Stryker Corp. (NYSE:SYK)

Inventory Turnover

Inventory turnover exhibited a generally stable trend between 2017 and 2020, fluctuating slightly from 1.73 to 1.52 times, before increasing notably to 1.85 times in 2021. This indicates an improvement in inventory management and faster sales relative to inventory held during the latest period.

Receivables Turnover

Receivables turnover fluctuated mildly, starting at 5.66 in 2017, dipping to 5.14 in 2019, and then recovering to 5.66 by 2021. The pattern suggests a slight decline in the efficiency of collecting receivables in the middle years, followed by a reestablishment of earlier collection performance by 2021.

Payables Turnover

Payables turnover showed a clear downward trend, declining consistently from 8.77 in 2017 to 5.44 in 2021. This indicates the company took longer to pay its suppliers over time, reflecting extended payment terms or slower outflows to vendors.

Working Capital Turnover

Working capital turnover was stable at 2.76 in 2017 and 2018, experienced a contraction to 2.14 in 2019, and then recovered to above prior levels in 2020 and 2021, reaching 3.13. This improvement suggests enhanced efficiency in using working capital to generate sales in recent years.

Average Inventory Processing Period

The average inventory processing period increased steadily from 211 days in 2017 to a peak of 241 days in 2020, followed by a significant reduction to 197 days in 2021. This implies that inventory was held longer in the years before 2021 but turnover accelerated considerably in the latest year.

Average Receivable Collection Period

The average receivable collection period remained relatively stable, fluctuating mildly between 63 and 71 days across the periods. It peaked at 71 days in 2019 and returned to 64 days by 2021, reflecting consistent credit collection practices with some variation.

Operating Cycle

The operating cycle lengthened gradually from 275 days in 2017 to 310 days in 2020, but dropped markedly to 261 days in 2021. This suggests that while the overall time from inventory acquisition through receivables collection grew until 2020, the process became significantly more efficient in the latest period.

Average Payables Payment Period

The average payment period for payables extended from 42 days in 2017 to 67 days in 2021, consistent with the declining payables turnover ratio. This indicates the company increasingly deferred payments to suppliers across the timeframe.

Cash Conversion Cycle

The cash conversion cycle exhibited an upward trend from 233 days in 2017 to a peak of 255 days in 2019, remained elevated through 2020, and then declined sharply to 194 days in 2021. This indicates that the company reduced the time between cash outflow and inflow substantially in 2021, reflecting improved liquidity and operational efficiency.

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

Cost of Sales

The cost of sales demonstrated a steady upward trajectory across the years. Starting at USD 4,271 million in 2017, it increased consistently each year, reaching USD 6,140 million in 2021. This represents a significant growth, indicating either increased production volume, rising input costs, or a combination of these factors.

Inventories

Inventories also showed an overall increasing trend from USD 2,465 million in 2017 to a peak of USD 3,494 million in 2020, followed by a slight decline to USD 3,314 million in 2021. This pattern suggests accumulation of stock over four years, potentially preparatory for higher sales or production, with a modest reduction in the final year, possibly reflecting improved inventory management or sales adjustments.

Inventory Turnover Ratio

The inventory turnover ratio experienced some fluctuations during the five-year period. Initially, it declined from 1.73 in 2017 to 1.52 in 2020, suggesting a lengthening of inventory holding periods or slower movement of inventory. However, in 2021, the ratio rose sharply to 1.85, indicating a more efficient conversion of inventories into sales at the end of the period.

Overall, the data reveals a growth in cost of sales aligning with increased inventory levels until 2020, after which inventory management appears to have become more efficient, as evidenced by the improvement in inventory turnover ratio in 2021. The slight reduction in inventory in 2021, coupled with the higher turnover ratio, suggests a positive shift towards more optimized inventory handling or increased sales velocity during the last recorded year.

The financial data reflects trends in net sales, accounts receivable, and receivables turnover over a five-year period.

Net Sales

Net sales demonstrate an overall upward trend from US$12,444 million in 2017 to US$17,108 million in 2021. There was consistent growth between 2017 and 2019, with a slight decline in 2020, followed by a substantial increase in 2021. This indicates a strong recovery and expansion after the 2020 dip.

Accounts Receivable, Less Allowance

The accounts receivable balance increased steadily from US$2,198 million in 2017 to US$3,022 million in 2021. The rise was consistent each year, though the rate of increase slowed somewhat between 2019 and 2020 before accelerating again in 2021. This growth generally aligns with the increase in net sales, reflecting higher credit sales or extended payment terms.

Receivables Turnover

Receivables turnover, which measures the efficiency of collecting receivables, exhibited fluctuations during the period. It increased marginally from 5.66 in 2017 to 5.83 in 2018, then declined to 5.14 in 2019, followed by a slight improvement to 5.31 in 2020 and a return to 5.66 in 2021. This pattern suggests variability in collections efficiency, with the lowest turnover recorded in 2019, potentially indicating slower collection cycles or relaxed credit policies during that year.

The financial data reveals a notable upward trend in both cost of sales and accounts payable over the five-year period ending in 2021. The cost of sales has increased steadily from US$4,271 million in 2017 to US$6,140 million in 2021, indicating growing operational expenses or increased production levels. Concurrently, accounts payable has grown from US$487 million to US$1,129 million, reflecting rising liabilities owed to suppliers or vendors.

Conversely, the payables turnover ratio shows a consistent decline over the same period, moving from 8.77 in 2017 down to 5.44 in 2021. This downward trend in the ratio suggests that the company is taking longer to settle its payables relative to its cost of sales. Such an elongation of the payment period could indicate changes in credit terms, cash management strategies, or liquidity constraints.

Cost of Sales

Increased progressively each year, with a total rise of approximately 43.7% over five years.

Accounts Payable

More than doubled from 2017 to 2021, demonstrating an increasing reliance on supplier credit or extended settlement timeframes.

Payables Turnover Ratio

Decreased steadily, indicating slower payments to suppliers relative to the cost base, possibly signaling strategic shifts in working capital management.

The financial data reveals several notable trends across the five-year period ending December 31, 2021.

Working Capital

Working capital showed an overall increasing trend with fluctuations. Starting at 4,508 million US dollars in 2017, it increased to a peak of 6,960 million in 2019, followed by a significant decline to 4,666 million in 2020. Subsequently, it rose again to 5,468 million in 2021, indicating some recovery but still below the 2019 peak.

Net Sales

Net sales exhibited consistent growth throughout the period. Beginning with 12,444 million US dollars in 2017, net sales steadily increased each year, reaching 17,108 million in 2021. This reflects a compound growth trend and suggests expanding market demand or successful sales efforts despite a slight dip in 2020 compared to 2019.

Working Capital Turnover

The working capital turnover ratio experienced variability across the analyzed years. It remained stable at 2.76 in both 2017 and 2018, declining sharply to 2.14 in 2019. The metric recovered strongly in 2020 to 3.08 and further improved marginally to 3.13 in 2021. This ratio trend suggests improved efficiency in utilizing working capital to generate sales following the dip in 2019.

Overall, the data suggests that while working capital management faced challenges with volatility in levels, the company's ability to generate sales from its working capital has improved in recent years. The steady increase in net sales coupled with increased working capital turnover in 2020 and 2021 indicates enhanced operational efficiency and potential growth momentum.

Inventory turnover

The inventory turnover ratio exhibited a declining trend from 1.73 in 2017 to a low of 1.52 in 2020, indicating a gradual decrease in the frequency of inventory turnover during this period. However, in 2021, the ratio increased noticeably to 1.85, suggesting an improvement in inventory management or increased sales efficiency.

Average inventory processing period

The average inventory processing period showed an increasing trend from 211 days in 2017 to 241 days in 2020, implying that inventory was held for longer durations over these years. This trend aligns inversely with the declining inventory turnover ratio during the same timeframe. In 2021, there was a significant reduction in the processing period to 197 days, reflecting quicker inventory turnover and improved operational efficiency.

General observations

The inverse relationship between inventory turnover and average inventory processing period is evident across the years, as expected. The deterioration in inventory turnover and increase in processing period until 2020 may indicate operational challenges or shifts in demand. The reversal of these trends in 2021 suggests corrective actions were effective, leading to enhanced inventory management and potentially higher liquidity.

Receivables Turnover

The receivables turnover ratio exhibited moderate fluctuations over the five-year period. It started at 5.66 in 2017, experienced a slight increase to 5.83 in 2018, followed by a decline to 5.14 in 2019. The ratio rebounded modestly to 5.31 in 2020, and returned to its initial level of 5.66 by 2021. This pattern suggests variability in the efficiency of collecting receivables, with a dip in 2019 indicating slower collection relative to sales, but improvement observed thereafter.

Average Receivable Collection Period

The average collection period, measured in days, inversely mirrors the trend seen in the receivables turnover. The period decreased slightly from 64 days in 2017 to 63 days in 2018, indicating a marginal acceleration in collections. However, it rose significantly to 71 days in 2019, reflecting slower collections consistent with the decline in turnover ratio that year. In 2020, the period improved slightly to 69 days and returned to 64 days by 2021, returning to the initial efficiency level. The dynamics suggest some challenges in receivable collection timing around 2019, followed by a recovery to previous efficiency levels.

Inventory Management

The average inventory processing period exhibited an increasing trend from 211 days in 2017 to 241 days in 2020, indicating slower inventory turnover over these years. However, this period significantly decreased to 197 days in 2021, suggesting an improvement in inventory management or faster movement of inventory during the latest year observed.

Receivable Collection

The average receivable collection period remained relatively stable over the five-year span. It showed a slight decline from 64 days in 2017 to 63 days in 2018, then increased to 71 days in 2019. This was followed by a decrease to 69 days in 2020 and a further reduction back to 64 days in 2021. The fluctuations suggest some variability in the efficiency of collection practices but ultimately a return to the original timeframe.

Operating Cycle

The operating cycle, combining inventory processing and receivable collection periods, increased progressively from 275 days in 2017 to a peak of 310 days in 2020, implying a lengthening in the overall time from inventory purchase to cash collection. In 2021, the operating cycle shortened significantly to 261 days. This reduction reflects improved operational efficiency, likely influenced by the shorter inventory processing period and stabilized receivable collection time.

Payables Turnover

The payables turnover ratio displays a decreasing trend over the five-year period. Starting at 8.77 in 2017, the ratio declines consistently, reaching 5.44 by the end of 2021. This indicates that the company is taking longer to pay its suppliers, suggesting a slowdown in accounts payable settlements relative to purchases.

Average Payables Payment Period

The average payables payment period increases steadily throughout the period. It rises from 42 days in 2017 to 67 days in 2021. This signifies an extension in the time taken by the company to settle its payables, which aligns with the declining payables turnover ratio.

Overall Analysis

The observed inverse relationship between the payables turnover ratio and the average payment period highlights a trend of elongating payment terms or delayed payments to suppliers. This could impact supplier relationships but may also improve short-term liquidity by retaining cash longer. The company appears to be strategically managing its payables by extending payment periods across these years.

Over the analyzed periods, several notable trends emerge regarding operational efficiency and working capital management.

Average Inventory Processing Period

The inventory processing period experienced a general increase from 211 days in 2017 to a peak of 241 days in 2020, indicating a lengthening duration to process inventory. However, there was a significant reduction to 197 days in 2021, suggesting improvement in inventory turnover and management efficiency in the most recent year.

Average Receivable Collection Period

This metric remained relatively stable over the years, fluctuating mildly between 63 and 71 days. Notably, it decreased back to 64 days in 2021, reflecting a slight improvement in the company's ability to collect receivables within a shorter timeframe.

Average Payables Payment Period

The payables payment period showed a consistent upward trend, increasing from 42 days in 2017 to 67 days in 2021. This indicates that the company increasingly extended the time taken to pay suppliers, potentially as a cash management strategy.

Cash Conversion Cycle

The cash conversion cycle, which reflects the net time between cash outflows and inflows, rose from 233 days in 2017 to a high of 255 days in 2019 and remained elevated through 2020. However, a considerable improvement is observed in 2021, with the cycle shortening to 194 days. This contraction suggests enhanced efficiency in overall working capital management, possibly driven by improved inventory processing and receivables collection alongside longer payables payment.