declined to 10.22 in 2022 and dropped significantly to 6.98 in 2023. The decline in 2023 suggests that the company is taking longer to pay its accounts payable compared to earlier years. This, combined with the sharp increase in accounts payable, implies a notable lengthening in payment terms or cash management strategies to delay outflows.

Working Capital

The working capital shows an overall declining trend from the end of 2019 through 2023. Beginning at 3,887 million USD in 2019, it increased to a peak of 5,136 million USD in 2020, but then gradually decreased in subsequent years, falling sharply to 1,514 million USD by the end of 2023. This reduction indicates a decreasing cushion of current assets over current liabilities over the period, potentially implying tighter liquidity conditions or changes in operational asset management.

Sales

Sales exhibited a growth pattern initially, rising from 9,740 million USD in 2019 to 12,222 million USD in 2021. However, sales slightly declined over the last two years, ending at 11,812 million USD in 2023. The sales performance suggests that while the company experienced growth in the earlier years, recent periods have seen a marginal downturn, reflecting possible market challenges or fluctuations in demand.

Working Capital Turnover

The working capital turnover ratio demonstrates a fluctuating and then sharply increasing trend. From 2.51 in 2019, it slightly decreased to 2.24 in 2020, then increased moderately to 2.42 in 2021. The ratio jumped substantially in 2022 to 3.32 and surged to 7.80 in 2023. This significant rise indicates the company is generating much higher sales per unit of working capital, potentially reflecting improved efficiency in the use of working capital or a result of the sharp decline in working capital combined with relatively stable sales.

Overall Analysis

Overall, the company experienced moderate sales growth followed by stabilization or slight decline in recent years. Working capital peaked in 2020 but then contracted significantly through 2023. Meanwhile, the working capital turnover ratio increased notably, particularly in the last two years. These dynamics suggest a shift in the company's operational financing and asset management strategies, possibly indicating reduced liquidity buffers combined with more intensive use of working capital to support sales. Further assessment would be needed to understand the impact on financial stability and operational risks.

Inventory turnover

The inventory turnover ratio demonstrated an overall rising trend from 2019 through 2022, increasing from 5.12 to a peak of 6.61. This indicates improved efficiency in inventory management during this period, as the company was able to sell and replace its inventory more frequently. However, in 2023, the ratio declined sharply to 4.03, suggesting a reduction in the rate at which inventory was being utilized or sold relative to previous years.

Average inventory processing period

The average inventory processing period showed a consistent decline from 71 days in 2019 to 55 days in 2022, reflecting a shortening of the time inventory remained in stock before being sold. This aligns with the improving inventory turnover trend observed earlier. Conversely, in 2023, the average processing period increased dramatically to 91 days, indicating that inventory was held longer. This reversal suggests a slowdown in inventory movement or potential challenges in sales or supply chain efficiency during the most recent year.

Summary of trends

From 2019 to 2022, there was a clear improvement in inventory management, as evidenced by increasing inventory turnover and decreasing processing periods. Nevertheless, the data for 2023 shows a noticeable deterioration in these metrics, with inventory turnover decreasing significantly and the average inventory processing period lengthening considerably. This shift might reflect operational challenges, changes in market demand, or other factors negatively impacting inventory efficiency during 2023.

The financial data reveals noteworthy trends in receivables management over the five-year period under review. Receivables turnover and average collection period are key indicators of how effectively the company converts receivables into cash.

Receivables Turnover

The receivables turnover ratio fluctuates significantly. After a slight decline from 26.11 in 2019 to 25.61 in 2020, there is a sharp increase to 36.27 in 2021, indicating improved efficiency in collecting receivables. This is followed by a decrease to 32.55 in 2022 and a pronounced drop to 16.09 in 2023, suggesting a marked slowdown in receivables collection in the most recent year.

Average Receivable Collection Period

The average number of days to collect receivables correspondingly shifts in the opposite direction to the turnover ratio. It remains stable at 14 days for 2019 and 2020, then improves to 10 days in 2021, reflecting faster collections. However, the period extends slightly to 11 days in 2022 and then more than doubles to 23 days in 2023, indicating a significant deterioration in collection efficiency.

Overall, the initial improvements in receivables management seen in 2021 were not sustained in subsequent years. The sharp decline in turnover combined with the longer collection period in 2023 raises concerns about potential cash flow impacts and credit risk management that may require further analysis and possible corrective measures.

Average Inventory Processing Period

The average inventory processing period showed a decreasing trend from 71 days in 2019 to 55 days in 2022, indicating an improvement in inventory management and faster turnover. However, there was a significant increase to 91 days in 2023, suggesting a slowdown in inventory processing speed during that year.

Average Receivable Collection Period

The average receivable collection period remained relatively stable at 14 days in 2019 and 2020, followed by a decline to 10 days in 2021, implying improved efficiency in collecting receivables. In 2022, it slightly increased to 11 days but then rose sharply to 23 days in 2023, signaling a notable delay in cash collection from customers.

Operating Cycle

The operating cycle, which summarizes the total time taken to convert inventory and receivables into cash, mirrored the trends seen in the components. It decreased steadily from 85 days in 2019 to a low of 66 days in 2022, reflecting enhanced operational efficiency. However, in 2023, the operating cycle expanded substantially to 114 days, primarily driven by the increases in both inventory processing and receivable collection periods.

Payables Turnover

Throughout the five-year period, the payables turnover ratio initially increased from 9.64 in 2019 to a peak of 10.49 in 2021, indicating an improvement in the efficiency of payments to suppliers during this timeframe. Following this peak, the ratio showed a slight decline to 10.22 in 2022, before experiencing a significant decrease to 6.98 in 2023. This marked reduction suggests a slower payment cycle or potentially extended credit terms as of the most recent year.

Average Payables Payment Period

The average number of days to settle payables decreased from 38 days in 2019 to 35 days in 2021, reflecting an acceleration in payment speed consistent with the increasing payables turnover ratio observed in the same period. This trend reversed starting in 2022, with the payment period increasing to 36 days, and then sharply rising to 52 days in 2023. This indicates a considerably longer period before settling accounts payable in the latest year, which aligns with the downturn in payables turnover.

Overall Trend and Insights

The data reveal a pattern of improving payment efficiency from 2019 through 2021, followed by a noticeable deterioration in 2022 and 2023. The concurrent increase in payment period and decrease in payables turnover ratio in 2023 suggest a strategic or operational shift leading to slower payments or renegotiated payment terms with suppliers. This shift could impact supplier relationships or cash management strategies and warrants further investigation regarding underlying causes.

Average Inventory Processing Period

The average inventory processing period showed a general decline from 71 days in 2019 to 55 days in 2022, indicating improved efficiency in managing inventory turnover. However, there was a significant increase to 91 days in 2023, suggesting a possible slowdown in inventory movement or accumulation of stock in the latest period.

Average Receivable Collection Period

The receivable collection period remained relatively stable around 14 days from 2019 to 2020, then improved to 10 days in 2021. It slightly increased to 11 days in 2022 but nearly doubled to 23 days in 2023. This sharp increase in 2023 may imply challenges in collecting receivables or extended credit terms to customers.

Average Payables Payment Period

The payables payment period decreased gradually from 38 days in 2019 to 35 days in 2021, indicating quicker payments to suppliers. It remained stable in 2022 at 36 days before rising significantly to 52 days in 2023. This suggests slower payments to suppliers or extended credit from suppliers during the latest year.

Cash Conversion Cycle

The cash conversion cycle improved consistently from 47 days in 2019 to 30 days in 2022, reflecting enhanced overall working capital management efficiency. However, there was a marked increase to 62 days in 2023. This rise is primarily influenced by the increased inventory and receivables periods, alongside a longer payables period, indicating potential liquidity management challenges or operational disruptions affecting cash flow.