Philip Morris International Inc. (NYSE:PM)

The analysis of key efficiency ratios and cycle periods over multiple quarters reveals distinct trends in the company’s operational performance.

Inventory Turnover

This ratio demonstrates fluctuations over the period. It generally trended upward from early 2021 through mid-2022, peaking around 1.54. However, it subsequently declined toward the end of 2022 before experiencing moderate increases and decreases in 2023 and 2024. The turnover ratios in 2025 appear to stabilize around 1.2 to 1.3. This suggests periods of varying efficiency in inventory management, with occasional slower turnover cycles.

Receivables Turnover

Receivables turnover has seen moderate variability, ranging mostly between 7.8 and 10.2 over the quarters. Notable peaks occurred around late 2021 and early 2023, implying improved collection speeds during these periods. However, the turnover ratio generally hovered closer to the lower end in mid to late periods, indicating slightly slower collection processes at those times.

Payables Turnover

The payables turnover ratio fluctuated within a relatively narrow band of approximately 2.8 to 3.8. A declining tendency in late 2021 suggests delayed payments or extended credit terms, which reversed in subsequent quarters as turnover increased, indicating accelerated payment cycles in 2023 and 2024. In 2025, the ratio stabilized somewhat, with minor fluctuations.

Average Inventory Processing Period

The number of days inventory remained on hand generally decreased between early 2021 and late 2022, improving from 349 days down to a low near 237 days. This was followed by an increase toward 316 days at the end of 2022. In the subsequent years, the period oscillated between roughly 255 and 330 days, reflecting intermittent challenges in inventory clearance and stock management.

Average Receivable Collection Period

The collection period mostly remained within a 36 to 47 days range. A slight elongation in receivable days occurred mid-2022 and again in 2025, indicating slower customer payments during these segments. Conversely, shorter periods near 36 days in late 2021 and early 2023 indicate improved collections efficiency during those quarters.

Operating Cycle

The operating cycle in days shows variability ranging from approximately 280 to 390 days. It trended downward notably during 2022, with a low around 281 days, signaling enhanced overall operational efficiency. However, the cycle expanded again during late 2022 and into 2023, indicating periods where inventory and receivables durations increased before stabilizing somewhat in the final quarters of the data.

Average Payables Payment Period

There is a general increasing trend in payable periods during 2021 and 2022, peaking around 130 days, implying the company took longer to settle its obligations. This trend reversed somewhat in 2023 and 2024, with payment periods lowering to approximately 96 to 110 days, suggesting a tighter payment cycle. The 2025 data indicate minor volatility but no significant deviation from this range.

Cash Conversion Cycle

The cash conversion cycle reflects the number of days from outlay to cash recovery. It decreased notably from 292 days early in 2021 to a low of around 170 days mid-2022, showing improved cash management efficiency. Subsequently, it increased again to approximately 230-250 days during late 2022 and into parts of 2023, then trended downward slightly in 2024 and early 2025. These dynamics reveal ongoing efforts to optimize working capital but also exposure to cyclical fluctuations in operational timing.

In summary, the company's operational efficiency ratios and cycle metrics indicate periods of improvement particularly around mid-2022, followed by intermittent regressions and stabilization. Changes in inventory turnover and inventory days suggest variable inventory management effectiveness, while receivables and payables cycles reveal shifts between efficient cash flow management and elongated collection or payment periods. The overall trends point to active management of working capital with opportunities to further smooth operational cycles and reduce cash conversion periods.

Cost of Sales Trend

The cost of sales exhibits an overall upward trajectory from March 2021 to September 2025. Initial values commenced around 2,274 million USD in Q1 2021 and steadily increased, with some fluctuations, to peak values near 3,487 million USD by Q3 2025. Notably, the cost of sales rose notably towards the end of each year, indicating a possible seasonal pattern or higher activity in the fourth quarter. Despite some quarters showing slight declines or stabilization, the general trend remained positive and reflects growing operational scale or increased input costs over the period.

Inventories Trend

Inventories showed variability throughout the observed period. Starting near 9,019 million USD at the beginning of 2021, inventory levels declined through much of mid-2021 and 2022, reaching a low point around 7,153 million USD in Q3 2022. Subsequently, inventory levels rebounded sharply in Q4 2022 to approximately 9,886 million USD and fluctuated around 9,900 to 10,700 million USD in 2023 and into 2024. Towards the end of the period in 2025, inventories remained elevated but exhibited a slight decreasing tendency. This variability may suggest adjustments in stock management, supply chain dynamics, or demand fluctuations across quarters and years.

Inventory Turnover Ratio

The inventory turnover ratio demonstrates moderate fluctuations and generally increased from 1.05 in Q1 2021 to peak levels near 1.54 in Q3 2022, indicating improved efficiency in converting inventory to sales during that timeframe. Following this peak, turnover ratios declined to around 1.1 in Q1 2023 before gradually rising again and stabilizing near 1.3 to 1.4 in subsequent quarters. The ratio's pattern suggests periods of enhanced inventory utilization followed by phases of relative slowdown, reflecting changing inventory management effectiveness or sales velocity. The metrics toward the end of the period settle at levels higher than those at the start, pointing to a net improvement in inventory turnover efficiency over the medium term.

Overall Insights

The data indicates increases in both cost of sales and inventory levels over the nearly five-year span, with marked seasonality and variability. The improvement in inventory turnover ratio points to progressive enhancements in operational efficiency despite fluctuations. The interplay between rising costs and inventory management efficiency should be closely monitored to sustain profitability and operational balance. Seasonal spikes and troughs suggest that management may be responding dynamically to market or production cycles.

The analysis of the quarterly financial data reveals several noteworthy patterns across net revenues, trade receivables, and receivables turnover ratios over the observed periods.

Net Revenues

Net revenues exhibit a general upward trend with some fluctuations. Starting from approximately 7,585 million USD in the first quarter of 2021, revenues gradually increased, reaching peaks near 10,845 million USD by the third quarter of 2025. Notable growth periods include the intervals from early 2023 to late 2024, where revenues increased significantly from around 8,019 million USD to above 9,911 million USD. Some periods, such as the fourth quarter of 2024 (9,706 million USD), show slight declines when compared to preceding quarters but are followed by subsequent recoveries.

Trade Receivables, less Allowances

The trade receivables balance exhibits variability that correlates loosely with net revenue trends but with some divergence. Beginning near 3,303 million USD in the first quarter of 2021, receivables rose steadily to exceed 4,000 million USD in multiple occurrences from early 2023 onward. The peak levels approaching nearly 4,994 million USD during mid-2025 indicate an expanding amount of credit extended or longer collection periods. However, the pattern does not maintain a strict upward trajectory; certain quarters, such as late 2022 and late 2024, show declines, suggesting periods of improved collections or tighter credit management.

Receivables Turnover Ratio

The receivables turnover ratio fluctuates between roughly 7.8 and 10.2 times per year. Higher turnover ratios, observed around the fourth quarters of 2021, 2023, and 2024, imply faster collection cycles during these periods, reflecting efficient management of receivables. Conversely, lower turnover ratios, visible in mid-2025 (around 7.8), suggest slower collections relative to sales. The ratio demonstrates some seasonality or cyclical behavior, with increases typically following quarters of revenue growth or stabilized receivables.

Integrated Insights

While net revenues steadily grow, trade receivables do not consistently follow at the same pace, leading to fluctuations in the receivables turnover ratio. The periods with the highest revenue growth are sometimes accompanied by stable or even improved turnover ratios, indicating effective collection policies even amid expanding sales. The occasional declines in turnover ratio could signal temporary credit extension or collection challenges. Overall, the data suggests robust revenue growth with generally effective receivables management, despite some variability that should be monitored for potential liquidity impacts.

The analysis of the quarterly financial data reveals several trends related to cost of sales, accounts payable, and payables turnover over the observed periods.

Cost of Sales

The cost of sales shows a generally increasing trend from March 31, 2021, to December 31, 2025, although there are fluctuations within this upward pattern. Starting at 2,274 million US dollars, the cost rises steadily through 2021 and 2022, reaching values above 3,000 million US dollars by 2023. Notably, there are some periods of slight decline or stabilization, such as between December 31, 2023, and December 31, 2024, where values hover around 3,300 to 3,400 million, before rising again to 3,487 million by the third quarter of 2025. This indicates increasing production or procurement costs over time, possibly reflecting inflation, volume growth, or changes in cost structure.

Accounts Payable

Accounts payable also demonstrate an overall upward trend with notable fluctuations. Initially recorded at 2,537 million US dollars, the values increase, with some periods of significant acceleration, such as the sharp rise from December 31, 2021 (3,331 million) to December 31, 2022 (4,143 million). Afterward, accounts payable values fluctuate around the 3,500 to 4,000 million mark, indicating growing liabilities to suppliers or delayed payments. The peak in accounts payable appears at 4,143 million on December 31, 2022, after which there are movements up and down, but the magnitude remains elevated compared to the initial periods, which might suggest changing credit terms or financing policies.

Payables Turnover Ratio

The payables turnover ratio, representing the frequency with which accounts payable are settled, generally decreases from 3.72 in the first quarter of 2021 to a low of 2.8 at the end of 2022. This declining trend indicates a slower payment cycle or extended payment terms during this period. Subsequently, the ratio recovers somewhat in 2023 and 2024, reaching values around 3.8, suggesting a quicker turnover of payables or improved payment management. The ratio, however, does not return to the initial level seen in early 2021, indicating a possible lasting effect on payment practices or supply chain conditions.

In summary, the financial metrics analyzed reflect a company experiencing rising costs and accounts payable balances over the approximately five-year period. The fluctuations in payables turnover ratio suggest adjustments in payment terms or supplier financing strategies which may be reactive to market conditions or internal policies. These trends provide insight into operational efficiency and working capital management, with potential implications for liquidity and supplier relationships.

Working Capital

Working capital demonstrates considerable volatility across the periods observed. It starts positively at 2,695 million US dollars in March 2021 but dips into negative territory by September 2021, continuing a downward trend through December 2022, reaching a notably low point of -7,717 million US dollars. Subsequently, while some recovery is observed through mid-2024, the figure remains negative, fluctuating between approximately -1,294 million and -2,745 million US dollars before declining more sharply again by 2025, ending at -4,054 million US dollars in the final period provided. This pattern indicates ongoing challenges in managing short-term liquidity and current assets relative to current liabilities.

Net Revenues

Net revenues show a generally positive trajectory over the entire span, with some fluctuations. Beginning at 7,585 million US dollars in March 2021, revenues increase modestly, with intermittent fluctuations, to surpass 8,000 million US dollars by the end of 2021. There is a continued upward movement through 2023 and 2024, peaking at 10,845 million US dollars by September 2025. This upward trend suggests growth in sales or effective pricing strategies despite the varying economic conditions during the periods analyzed.

Working Capital Turnover

Working capital turnover is only reported for the first two quarters in 2021, showing values of 10.81 and 10.52 respectively. The absence of data for subsequent periods limits the ability to analyze trends comprehensively. However, the relatively high initial ratios indicate efficient use of working capital in generating revenue during early 2021.

Summary Insights

The company experiences a persistent negative working capital position from late 2021 onward, which suggests potential liquidity pressures or strategic use of liabilities to finance operations. Despite this, net revenues have shown consistent growth, indicating strong sales performance. The decoupling of working capital and net revenues implies that operational efficiency or cash management strategies might have shifted, potentially involving extended payables or reduced current asset holdings. The limited working capital turnover data hampers a deeper efficiency analysis but initial values suggest effective asset utilization early on.

Inventory Turnover

The inventory turnover ratio displayed a generally positive trend with fluctuations across the quarters. Starting at 1.05 in the first quarter of 2021, there was an increase to a peak of 1.54 by the third quarter of 2022. This improvement suggests a more efficient inventory management during this period. However, a decline followed, dropping to 1.15 by the end of 2022. Recent data from 2023 and 2024 show a recovery and stabilization of the ratio around the 1.3 to 1.43 range, with a slight downward adjustment toward the third quarter of 2025, settling at 1.29. Overall, inventory turnover trends suggest moderate efficiency with periods of both improvement and contraction.

Average Inventory Processing Period

The average inventory processing period, measured in days, inversely correlates with inventory turnover. Beginning at 349 days in the first quarter of 2021, the period steadily decreased to a low of 237 days around the third quarter of 2022, indicating faster inventory processing and potentially reduced holding costs. Following this low point, the processing period lengthened again, peaking at 330 days by the first quarter of 2023, signaling a potential slowdown in inventory movement or buildup. Subsequently, the trend demonstrates a pattern of gradual improvement, with days declining once more to approximately 255-260 days in the mid-2024 quarters. Toward the latter part of 2024 into 2025, there is a modest increase, reaching close to 283 days by the third quarter of 2025. This volatility implies periodic shifts in inventory management effectiveness and market demand balance.

Overall Insights

The analyzed metrics collectively highlight cyclical dynamics in inventory management effectiveness. Periods of higher inventory turnover coincide with reduced average processing days, reflecting enhanced operational efficiency and quicker inventory cycles. Conversely, periods of decreased turnover and increased processing days suggest slower inventory movement, which could raise holding costs and affect liquidity. The company appears to navigate these fluctuations with some degree of recovery and stabilization, albeit without a clear, sustained upward trajectory over the entire timeframe.

Receivables Turnover Ratio

The receivables turnover ratio exhibits notable fluctuations over the observed periods. Initially, it started at 8.82 and demonstrated a dip during mid-2021, reaching around 8.21 to 8.32 in the latter half of 2022. However, periodic increases are evident, with peaks observed at the end of 2021 and again towards the end of 2024, reaching values slightly above 10. The trend toward the most recent quarters shows a decline again, with ratios hovering below 8.5. Overall, the pattern suggests variability in the efficiency of receivables collection, with intermittent improvement phases followed by decreases.

Average Receivable Collection Period

The average receivable collection period moves inversely to the turnover ratio, demonstrating a cyclical pattern with intermittent reductions and increases. The period starts at 41 days and decreases to a low of 36 days at the end of 2021 and again in late 2023 and 2024. Between these intervals, the collection period tends to increase, peaking near 47 days in the latter part of 2025. These fluctuations correspond to changes in the turnover ratio, indicating periods when the company collects its receivables more quickly and periods when collection slows down.

Overall Insights

The data suggests that the company experiences cyclical fluctuations in its receivables management efficiency. Periods of higher turnover ratios coincide with shorter collection periods, reflecting more effective receivables collection. Conversely, periods of lower turnover correspond to longer collection times, indicating potential challenges in cash flow management during those intervals. There is no clear linear trend toward sustained improvement or deterioration; rather, the results imply sensitivity to external or internal factors that affect receivables performance on a quarterly basis.

Average Inventory Processing Period

The average inventory processing period demonstrates a fluctuating but generally decreasing trend over the observed timeframe. Starting at 349 days, it declines to a low of 237 days by September 2022, indicating an improvement in inventory turnover efficiency. Following this, it experiences an upward adjustment fluctuating around the 280-330 days range towards the end of the period, suggesting occasional variations in inventory management but maintaining a better level than the initial figures.

Average Receivable Collection Period

The average receivable collection period remains relatively stable throughout the periods, mainly oscillating between 36 and 47 days. Minor fluctuations are observed, with a peak around 44-47 days in some quarters and a low near 36 days, signaling consistent efficiency in receivables collection without significant deterioration or improvement.

Operating Cycle

The operating cycle closely mirrors the trends in the inventory processing period due to its dependence on inventory and receivables duration. It exhibits a decreasing trend from 390 days at the beginning down to approximately 281 days by September 2022, reflecting improved operational efficiency. Subsequently, it rebounds to a higher range near 346 days before decreasing again slightly towards the final periods. Overall, the company appears to have successfully reduced the length of its operating cycle over time, despite some variability in later periods.

Payables Turnover Ratio

The payables turnover ratio generally exhibits fluctuations throughout the observed periods. Beginning at 3.72, the ratio shows a declining trend in 2021, reaching a low of 2.8 by the end of 2022. Subsequently, the ratio recovers and demonstrates a gradual upward movement, peaking at 3.81 in September 2024 before slightly decreasing again to around 3.33 by September 2025. This pattern indicates varying efficiency in managing payables, with periods of slower and faster turnover.

Average Payables Payment Period

The average payables payment period moves inversely to the payables turnover ratio, reflecting how quickly the company settles its payables. Starting at 98 days in March 2021, the payment period lengthens steadily, peaking at 130 days in December 2022, which corresponds with the lowest payables turnover ratio during the same time. After this peak, the payment period generally diminishes, reaching a low near 96 days in September 2024, before increasing slightly to around 110 days by September 2025. This trend suggests intervals of extended payment durations followed by tighter payment cycles.

Overall Insight

The inverse relationship between payables turnover and average payment period is consistent across the timeline, illustrating cyclical phases in the company's payment practices. Periods of slower payables turnover align with longer payment durations, potentially indicating cash flow management strategies or changing supplier terms. Conversely, periods of higher turnover associate with a shorter payment period, suggesting improved payment efficiency. The fluctuations over the years highlight the dynamic nature of the company's working capital management.

The analysis of the financial efficiency metrics over the reported periods reveals several noteworthy trends in the company's working capital management.

Average Inventory Processing Period

The average inventory processing period demonstrates a fluctuating yet generally declining trend from early 2021 through 2025. Starting at 349 days in the first quarter of 2021, it decreases significantly to a low around 237 days by the third quarter of 2022. Following this, there is some volatility with periods of increase and decrease, but the overall level tends to stabilize in the range of approximately 255 to 283 days towards the later part of the forecast horizon. This suggests improvements in inventory turnover and possible operational efficiencies during the middle part of the period, albeit with some instability thereafter.

Average Receivable Collection Period

The receivable collection period remains comparatively stable throughout the timeline, generally oscillating between 36 and 47 days. There is a minor tendency towards slight increases in certain quarters such as mid-2023 and mid-2025, reaching up to 47 days. However, overall, the company appears to maintain consistent credit collection practices without significant deviations, indicating steady management of accounts receivable.

Average Payables Payment Period

The payables payment period experiences more variability, beginning near 98 days in early 2021 and increasing to a peak of 130 days by the end of 2022. Post-2022, the period fluctuates within a band of approximately 96 to 110 days without a clear upward or downward trend. The initial increase could reflect extended payment terms or strategic supplier negotiations, while the subsequent oscillations show a balanced approach to payables management, avoiding both early and excessively delayed payments.

Cash Conversion Cycle (CCC)

The cash conversion cycle demonstrates a general improvement from 292 days at the start of 2021 to a lower range around 170-188 days by late 2024, indicating enhanced efficiency in converting inventory and receivables into cash. However, from late 2024 onward, the CCC shows signs of lengthening again, rising to above 230 days by mid-2025 before slightly declining towards 217 days at the end of the observed timeline. This pattern reflects that while the company succeeded in reducing the duration of its operating cycle initially, recent months suggest some deterioration, possibly due to the combined effects of lengthening payables and receivables periods.