Sysco Corp. (NYSE:SYY)

Inventory Turnover

The inventory turnover ratio declined steadily from 14.39 in late 2019 to a low of 11.19 in early 2021. Subsequently, it exhibited a gradual recovery, reaching 13.73 by mid-2024. This suggests initial slower inventory movement followed by improved efficiency in managing inventory levels over the latter periods.

Receivables Turnover

Receivables turnover experienced significant fluctuations, rising sharply to 18.28 in mid-2020 before declining to around 13.36 by late 2022. From there, the ratio stabilized around the 14 to 15 range through mid-2024. This indicates periods of faster collections during 2020, followed by normalization in subsequent years.

Payables Turnover

The payables turnover ratio decreased markedly from approximately 12.47 in mid-2020 to a low near 8.53 in early 2021, reflecting slower payments to suppliers. From then on, it steadily improved, reaching around 10.21 by mid-2024, denoting a trend toward quicker payment cycles over time.

Working Capital Turnover

Working capital turnover displayed considerable volatility. After peaking near 34.96 at the end of 2019, it plummeted to under 10 in mid-2020 and stabilized at elevated levels above 30 from late 2021 onward, climaxing at 43.75 by mid-2024. This suggests significant improvements in utilizing working capital efficiently during the more recent periods.

Average Inventory Processing Period

This metric generally moved upward between 2019 and early 2021, increasing from 25 to about 33 days, indicating slower inventory processing. Since then, it has gradually declined and remained steady around 27 days, demonstrating improved inventory handling efficiency in the latest periods.

Average Receivable Collection Period

The average receivable collection period shortened from 27 days in late 2019 to 20 days by mid-2020, reflecting quicker collections, then lengthened again to approximately 28 days by late 2021. It again stabilized around 24 to 26 days afterward, suggesting a return to typical collection behaviors.

Operating Cycle

The operating cycle fluctuated between about 46 and 60 days across the periods. It showed a notable spike up to 60 days in early 2021 but generally remained near the low 50-day range, indicating some variability but an overall stable operational timeline for converting inventory and receivables back into cash.

Average Payables Payment Period

The average payables payment period declined from approximately 37 days in 2020 to 29 days by mid-2020 but then rose sharply to over 43 days in early 2021. More recently, it decreased gradually to around 33-36 days, reflecting changing payment terms and supplier relations over time.

Cash Conversion Cycle

The cash conversion cycle exhibited relative stability, fluctuating mostly between 14 and 21 days. It declined from 20 days in late 2019 to as low as 14 days in late 2020, then hovered around 16 to 19 days subsequently, demonstrating an overall effective management of the cash flow conversion processes.

The analysis of the recent quarterly financial results reveals several notable trends in cost of sales, inventories, and inventory turnover ratios over the examined periods.

Cost of Sales

The cost of sales initially decreased from approximately 12,360 million USD in late 2019 to a low point of about 7,301 million USD in mid-2020, reflecting a significant contraction likely due to external factors impacting operations during that period. Following this trough, a steady upward trend is observed, culminating in a rise to 16,719 million USD by mid-2024. This suggests a recovery and growth phase, with the cost of sales surpassing pre-2020 levels by the end of the period examined.

Inventories

Inventories demonstrated a generally upward trajectory from roughly 3,387 million USD at the end of September 2019 to a peak near 4,734 million USD by early 2024. There was an interim dip in mid-2020 consistent with the trough in cost of sales, after which inventories increased steadily. The sustained elevation in inventory levels in recent quarters indicates accumulation which may support expanding sales activities or anticipation of demand increases.

Inventory Turnover Ratio

The inventory turnover ratio exhibited a decline from 14.39 in late 2019 to a low around 11.19 by early 2021, signaling slower inventory movement during this period. However, from 2021 onwards, the ratio improved steadily, reaching approximately 13.73 by mid-2024. This recovery suggests enhanced efficiency in inventory management or improved sales velocity relative to inventory levels.

In summary, the data reflect initial disruptions around early 2020 followed by gradual operational recovery and growth. The cost of sales and inventories both increased substantially after mid-2020, while the inventory turnover ratio, after weakening, has shown consistent improvement, indicative of better inventory utilization over time. These patterns collectively point to a strengthening business cycle with improved operational performance in recent quarters.

The financial data exhibits several notable trends over the observed periods, particularly concerning sales, accounts receivable, and receivables turnover ratios.

Sales

Sales demonstrated considerable variability throughout the timeframe. Initially, sales dropped markedly from approximately $15.3 billion in late 2019 to a low of around $8.9 billion by mid-2020, likely reflecting external disruptions. Following this decline, sales rebounded strongly starting in the third quarter of 2020, surpassing pre-decline levels by early 2021. The upward trend continued with sales peaking close to $20.5 billion by mid-2024. These fluctuations indicate recovery and growth after a period of contraction.

Accounts Receivable, Less Allowances

Accounts receivable values displayed a declining trend early on, descending from about $4.4 billion in late 2019 to roughly $2.9 billion during mid-2020, paralleling the sales contraction. Post mid-2020, the balances began to increase progressively, reaching approximately $5.3 billion by mid-2024. This pattern suggests a recovery in credit sales and potentially a growing customer base or extended credit terms.

Receivables Turnover Ratio

The receivables turnover ratio, indicating how efficiently the company collects receivables, initially increased from approximately 13.7 times in late 2019 to a peak of 18.3 times in mid-2020, reflecting improved collection speed amidst declining sales. However, post mid-2020, this ratio generally declined to a range between 13.3 and 15 times, with some fluctuations, implying a normalization in collection periods as sales recovered and receivables increased. The turnover ratio stabilized mostly around 14 to 15, suggesting consistent credit management practices in the latter periods.

Cost of Sales

The cost of sales exhibited a declining trend from late 2019 through mid-2020, reaching a low point in June 2020. Following this period, there was a noticeable recovery and upward trajectory extending through mid-2022, culminating in a peak around that time. Subsequent quarters showed fluctuations with costs generally remaining elevated compared to the initial periods of 2019 and early 2020. The most recent data suggest a slight increase in cost of sales, reaching the highest values observed in the series by mid-2024.

Accounts Payable

Accounts payable demonstrated a modest decline from late 2019 until around mid-2020, aligning with the reduction in cost of sales in the same timeframe. From mid-2020 onward, accounts payable steadily increased, peaking toward the end of 2023 and into 2024. This rising trend in payables suggests an expansion in payables balances potentially driven by increased purchasing activity or extended payment terms. The recent values remain at a historically higher level compared to the earlier periods analyzed.

Payables Turnover Ratio

The payables turnover ratio started at a relatively high level in late 2019 and early 2020, indicative of faster payments to suppliers during those quarters. However, a significant decrease in this ratio was observed from early 2021 through mid-2022, marking a shift toward slower payment cycles or increased accounts payable relative to cost of sales. This lower turnover persisted for several consecutive quarters before showing signs of recovery towards the end of 2022 and into 2023. The ratio generally fluctuated above 10 thereafter, but it has not returned to the highest levels seen at the beginning of the sample period, suggesting a moderately slower payment dynamic compared to pre-pandemic periods.

Overall Insights

The data reveals an initial contraction in both cost of sales and accounts payable during the early stages of the analyzed period, likely reflecting external economic pressures or operational adjustments. The subsequent rebound and growth in cost of sales, paired with an increase in accounts payable, point to rising procurement and business activity as conditions evolved. The payables turnover ratio trends indicate a changing payment behavior, with a period of slower payments possibly related to strategic cash management or vendor negotiations post-2020, followed by a modest normalization. The combination of these factors signals an adaptation phase in working capital management, with recent quarters showing higher absolute payables and costs alongside a stabilization in payment efficiency.

Working Capital

Working capital exhibited significant fluctuations over the reported quarters. Initially, it increased from 2,383 million US dollars in late September 2019 to a peak of 5,630 million US dollars by late June 2020. Thereafter, a general declining trend was observed, with working capital decreasing to 1,802 million US dollars by late June 2024, despite some intermittent rises such as in early 2023 and throughout 2023. The variations suggest periods of changing short-term liquidity management, possibly reflecting shifts in current assets and liabilities.

Sales

Sales showed volatility with a notable decline from 15,303 million US dollars in September 2019 to a minimum of 8,867 million US dollars by June 2020. This was followed by a recovery and sustained growth, reaching 20,556 million US dollars by June 2024. The overall trend indicates resilience and expansion in revenue-generating capacity after the initial downturn, with consistent increases observed especially from mid-2021 onwards.

Working Capital Turnover

The working capital turnover ratio, reflecting efficiency in utilizing working capital to generate sales, demonstrated marked variability. It began at 25.27 in September 2019, plummeted to a low of 8.7 by late December 2020, and then substantially increased to peak at 43.75 by late June 2024. The low turnover ratios during 2020 correlate with elevated working capital and decreased sales, indicating reduced operational efficiency during that period. The subsequent rise in turnover reflects improved efficiency and better capital utilization aligned with increased sales and normalized working capital levels.

Integrated Analysis

The data reflects a challenging environment around early to mid-2020, characterized by reduced sales, increased working capital, and impaired efficiency in turnover. Recovery phases are marked by revenue growth and improved working capital turnover, suggesting effective adjustments in working capital management and operational performance. The elevated turnover ratios in the latest quarters evidence an enhanced ability to convert working capital into sales, indicating strengthening financial health and operational efficiency.

Inventory Turnover

The inventory turnover ratio exhibited a downward trend from late 2019 through early 2021, declining from 14.39 to a low of 11.19. This decline suggests a slower rate of inventory being sold or used during this period. Beginning mid-2021, the inventory turnover ratio began a gradual recovery, increasing steadily to reach 13.73 by mid-2024. This improvement indicates a more efficient management of inventory in recent quarters, approaching earlier levels observed in 2019.

Average Inventory Processing Period

The average inventory processing period moved inversely to the inventory turnover ratio. It increased from 25 days in late 2019 to a peak of 33 days by March 2021, reflecting that inventory was held longer. Following this peak, the processing period gradually decreased, stabilizing at around 27 days from mid-2023 through mid-2024. This reduction aligns with the improved inventory turnover and suggests enhanced operational efficiency in managing stock levels.

Overall Analysis

The period from late 2019 to early 2021 was characterized by declining inventory turnover and increasing inventory days on hand, indicating potential challenges in inventory management or demand fluctuations. From mid-2021 onwards, a reversal in these trends is evident with turnover ratios improving and processing periods shortening. This shift points to effective adjustments in inventory control or a positive change in market conditions, resulting in better alignment between inventory levels and sales or usage rates.

Receivables Turnover

The receivables turnover ratio exhibited notable fluctuations across the periods analyzed. Starting at 13.69 in late September 2019, it increased significantly to a peak of 18.28 by June 2020, indicating a faster collection of receivables during that interval. Subsequently, the ratio declined steadily, reaching a lower range around 13.36 to 14.99 in 2022 and 2023. The turnover ratio remained relatively stable thereafter, fluctuating slightly but staying close to the 14 to 15 range through mid-2024. This pattern suggests an initial improvement in the efficiency of credit sales collection followed by a normalization to moderate turnover levels.

Average Receivable Collection Period

The average receivable collection period mirrored the behavior of the receivables turnover ratio in an inverse manner, consistent with their mathematical relationship. Starting with 27 days in late September 2019, the collection period decreased to a low of 20 days by June 2020, corresponding with the peak in turnover ratio. Thereafter, the collection period lengthened gradually, fluctuating around 24 to 28 days through 2022 and 2023, before stabilizing at approximately 25 to 26 days by mid-2024. This indicates that while the company initially succeeded in accelerating its cash conversion cycle, the collection period ultimately adjusted to a somewhat longer but stable duration in subsequent quarters.

Overall Insights

The trends in both ratios suggest an initial period of improving receivables management efficiency during the early months of the pandemic, potentially attributed to changes in customer payment behavior or company collection practices. However, this improvement was not sustained, and the performance metrics reverted to more typical levels in later periods. The stability observed in recent quarters indicates a consistent receivables management process maintained over the most recent periods analyzed.

The analysis of the quarterly financial data reveals several trends in the operational efficiency metrics over the observed periods.

Average Inventory Processing Period

This metric exhibits a gradual increase from 25 days at the start to a peak of 33 days in early 2021. Following this peak, the period shows a steady decline, settling around 27 days in the most recent quarters. This pattern suggests an initial reduction in inventory turnover efficiency, followed by improvements toward more streamlined inventory management.

Average Receivable Collection Period

The receivable collection period starts at 27 days, decreases significantly to a low of 20 days by mid-2020, indicating faster collections during that time. Subsequently, it stabilizes in the mid-20s range, fluctuating slightly but maintaining relative consistency around 24 to 27 days. This stability indicates consistent credit policies or collection efficiency after the initial improvement.

Operating Cycle

The operating cycle mirrors the trends seen in both the inventory processing and receivable collection periods. It drops from 52 days to as low as 46 days during mid-2020, coinciding with the lowest receivable collection periods, then increases sharply to around 60 days in early 2021. The cycle then gradually decreases, hovering in the low 50s in recent quarters. This reflects overall operational improvements after a peak period of elongation.

Overall, the data indicate that the company experienced some initial operational delays or inefficiencies that peaked around early 2021, followed by a phase of improvement in inventory management and receivables collections. The more recent figures suggest a stabilization in these operational timeframes, with a tendency toward faster inventory turnover and receivable collections, contributing to a more efficient operating cycle.

The payables turnover ratio exhibits notable fluctuations over the observed periods. Initially, the ratio increased steadily from 11.48 to a peak of 12.47, indicating an improvement in the company's efficiency in managing payables. However, this was followed by a significant decline to a low of 8.53, suggesting a slower turnover during that timeframe. Subsequently, the ratio recovered gradually, moving back towards double digits and reaching 11.02 before slightly decreasing again towards the end of the data set.

Correspondingly, the average payables payment period demonstrates an inverse relationship with the payables turnover ratio. Early on, the payment period shortened from 32 to 29 days, reflecting quicker payments to suppliers. This period then lengthened considerably, peaking at 43 days, which aligns with the period of decreased payables turnover. Later, the payment period shortened again to approximately 33-35 days, consistent with the recovery observed in the turnover ratio.

Overall, these patterns suggest that the company initially enhanced its payment efficiency, then extended payment durations during a certain phase, possibly reflecting a strategic shift in working capital management or external financial pressures. Towards the latter periods, the trend indicates a return to relatively more prompt payment practices, albeit not reaching the earliest levels of turnover efficiency. The interplay between the turnover ratio and payment period underscores dynamic adjustments in payable management over time.

The analysis of the quarterly financial periods reveals several noteworthy trends in the company's operational efficiency as expressed through its working capital management ratios.

Average Inventory Processing Period

The inventory processing period shows a generally increasing trend from late 2019 through early 2021, rising from 25 days to a peak of 33 days. Following this peak, there is a gradual decline stabilizing around 27 days by mid-2023 and maintaining this level through the first half of 2024. This pattern suggests that inventory turnover slowed notably during the middle of the period analyzed but improved and plateaued thereafter.

Average Receivable Collection Period

The receivable collection period exhibits a decline from 27 days in late 2019 to a low of 20 days in mid-2020, then fluctuates slightly but generally remains within a range of 24 to 28 days up until mid-2024. This indicates an initial improvement in collecting receivables more quickly, followed by stabilization at a moderately efficient collection timeframe.

Average Payables Payment Period

The payable payment period underwent significant variability, initially decreasing from 32 days to 29 days by mid-2020, then increasing sharply to a peak of 43 days in early to mid-2021. Thereafter, the period declines back to a range around 33-36 days through mid-2024. This pattern may reflect strategic shifts in payment timing, possibly to manage cash flow or supplier relations amid changing business circumstances.

Cash Conversion Cycle

The cash conversion cycle generally trends downward from 20-21 days in 2019 to a low point of 14 days in late 2020, indicating an improvement in overall working capital efficiency during that time. It then stabilizes around 15-19 days through mid-2024, with minor fluctuations. This suggests that after initial gains, the company's cash conversion efficiency remained relatively stable over the subsequent years.

Overall, the data reflect an initial period of operational adjustments during 2019 to 2021, characterized by slower inventory turnover and extended payment periods, coupled with improvements in receivables collection and cash conversion efficiency. Following this, the company appears to have optimized its working capital management, maintaining consistent inventory processing, receivables collection, and payment cycles, contributing to a steady cash conversion cycle performance throughout 2022 to mid-2024.