Philip Morris International Inc. (NYSE:PM)

The analyzed financial data reveals notable trends in efficiency and working capital management over the observed periods.

Inventory Turnover

The inventory turnover ratio has shown a consistent upward trend from 1 in 2020 to 1.41 by the end of 2024, indicating improved efficiency in managing and selling inventory.

Receivables Turnover

This ratio experienced a slight increase from 9.88 in 2020 to a peak of 10.16 in 2023, before a minor decline to 10 in 2024. This suggests relatively stable but slightly fluctuating efficiency in collecting receivables.

Payables Turnover

The payables turnover ratio declined from 3.44 in 2020 to 2.8 in 2022, indicating slower payment to suppliers, but then improved to 3.37 by 2024, reflecting a return to faster payments.

Working Capital Turnover

Data is only available for 2020, recorded at 15.29, with no subsequent figures to establish a trend.

Average Inventory Processing Period

The inventory processing period decreased steadily from 366 days in 2020 to 259 days in 2024, supporting the increased inventory turnover and suggesting faster inventory movement.

Average Receivable Collection Period

This metric declined from 37 days in 2020 to 36 days in 2021, increased notably to 44 days in 2022, then returned to near initial levels (37 days) by 2024. This reflects some volatility in collecting receivables, with 2022 as an outlier year.

Operating Cycle

The operating cycle shortened from 403 days in 2020 to 296 days in 2024, indicating an overall improvement in the time taken to convert inventory and receivables into cash.

Average Payables Payment Period

The payables payment period lengthened from 106 days in 2020 to a peak of 130 days in 2022, then shortened to 108 days by 2024, showing a pattern of delaying payments followed by a return to quicker settlements.

Cash Conversion Cycle

The cash conversion cycle has improved consistently, decreasing from 297 days in 2020 to 188 days in 2024, reflecting enhanced working capital efficiency by reducing the time between cash outflows and inflows.

Overall, the data indicates significant improvements in managing inventory and reducing cycle times, contributing to enhanced operational efficiency. Some fluctuations in receivables and payables metrics suggest temporary changes in credit policies or supplier relationships during the period, but the trends by 2024 demonstrate a general optimization in cash flow management.

The financial data over the five-year period reveals several significant trends related to the cost of sales, inventories, and inventory turnover ratio.

Cost of Sales

The cost of sales has exhibited a steady increase each year, rising from $9,569 million in 2020 to $13,329 million in 2024. This consistent upward trend suggests growing operational activity or increased production costs over the period. The largest year-over-year increase is observed between 2022 and 2023, where the cost rose by $1,491 million, indicating a more pronounced escalation during this interval.

Inventories

Inventories illustrate a more fluctuating pattern. Starting at $9,591 million in 2020, inventories decreased to $8,720 million in 2021 but rebounded to $9,886 million in 2022 and further increased to $10,774 million in 2023. However, in 2024, there is a notable decline to $9,453 million. These movements suggest periodic adjustments in stock levels, with a peak in 2023 followed by a reduction, possibly reflecting changes in demand forecasting, supply chain efficiency, or inventory management strategies.

Inventory Turnover Ratio

The inventory turnover ratio has shown consistent improvement over the period, increasing from 1.00 in 2020 to 1.41 in 2024. This upward trend indicates enhanced efficiency in managing inventory, with goods being sold and replenished more frequently. The increase is gradual from 2020 to 2023, with a more significant jump occurring in 2024, corresponding with the reduction in inventories while cost of sales continued to rise.

Overall, the data indicates growing sales activity alongside efforts to optimize inventory management. While cost of sales steadily increases, the inventory levels fluctuate but ultimately decline in the latest year, coinciding with a higher inventory turnover ratio. This combination reflects potentially improved operational efficiency and responsiveness to market demand in recent periods.

Net Revenues

Net revenues show a consistent upward trend over the five-year period. Starting from approximately 28.7 billion USD in 2020, revenues increased steadily each year, reaching nearly 37.9 billion USD by the end of 2024. This reflects a compound growth pattern indicating improved sales performance or pricing power over the period.

Trade Receivables, less Allowances

The trade receivables balance exhibits fluctuations over the timeframe. Beginning at around 2.9 billion USD in 2020, the balance grew to 3.8 billion USD by 2022, suggesting an increase in credit sales or longer collection periods. Subsequently, it decreased to 3.5 billion USD in 2023 before rising again to approximately 3.8 billion USD in 2024. This variability might indicate changing credit policies or shifts in customer payment behavior.

Receivables Turnover Ratio

The receivables turnover ratio, which measures the efficiency of collection processes, shows some volatility across the years. It started at about 9.88 in 2020, slightly increased to 10.06 in 2021, then dropped to 8.25 in 2022, indicating slower collection or higher receivables relative to sales that year. The ratio rebounded to 10.16 in 2023, indicating improved efficiency, and slightly declined to 10.0 in 2024. Overall, the ratio suggests generally effective collection practices, with a temporary dip in 2022.

The financial data exhibits several notable trends over the five-year period from the end of 2020 to the end of 2024.

Cost of Sales

The cost of sales consistently increased each year, starting at 9,569 million USD in 2020 and rising to 13,329 million USD by the end of 2024. This steady upward trajectory indicates growing expenses related to producing the company's goods, which may be driven by higher production volumes, rising input costs, or both.

Accounts Payable

Accounts payable showed a general rising trend from 2,780 million USD in 2020 to a peak of 4,143 million USD in 2023, before experiencing a slight decrease to 3,952 million USD in 2024. This pattern suggests the company increased its short-term liabilities to suppliers over the years but managed to reduce them somewhat in the final year observed.

Payables Turnover Ratio

The payables turnover ratio started at 3.44 in 2020, declined to a low of 2.80 in 2022, before recovering to 3.37 by 2024. The initial decline indicates the company was taking longer to settle its payables relative to purchases during this period. The subsequent rise suggests an improvement in the company's efficiency or a change in payment policies, resulting in faster payments to suppliers in the later years.

Overall, the data reflects an expanding cost base coupled with evolving payment patterns. The growth in cost of sales and accounts payable together suggest increased purchasing activity, while fluctuations in payables turnover indicate changes in the company's management of supplier payments. The improvement in the turnover ratio towards the end of the period may signify stronger liquidity management or renegotiated payment terms.

The data reveals several trends over the period from 2020 to 2024. Net revenues demonstrate a consistent upward trajectory, increasing from approximately $28.7 billion in 2020 to nearly $37.9 billion in 2024. This steady growth indicates a strengthening sales performance and market presence.

Conversely, working capital exhibits a notable decline. Beginning with a positive value of $1.9 billion in 2020, it sharply decreases into negative territory starting in 2021, reaching its lowest point around -$7.7 billion in 2022. Though there is some recovery in subsequent years, working capital remains negative through 2024, at approximately -$2.7 billion. This persistent negative working capital suggests potential liquidity concerns or changes in operational financing strategies over the period.

The working capital turnover ratio is recorded only for 2020 at 15.29, with no data available for the following years. The absence of this ratio hinders a full assessment of how efficiently working capital has been utilized relative to net revenues during the more recent periods.

Net Revenues

Show a continuous upward trend from 2020 through 2024, reflecting growing business activity and sales expansion.

Working Capital

Shifts dramatically from positive in 2020 to consistently negative from 2021 onward, indicating increasing short-term liabilities or decreased current assets over time.

Working Capital Turnover Ratio

Available only for 2020, precluding comprehensive analysis of efficiency trends in later years.

Overall, the contrasting trends of rising net revenues and falling working capital highlight a scenario where revenue growth is accompanied by deteriorating short-term financial position, warranting closer examination of the underlying operational or financial factors driving this divergence.

Inventory Turnover

The inventory turnover ratio demonstrates a consistent upward trend over the analyzed periods. Starting at 1.00 in 2020, the ratio increased gradually to 1.15 in 2021 and remained stable in 2022 before rising to 1.20 in 2023 and significantly accelerating to 1.41 in 2024. This upward movement indicates an improvement in the efficiency with which inventory is sold or used, suggesting enhanced operational performance or better inventory management practices over time.

Average Inventory Processing Period

The average inventory processing period, measured in days, shows a continuous decreasing trend throughout the periods. Beginning at 366 days in 2020, it declined to 317 days in 2021, followed by a marginal decrease to 316 days in 2022. This trend further accelerated with a drop to 305 days in 2023 and a more significant reduction to 259 days in 2024. The reduction in processing period reflects improved inventory turnover efficiency, indicating the company is taking less time to convert inventory into sales or production inputs.

Overall Insights

The inverse relationship between inventory turnover and average processing period is evident and consistent over time, as expected. The increase in inventory turnover ratio alongside a decline in the average inventory processing period confirms positively trending inventory management. This pattern suggests the company has been increasingly effective in managing stock levels, reducing holding periods, and potentially lowering carrying costs, which can contribute to better liquidity and operational efficiency.

Receivables Turnover

The receivables turnover ratio exhibited some fluctuations throughout the observed period. Beginning at 9.88 in 2020, it increased slightly to 10.06 in 2021, indicating an improvement in how efficiently the company was collecting its receivables. However, in 2022, the ratio declined significantly to 8.25, suggesting a slowdown in the collection process. The ratio rebounded strongly in 2023 to 10.16, reaching its highest point in the timeframe, and then exhibited a moderate decrease to 10 in 2024. Overall, despite the dip in 2022, the trend suggests a generally strong capacity to turn receivables into cash with some variability.

Average Receivable Collection Period

The average receivable collection period inversely mirrored the movement of the receivables turnover ratio. It decreased from 37 days in 2020 to 36 days in 2021, illustrating a slight improvement in the speed of collections. The period then increased notably to 44 days in 2022, reflecting delayed collections and aligning with the noted dip in turnover ratio. In 2023, the collection period shortened again to 36 days, consistent with the improved turnover ratio, and slightly increased to 37 days in 2024. This pattern indicates that while the company generally maintained effective collections, there was a temporary setback in 2022, after which performance stabilized.

Inventory Management Efficiency

The average inventory processing period demonstrates a consistent downward trend from 366 days in 2020 to 259 days in 2024. This indicates an improvement in inventory turnover, suggesting enhanced efficiency in managing and moving inventory over the analyzed period.

Receivables Collection Period

The average receivable collection period remains relatively stable, fluctuating modestly between 36 and 44 days. Specifically, it shows a slight increase in 2022 to 44 days but reverts to near initial levels of 36 to 37 days in subsequent years. This pattern indicates consistent management of credit collection practices without significant deterioration or improvement.

Operating Cycle

The operating cycle, reflecting the time taken from inventory acquisition to cash collection, exhibits a declining trend from 403 days in 2020 to 296 days in 2024. This contraction aligns with the improvements seen in inventory management and stable receivables collection, collectively pointing to enhanced working capital efficiency and faster operating cash flows over time.

The analysis of the provided financial data reveals significant trends in the management of payables over the five-year period under review. The payables turnover ratio and the average payables payment period offer insights into the company's efficiency in settling its obligations to suppliers.

Payables Turnover Ratio

The payables turnover ratio shows a declining trend from 3.44 in 2020 to 2.8 in 2022, indicating a slowdown in the rate at which the company pays its suppliers during this period. However, this trend reverses subsequently, with the ratio increasing to 3.11 in 2023 and further to 3.37 in 2024, approaching the initial levels observed in 2020. This pattern suggests an initial delay followed by an improvement in payment speed.

Average Payables Payment Period

The average payables payment period, expressed in days, exhibits an opposite trend to the turnover ratio, as expected. The period increases from 106 days in 2020 to a peak of 130 days in 2022, reflecting longer durations taken to pay suppliers. Following this peak, the payment period decreases to 117 days in 2023 and further to 108 days in 2024, signifying a move towards quicker settlements and improved payables management.

Overall, the data indicates that the company initially extended its payment terms or experienced slower payables turnover up to 2022. From 2023 onwards, the trend reflects enhanced efficiency in managing payables, with turnover ratios increasing and payment periods shortening, suggesting a strategic or operational shift towards faster supplier payments. This improvement may have implications for supplier relations and cash flow management.

The financial data reveals distinct trends in the company's operational efficiency and working capital management over the analyzed five-year period.

Average Inventory Processing Period

There is a clear downward trajectory in the average inventory processing period, decreasing from 366 days in 2020 to 259 days in 2024. This indicates an improvement in inventory turnover, suggesting more efficient inventory management or faster movement of goods through the supply chain.

Average Receivable Collection Period

The average receivable collection period shows some fluctuation but remains relatively stable overall. It started at 37 days in 2020, dipped slightly to 36 days in 2021, peaked at 44 days in 2022, then returned close to initial levels with 36 days in 2023 and 37 days in 2024. This implies consistency in the company's ability to collect outstanding receivables, with a temporary delay in 2022.

Average Payables Payment Period

The average payables payment period generally increased from 106 days in 2020 to a peak of 130 days in 2022, before declining to 108 days by 2024. This suggests that the company initially extended its payment terms with suppliers over the first three years but has since moved towards accelerated payments, possibly improving supplier relations or responding to changes in credit terms.

Cash Conversion Cycle

The cash conversion cycle consistently declined from 297 days in 2020 to 188 days in 2024. This trend reflects an overall improvement in the efficiency of converting investments in inventory and other resources into cash flows from sales. The reduction in this cycle length is a positive indicator of optimized working capital management, likely driven by faster inventory turnover and more efficient collection processes, partially offset by adjustments in payment periods.

Overall, the data demonstrates progressive enhancements in working capital efficiency, highlighted by reduced inventory holding and a shortened cash conversion cycle, despite variability in receivables collection and payables payment terms.