Procter & Gamble Co. (NYSE:PG)

Inventory turnover

The inventory turnover ratio shows a gradual decline over the periods, decreasing from 6.41 in 2020 to 5.45 in 2025. This suggests that the company is turning over its inventory less frequently over time, potentially indicating slower inventory movement or increased inventory levels relative to sales.

Receivables turnover

Receivables turnover also shows a steady decline from 16.98 in 2020 to 13.63 in 2025. This indicates an increasing average collection period and potentially reduced efficiency in collecting receivables over the years.

Payables turnover

Payables turnover fluctuates mildly, starting at 2.92 in 2020, dipping to 2.66 in 2024, and slightly rising to 2.7 in 2025. This reflects some variability in the rate at which the company pays its suppliers, but generally the company appears to be extending payment periods slightly over the years.

Average inventory processing period

The average inventory processing period increases steadily from 57 days in 2020 to 67 days in 2025. This aligns with the declining inventory turnover, signaling slower movement of inventory or longer holding times.

Average receivable collection period

The average receivable collection period rises from 21 days in 2020 to 27 days in 2025, consistent with the decline in receivables turnover, showing a gradual lengthening of time taken to collect payments from customers.

Operating cycle

The operating cycle extends from 78 days in 2020 to 94 days in 2025, indicating the company is taking longer to convert its inventory and receivables into cash. This lengthening cycle suggests slower overall operations or longer working capital management processes.

Average payables payment period

The average payables payment period fluctuates but generally increases from 125 days in 2020 to 135 days in 2025, implying the company is taking more time to pay its suppliers, which may be a strategic effort to manage cash flow.

Cash conversion cycle

The cash conversion cycle remains negative across all years, indicating that the company effectively uses supplier credit to fund operations. However, it fluctuates between -53 days and -41 days, without a clear long-term trend. The negative values suggest the company collects cash from sales before it needs to pay its suppliers, which is favorable for liquidity.

Cost of Products Sold

The cost of products sold increased steadily from 35,250 million USD in 2020 to a peak of 42,760 million USD in 2023. It then experienced a slight decline to 40,848 million USD in 2024, followed by a minor increase to 41,164 million USD in 2025. Overall, this reflects a generally upward trend over the six-year period with some stabilization in the later years.

Inventories

Inventories showed consistent growth over the entire period, rising from 5,498 million USD in 2020 to 7,551 million USD in 2025. This increase indicates a gradual accumulation of stock or possibly higher levels of production or procurement aligned with business needs.

Inventory Turnover Ratio

The inventory turnover ratio exhibited a declining trend, decreasing from 6.41 in 2020 to 5.45 in 2025. This gradual reduction suggests that inventories are being sold less frequently over time, which could imply slower movement of stock or changes in inventory management strategies.

Net Sales

Net sales demonstrated a consistent upward trajectory over the observed period. Beginning at US$70,950 million in mid-2020, sales increased each year to reach US$84,284 million by mid-2025. This reflects a steady annual growth trend, indicative of sustained revenue expansion and potential market demand resilience.

Accounts Receivable

The accounts receivable balance also exhibited a rising trend, starting from US$4,178 million in mid-2020 and escalating to US$6,185 million by mid-2025. This increase in receivables aligns with the growth in net sales but at a proportionally higher rate, suggesting that the company may be extending more credit to customers or experiencing slower collections over time.

Receivables Turnover Ratio

The receivables turnover ratio shows a declining pattern from 16.98 in mid-2020 to 13.63 in mid-2025. A decreasing turnover ratio indicates that the company is collecting its receivables less frequently during the year, which may point to a lengthening in the collection period or potentially relaxed credit terms. This trend warrants attention as it can impact cash flow efficiency despite growing sales.

Summary Insights

The overall financial data reflects a scenario of expanding sales accompanied by increasing accounts receivable and a declining receivables turnover ratio. While revenue growth remains positive and steady, the simultaneous rise in receivables and the decreased turnover ratio suggest changes in credit management or collection effectiveness. Monitoring the impact on liquidity and working capital will be important to ensure that revenue growth translates to actual cash inflows in a timely manner.

Cost of Products Sold

The cost of products sold exhibited an overall upward trend from June 30, 2020, to June 30, 2023, increasing from $35,250 million to $42,760 million. However, a decline is observed in the subsequent years, falling to $40,848 million in 2024 and slightly rising to $41,164 million by June 30, 2025. This suggests some fluctuations in production or procurement costs after reaching a peak in 2023.

Accounts Payable

Accounts payable consistently increased from $12,071 million in mid-2020 to $15,364 million in 2024, with a marginal decrease to $15,227 million in 2025. This gradual rise indicates that the company has been extending or increasing its payables, potentially leveraging supplier credit or reflecting growth in operational scale.

Payables Turnover Ratio

The payables turnover ratio demonstrates some variability over the period, starting at 2.92 in 2020 and experiencing a decline to 2.7 in 2021. It recovered slightly to 2.83 in 2022 and 2.93 in 2023, then decreased again to 2.66 in 2024, before a modest increase to 2.7 in 2025. These fluctuations suggest variations in the speed at which the company settles its payables relative to its cost of products sold, indicating intermittent changes in cash management and payment policies.

Working Capital

The working capital shows a persistent negative value across all reported years, indicating that current liabilities exceed current assets consistently. This negative working capital deepened significantly from -4,989 million USD in 2020 to a peak negative value of -13,108 million USD in 2023. Thereafter, there is a noticeable reduction in the negative working capital to -8,918 million USD in 2024, followed by a subsequent increase in deficit to -10,666 million USD in 2025. The fluctuations suggest ongoing challenges in managing short-term liquidity, although there was a temporary improvement in 2024.

Net Sales

Net sales have exhibited a steady upward trend throughout the entire period, increasing from 70,950 million USD in 2020 to 84,284 million USD in 2025. This consistent growth trajectory illustrates a positive expansion in revenue generation, with the most significant increases occurring between 2020 and 2022. The growth rate appears to moderate slightly in the last few years, but the trend remains positive.

Working Capital Turnover

The working capital turnover ratio data is not provided, which limits direct assessment of efficiency in utilizing working capital relative to sales. Given the persistent negative working capital figures, the ratio could be challenging to interpret, potentially explaining its omission.

Overall Insights

The data displays a dichotomy between increasing sales revenues and persistent negative working capital. The company appears to be generating higher revenues year over year, suggesting effective operational performance and market demand. Conversely, the increasingly negative working capital through most years signals potential liquidity constraints or aggressive financing of current liabilities.

The temporary improvement in working capital in 2024 may indicate some initiative to better align current assets and liabilities, but the rebound to a larger negative position in 2025 suggests these were either not sustained or insufficient. Close attention may be warranted regarding liquidity management and the potential impacts on short-term financial stability despite healthy sales growth.

Inventory Turnover

The inventory turnover ratio has shown a gradual decline over the six-year period, decreasing from 6.41 in 2020 to 5.45 in 2025. This downward trend indicates that the company is turning over its inventory less frequently each year, suggesting a slower movement of goods and potentially less efficient inventory management over time.

Average Inventory Processing Period

The average inventory processing period, expressed in number of days, has increased consistently from 57 days in 2020 to 67 days in 2025. This increase aligns inversely with the declining inventory turnover ratio and indicates that the company is taking longer to process and sell its inventory. A longer processing period could imply an accumulation of stock or slower sales cycles.

Overall Insight

The observed trends in the inventory metrics suggest a reduction in inventory efficiency. The simultaneous decrease in inventory turnover ratio and increase in the processing period imply that inventory is held longer before being sold, which may impact working capital and operational costs. Monitoring these trends is essential to identify causes such as changes in demand, supply chain inefficiencies, or inventory management practices.

Receivables Turnover

The receivables turnover ratio demonstrates a declining trend over the analyzed period. Starting at 16.98 in June 2020, the ratio decreased consistently each year to reach 13.63 by June 2025. This decline suggests that the company is collecting its receivables more slowly over time, indicating potentially less efficient credit and collection processes or changes in credit policy or customer payment behavior.

Average Receivable Collection Period

The average receivable collection period exhibits an increasing pattern, rising from 21 days in June 2020 to 27 days in June 2024 and 2025. This increase corresponds with the decline in receivables turnover and reinforces the indication of longer collection times. A longer collection period may result in higher working capital requirements and potential liquidity pressures.

Overall Analysis

The inverse relationship between receivables turnover and average collection period is consistent, reflecting a gradual deterioration in receivables management efficiency over the period. The company appears to be taking a longer time to convert receivables into cash, which may necessitate management attention to credit policies or collection efforts to maintain optimal cash flow and reduce the risk of bad debts.

Average inventory processing period

The average inventory processing period shows a gradual upward trend over the six-year span, increasing from 57 days in 2020 to 67 days in 2025. This indicates that inventory is being held for longer durations as time progresses, with an increase of 10 days or approximately 17.5% over the period.

Average receivable collection period

The average receivable collection period also exhibits an increasing pattern, rising from 21 days in 2020 to 27 days in 2025. The period remained relatively stable between 2021 and 2022, but then increased steadily, particularly after 2023, pointing to a slower collection of receivables.

Operating cycle

The operating cycle, which combines the inventory processing and receivable collection periods, trends upward consistently from 78 days in 2020 to 94 days in 2025. This increase reflects the combined effect of longer inventory holding and extended receivables collection, representing a lengthening of the company's overall operating cycle by 16 days over six years.

The analysis of the payables metrics over the six-year period reveals fluctuations in the company's efficiency in managing its payables.

Payables Turnover

The payables turnover ratio displays a relatively stable trend with minor variations. Starting at 2.92 in 2020, it decreased to 2.7 in 2021, slightly improved to 2.83 in 2022, and reached a peak of 2.93 in 2023. This was followed by a decline to 2.66 in 2024 and a modest recovery to 2.7 in 2025. These fluctuations suggest some variability in the rate at which the company settles its payables, with no clear long-term upward or downward trend.

Average Payables Payment Period

The average payables payment period, expressed in days, shows an inverse pattern to payables turnover, as expected. Beginning at 125 days in 2020, it increased to 135 days in 2021, then decreased slightly to 129 days in 2022. It returned to 125 days in 2023, followed by a rise to 137 days in 2024 and a small decline to 135 days in 2025. This indicates that the company at times takes longer to pay its suppliers, with a general tendency toward extending payment periods in the latter years of the dataset.

Overall, the data suggests that the company’s payables management has exhibited some variability, with periods of quicker turnover and shorter payment cycles alternating with phases of extended payment durations. The absence of a consistent trend might reflect responsive adjustments in working capital policies or changes in supplier agreements over time.

Average Inventory Processing Period

The average inventory processing period shows a general upward trend over the six-year period. It increased from 57 days in 2020 to 67 days in 2025, indicating a lengthening duration for inventory turnover. This suggests that inventory remains on hand for a longer time before being sold or used, which could point to slower inventory movement or possible changes in inventory management.

Average Receivable Collection Period

The receivable collection period exhibits a gradual increase from 21 days in 2020 to 27 days in 2024 and 2025. This reflects that the company is taking longer to collect payments from customers over time, potentially impacting cash flow management. The increase is moderate but consistent, indicating a slight relaxation or delay in receivables turnover.

Average Payables Payment Period

The payables payment period fluctuates between 125 and 137 days throughout the period but remains considerably longer than both inventory and receivables periods. After rising to a peak of 135 days in 2021, it decreases slightly by 2023, then increases again to 137 days in 2024 and slightly drops to 135 days in 2025. This suggests the company is maintaining an extended timeframe to settle its payables, effectively managing cash outflow by delaying payments to suppliers.

Cash Conversion Cycle

The cash conversion cycle remains negative during the entire period, varying between -41 and -53 days. After an improvement reaching -53 days in 2021, it rises to -41 days in 2023, improves again to -47 days in 2024, and ends at -41 days in 2025. The persistent negative value indicates the company is able to collect cash from operations before it needs to pay its suppliers, which is beneficial for liquidity. The fluctuations reflect changing dynamics between inventory, receivables, and payables periods but overall maintain efficient cash flow management.