Pfizer Inc. (NYSE:PFE)

Inventory Turnover

Inventory turnover exhibited significant fluctuations over the five-year period. It increased sharply from 1.08 in 2020 to a peak of 3.82 in 2022, suggesting improved efficiency in inventory management during this period. However, a decline followed, reaching 1.65 by the end of 2024, indicating a slowdown in inventory movement.

Receivables Turnover

Receivables turnover improved notably from 5.38 in 2020 to a high of 9.24 in 2022, reflecting faster collection of receivables. This was followed by a decline and relative stabilization around 5.33 to 5.55 in 2023 and 2024, implying a return to a slower collection pace compared to the peak.

Payables Turnover

Payables turnover increased significantly from 2.02 in 2020 to 5.53 in 2021 but then steadily declined to 3.17 by 2024. This trend suggests a faster payment to suppliers initially, followed by a gradual extension of payment periods.

Working Capital Turnover

Working capital turnover remained relatively stable between 2020 and 2021, at around 4.7 to 4.8, then surged to 11.09 in 2022 before contracting again; data for 2023 is missing. By 2024, the ratio was 8.64, indicating generally strong utilization of working capital over the period with some volatility.

Average Inventory Processing Period

The average inventory processing period decreased sharply from 338 days in 2020 to 95 days in 2022, reflecting a much faster inventory cycle. Subsequently, it increased to 222 days by 2024, signaling a lengthening of inventory holding periods.

Average Receivable Collection Period

The average receivable collection period improved (shortened) from 68 days in 2020 to 40 days in 2022, but then lengthened again to 66 days by 2024. This pattern aligns with the changes observed in receivables turnover, showing an initial acceleration in collections followed by a slowdown.

Operating Cycle

The operating cycle followed a similar trend, decreasing from 406 days in 2020 to 135 days in 2022, indicating enhanced operational efficiency. Thereafter, it increased to 288 days by 2024, suggesting a return to longer operating cycles.

Average Payables Payment Period

The average payables payment period was reduced markedly from 181 days in 2020 to 66 days in 2021 and remained relatively stable around 66 to 72 days through 2022. From 2023 onwards, the period extended to 115 days by 2024, indicating a longer time taken to pay suppliers.

Cash Conversion Cycle

The cash conversion cycle showed improvement from 225 days in 2020 to a low of 63 days in 2022, denoting efficient cash flow management. However, the cycle lengthened thereafter, rising to 173 days in 2024, reflecting less efficient cash conversion and potential liquidity pressure.

Cost of Sales

The cost of sales shows a substantial increase from 8,692 million US dollars in 2020 to a peak of 34,344 million US dollars in 2022. However, this figure declines sharply in the subsequent years, dropping to 24,954 million US dollars in 2023 and further down to 17,851 million US dollars in 2024. This pattern indicates a rapid escalation in cost of sales during the early period, followed by a significant reduction.

Inventories

Inventories exhibit an overall upward trend, starting at 8,046 million US dollars in 2020 and rising consistently to 10,851 million US dollars by 2024. The gradual increase suggests an accumulation of inventory over the time horizon without notable volatility.

Inventory Turnover Ratio

The inventory turnover ratio experiences a notable rise from 1.08 in 2020 to a high of 3.82 in 2022, reflecting more efficient inventory management or increased sales relative to inventory during this period. However, from 2023 onwards, the ratio declines to 2.45 and further to 1.65 in 2024, signaling a decrease in turnover efficiency or slower movement of inventory relative to previous years.

Revenue Trends

Revenues demonstrated a notable increase from 42,678 million US dollars in 2020 to a peak of 101,175 million in 2022. However, there was a sharp decline in 2023 to 59,553 million, followed by a modest recovery to 63,627 million in 2024. This pattern suggests a significant growth period up to 2022, succeeded by volatility or a possible downturn in the subsequent years.

Trade Accounts Receivable

The trade accounts receivable, net of allowance for doubtful accounts, showed an overall upward trend from 7,930 million in 2020 to 11,463 million in 2024. Although there was a slight dip from 11,479 million in 2021 to 10,952 million in 2022, the amounts generally increased, indicating growing credit sales or extended payment terms.

Receivables Turnover Ratio

The receivables turnover ratio increased significantly from 5.38 in 2020 to 9.24 in 2022, implying improved efficiency in collecting receivables during this period. However, the ratio declined sharply to 5.33 in 2023 and slightly improved to 5.55 in 2024. This change suggests a decreasing effectiveness in receivables collection corresponding with the revenue decline, potentially due to longer collection periods or credit policy adjustments.

Overall Insights

The data reveals strong revenue growth and improving receivables management efficiency through 2022, followed by a period of reduced revenue and collection efficiency in 2023 and 2024. The increase in trade accounts receivable alongside declining turnover ratios in the later years may signal an accumulation of uncollected receivables or less stringent credit control, warranting further investigation.

Cost of Sales

There is a notable increase in the cost of sales from 2020 to 2022, rising sharply from 8,692 million US dollars to a peak of 34,344 million US dollars. This represents a nearly fourfold increase in two years. After 2022, the cost of sales decreases significantly, dropping to 24,954 million in 2023 and further to 17,851 million in 2024. This suggests a period of elevated expenditure on goods sold around 2021-2022, followed by a substantial reduction in subsequent years.

Trade Accounts Payable

The trade accounts payable figures show a steady increase from 4,309 million in 2020 to 6,809 million in 2022, indicating growing obligations to suppliers or creditors over these years. After peaking in 2022, payables slightly decrease to 6,710 million in 2023 and further to 5,633 million in 2024, which suggests improved management of payables or reduced procurement needs.

Payables Turnover Ratio

The payables turnover ratio exhibits a marked increase from 2.02 in 2020 to a high of 5.53 in 2021, indicating a faster rate of paying off suppliers. It then slightly declines to 5.04 in 2022, further dropping to 3.72 in 2023 and 3.17 in 2024. This declining turnover ratio in the last two years may imply slower payment cycles or extended credit terms from suppliers.

Summary of Trends

The data reflects a period of rapid growth in cost of sales and corresponding accounts payable up to 2022, followed by a contraction in both figures thereafter. The substantial increase in payables turnover ratio in 2021 suggests accelerated payments during this period, while the subsequent decline in turnover indicates a shift towards slower payments or longer credit terms. These patterns imply dynamic operational and procurement activity with significant fluctuations in both expenditure and payment strategies over the analyzed periods.

The financial data over the five-year period reflects notable fluctuations in key performance indicators, highlighting changes in operational efficiency and financial management.

Working Capital

Working capital exhibited significant volatility across the years. It increased substantially from 9,147 million USD in 2020 to 17,022 million USD in 2021, indicating a stronger liquidity position during that period. However, there was a sharp decline to 9,121 million USD in 2022, followed by a movement into negative territory with -4,461 million USD in 2023, which could suggest liquidity constraints or elevated current liabilities surpassing current assets. In 2024, working capital rebounded to 7,363 million USD, reflecting partial recovery but still below the peak levels observed in 2021.

Revenues

Revenues showed an overall upward trend from 42,678 million USD in 2020 to a peak of 101,175 million USD in 2022, representing a strong growth phase. However, the subsequent years saw a marked decline to 59,553 million USD in 2023, with a modest increase to 63,627 million USD in 2024. This pattern suggests a period of volatility possibly due to market conditions, product lifecycle impacts, or changes in demand.

Working Capital Turnover

This ratio, which measures the efficiency of working capital use in generating revenues, increased from 4.67 in 2020 to a high of 11.09 in 2022, indicating improved operational efficiency. The absence of data for 2023 makes trend analysis for that year incomplete. By 2024, the ratio settled at 8.64, which, while lower than the peak, still indicates a relatively efficient use of working capital compared to the initial years.

In summary, the data suggests that the period experienced phases of strong revenue growth coupled with fluctuations in liquidity management as evidenced by working capital variations. The peak in revenue and working capital turnover in 2022 aligns with enhanced operational efficiency, but the decline in 2023 points to challenges that impacted both sales and liquidity. The partial recovery in 2024 indicates some stabilization, though overall the data reflects a need to monitor working capital management to support sustained revenue growth.

Inventory Turnover

There was a notable improvement in inventory turnover from 1.08 in 2020 to a peak of 3.82 in 2022, indicating an enhanced efficiency in managing and selling inventory during this period. However, this trend reversed in the subsequent years, declining to 2.45 in 2023 and further to 1.65 in 2024. This decline suggests a reduced rate of inventory utilization or sales velocity in the more recent periods.

Average Inventory Processing Period

This metric decreased sharply from 338 days in 2020 to just 95 days in 2022, reflecting a significant acceleration in inventory turnover and quicker processing times. Following this improvement, the processing period lengthened considerably to 149 days in 2023 and further to 222 days in 2024, indicating a slowdown in inventory turnover that aligns with the observed decrease in inventory turnover ratio.

Overall Trends

The data presents a clear inverse correlation between inventory turnover ratio and the average inventory processing period. As turnover increased sharply through 2022, the days required to process inventory dropped substantially. The subsequent years show a reversal, with turnover falling and processing days rising. These shifts may point to changes in operational efficiency, demand fluctuations, or inventory management strategies affecting the company’s inventory dynamics over the recent years.

Receivables Turnover

The receivables turnover ratio exhibited notable fluctuations over the five-year period. Initially, there was an upward trend from 5.38 in 2020 to a peak of 9.24 in 2022, indicating a progressively improved efficiency in collecting receivables. However, this trend reversed sharply in 2023, with the ratio declining to 5.33, and showing a minor recovery to 5.55 in 2024. The decrease after 2022 suggests a deterioration in the speed of receivables collection or possibly changes in credit policies or customer payment behavior.

Average Receivable Collection Period

The average receivable collection period inversely mirrored the receivables turnover ratio. Starting from 68 days in 2020, the period shortened significantly to 40 days by 2022, which aligns with the higher turnover ratio indicating faster collections. However, in 2023, there was a marked increase to 69 days, followed by a slight decrease to 66 days in 2024. The increase in days indicates a slowdown in the collection process, which might reflect challenges in customer payments or changes in terms of credit offered.

Overall Insights

The data reflects a period of improving receivables management efficiency from 2020 through 2022, followed by a notable reversal starting in 2023. This pattern suggests that after a phase of strengthened cash flow performance due to quicker collections, the company faced issues that extended the collection period. This recent decline in turnover efficiency could have implications for liquidity and working capital management if the trend continues. The minor improvement in 2024 may signal the beginning of stabilization, but the collection period remains elevated compared to the earlier years.

Average Inventory Processing Period

The average inventory processing period exhibited significant fluctuation over the analyzed years. It started at 338 days in 2020, sharply decreasing to 107 days in 2021 and further slightly declining to 95 days in 2022. However, in 2023, this period increased to 149 days and continued this upward trend to reach 222 days in 2024. This pattern suggests an initial improvement in inventory turnover efficiency followed by a reversal and lengthening of the inventory holding period in the latter years.

Average Receivable Collection Period

The average receivable collection period showed variability with an overall declining trend followed by an increase. It decreased from 68 days in 2020 to 51 days in 2021, then further to 40 days in 2022, indicating improved efficiency in collecting receivables during this period. However, in 2023, the collection period rose significantly to 69 days and slightly decreased to 66 days in 2024, indicating a loosening in credit collection or longer customer payment cycles during these years.

Operating Cycle

The operating cycle mirrored the patterns observed in both inventory and receivable periods. It decreased substantially from 406 days in 2020 to 158 days in 2021 and further to 135 days in 2022, reflecting enhanced overall operational efficiency. The cycle then increased markedly to 218 days in 2023 and continued to rise to 288 days by 2024, suggesting a deterioration in operational efficiency with prolonged periods to convert inventory into cash.

Summary of Trends

Overall, the data indicates a notable improvement in operational and working capital efficiency from 2020 through 2022, as shown by decreased days in inventory, receivables, and operating cycle. However, from 2023 onwards, there is a reversal in this trend with all measures increasing, implying operational challenges or changes in business dynamics that resulted in longer inventory holding and receivable collection periods, thereby extending the operating cycle.

Payables turnover

The payables turnover ratio shows a notable increase from 2.02 in 2020 to a peak of 5.53 in 2021, indicating a significantly faster payment to suppliers during that period. Following 2021, the ratio gradually declines to 5.04 in 2022, and further decreases over the subsequent years to 3.72 in 2023 and 3.17 in 2024. This suggests a trend toward slower payments to creditors after 2021, though the turnover remains higher compared to the 2020 level.

Average payables payment period

The average payables payment period, expressed as the number of days, inversely corresponds to the payables turnover trend. It dramatically shortens from 181 days in 2020 to 66 days in 2021, reflecting more prompt payments made to suppliers. However, from 2021 onwards, the payment period extends progressively, reaching 72 days in 2022, then rising to 98 days in 2023, and further increasing to 115 days in 2024. This pattern indicates a lengthening in the time taken to settle payables over these years, suggesting changes in working capital management or negotiation terms with suppliers.

Summary of trends

The data reveals an initial improvement in the efficiency of payables management in 2021, with faster payments and higher payables turnover. Subsequently, there is a reversal of this trend, with payables turnover ratios decreasing and payment periods extending through to 2024. Although payments are slower in the latter years compared to the peak efficiency year, they still remain more efficient than in 2020 in terms of turnover ratio, but less so in terms of the length of payment period. These trends may reflect strategic adjustments in cash flow management or supplier negotiations.

Average Inventory Processing Period

The average inventory processing period showed a significant decline from 338 days in 2020 to 95 days in 2022, indicating improved inventory turnover efficiency. However, there was an upward trend afterward, increasing to 149 days in 2023 and further to 222 days in 2024, suggesting a slowdown in inventory processing efficiency over the last two years.

Average Receivable Collection Period

The receivable collection period decreased from 68 days in 2020 to a low of 40 days in 2022, reflecting tighter credit control and faster collection. However, it then increased to 69 days in 2023 and slightly decreased to 66 days in 2024, indicating some instability in receivables management during the latter years.

Average Payables Payment Period

The payables payment period dropped substantially from 181 days in 2020 to 66 days in 2021, remaining relatively stable at 72 days in 2022. It then increased steadily to 98 days in 2023 and 115 days in 2024, showing a trend towards longer payment terms with suppliers in recent years.

Cash Conversion Cycle

The cash conversion cycle fell sharply from 225 days in 2020 to 63 days in 2022, indicating improved operational efficiency and liquidity management. However, it rose again to 120 days in 2023 and 173 days in 2024, suggesting a deterioration in the overall cash flow cycle and potential challenges in managing working capital in the most recent years.