Target Corp. (NYSE:TGT)

The data over the observed periods reveals several pertinent trends related to liquidity and operational efficiency metrics.

Inventory Turnover

The inventory turnover ratio displays moderate variability, initially increasing from 6.1 in early 2020 to a peak of 6.55 by early 2024, indicating improved inventory management or sales efficiency in this period. However, it declines to 6.0 by early 2025, suggesting a slight decrease in inventory velocity.

Receivables Turnover

A noticeable downward trend in receivables turnover occurs from 156.85 in 2020 to 93.34 in 2023, implying slower collection of receivables and potential extension of credit terms or delays in customer payments. A partial recovery is observed in 2024 and 2025 (120.55 and 106.78 respectively), yet still below initial levels, indicating continued challenges in receivables efficiency.

Payables Turnover

Payables turnover fluctuates over the period, declining from 5.53 in 2020 to 4.84 in 2022, which may reflect slower payment to suppliers. Thereafter, it rises to a peak of 6.43 in 2024, suggesting faster payment cycles, before falling again to 5.86 in 2025.

Average Inventory Processing Period

The average inventory processing period aligns inversely with inventory turnover trends. It increases from 60 days in 2020 to 68 days in 2022, signifying slower inventory clearance, then improves, dropping to 56 days by 2024 before slightly rising again to 61 days in 2025.

Average Receivable Collection Period

The average number of days to collect receivables extends from 2 days in 2020 to 4 days in 2023, corroborating the trend indicated by receivables turnover. It shortens modestly to 3 days in recent years, but remains elevated compared to the earliest period.

Operating Cycle

The operating cycle length increases from 62 days in 2020 to a peak of 71 days in 2022, reflective of slower overall cash flow generation from operations. It then contracts to 59 days by 2024 before slightly rising to 64 days in 2025, indicating fluctuating efficiency in converting inventory and receivables into cash.

Average Payables Payment Period

The average time taken to pay suppliers extends from 66 days in 2020 to 75 days in 2022, suggesting longer credit utilization from suppliers, which would delay cash outflows. Subsequently, this metric shortens significantly to 57 days by 2024, implying quicker payments, but increases again marginally to 62 days in 2025.

Cash Conversion Cycle

The cash conversion cycle (CCC) improves from -4 days in 2020 to a low of -10 days in 2021, indicating a favorable situation where payables are being settled after inventory is sold and receivables collected. However, this advantage erodes over time with the CCC turning positive at 4 days in 2023 and maintaining a small positive value (around 2 days) in subsequent years, signaling increased working capital tied up in operations and potentially impacting liquidity.

Overall, the data indicates varying efficiency in key working capital components over time. Inventory management shows cyclicality, with periods of faster and slower turnover. Receivables efficiency generally declines but shows some recovery in later years. Payables management shifts between extended and shortened payment periods. The net effect results in a fluctuating cash conversion cycle which moves from a net negative (favorable) to a slightly positive duration, reflecting complexities in balancing operating cash flows in recent years.

Cost of Sales

The cost of sales showed a consistent upward trend from 2020 to 2023, increasing from $54,864 million to a peak of $82,306 million. However, there was a decline in 2024 and 2025, with values decreasing to $77,828 million and $76,502 million respectively, indicating a possible reduction in sales volume or cost control measures implemented post-2023.

Inventory

Inventory levels increased steadily from $8,992 million in 2020 to a peak of $13,902 million in 2022. This was followed by a reduction in 2023 and 2024 to $13,499 million and $11,886 million respectively, before rising slightly to $12,740 million in 2025. The initial increase could suggest stockpiling or expansion in product range, while the subsequent decrease may indicate improved inventory management or a response to changing demand.

Inventory Turnover Ratio

The inventory turnover ratio revealed fluctuating efficiency in inventory management over the period. It remained relatively stable around 6.1 in 2020 and 2023, dipped to a low of 5.39 in 2022, suggesting slower inventory movement that year, and peaked at 6.55 in 2024, indicating improved turnover. By 2025, it decreased slightly to 6, but still reflected a reasonable level of inventory efficiency overall.

Net Sales

Net sales demonstrated a consistent upward trend between February 2020 and January 2023, rising from $78,112 million to a peak of $109,120 million. However, from January 2023 onwards, net sales exhibited a slight decline, decreasing to $107,412 million in February 2024 and further to $106,566 million in February 2025. Overall, the growth rate decelerated after 2023, indicating potential market saturation or other influencing factors impacting revenue growth.

Accounts and Other Receivables

Accounts and other receivables showed significant growth from $498 million in February 2020 to $1,169 million in January 2023, nearly doubling over the three-year span. Following this peak, receivables declined to $891 million in February 2024 but then increased again to $998 million in February 2025. This fluctuation suggests variability in credit sales or collection efficiency during the later periods.

Receivables Turnover Ratio

The receivables turnover ratio displayed a downward trend from 156.85 in February 2020 to a low of 93.34 in January 2023, indicating a slowing in the frequency at which receivables were collected relative to net sales. After this trough, the ratio improved to 120.55 in February 2024 but declined again to 106.78 in February 2025. These movements imply that the company experienced decreasing efficiency in receivables management initially, followed by a temporary improvement, and then a slight reduction in efficiency thereafter.

Summary of Trends

Over the analyzed period, net sales increased steadily before stabilizing and slightly decreasing in recent years. Concurrently, accounts receivable levels rose significantly until 2023, reflecting increased credit sales or slower collections, followed by some volatility. The receivables turnover ratio, an indicator of collection efficiency, declined markedly until 2023, indicating slower collections, then showed signs of recovery, though not reaching earlier high efficiency levels. These dynamics suggest that while sales growth slowed, challenges in receivables management may have contributed to changes in liquidity and working capital efficiency.

Cost of Sales

The cost of sales exhibits a general upward trend from February 2020 through January 2023, increasing from $54,864 million to $82,306 million. This represents a significant growth over the three-year period. However, starting in the fiscal year ending February 2024, there is a noticeable decline in cost of sales to $77,828 million, followed by a slight further decrease to $76,502 million in February 2025. This indicates a recent reduction in the cost of sales after several years of growth.

Accounts Payable

Accounts payable increased steadily from $9,920 million in February 2020 to a peak of $15,478 million in January 2022, suggesting increased supplier obligations and possibly higher inventory purchases or extended supplier credit terms. Following this peak, accounts payable declined to $13,487 million in January 2023 and further to $12,098 million in February 2024, before a slight uptick to $13,053 million in February 2025. This pattern indicates volatility and some contraction in payables after a peak in early 2022.

Payables Turnover Ratio

The payables turnover ratio, which indicates how frequently the company pays its suppliers during the year, declined from 5.53 in February 2020 to a low of 4.84 in January 2022. This decrease could mean slower payments to suppliers or longer credit terms during this period. From January 2022 onwards, the ratio increased markedly to 6.10 in January 2023 and peaked at 6.43 in February 2024, suggesting faster payment cycles or shorter credit terms. The ratio decreased slightly to 5.86 in February 2025, reflecting a moderation in payment speed. Overall, these fluctuations indicate changes in payment practices over the years, with a shift towards quicker payments after 2022.

Summary Insights

The data reveals a growth phase in the company's cost of sales until early 2023, accompanied by a rise and then fall in accounts payable balances. This could reflect changes in purchasing volume and supplier credit arrangements. The payables turnover ratio trends suggest extended payment terms until 2022, followed by a notable acceleration in payment tempo through 2024 and a slight moderation thereafter. These patterns may reflect adjustments in working capital management, possibly aimed at optimizing cash flow or responding to supplier relationships and market conditions.

The financial data over the examined periods reveals several notable trends and fluctuations in key financial metrics. Working capital, expressed in millions of US dollars, shows significant variability with negative values across most years, indicating a deficit in current assets relative to current liabilities. Specifically, working capital starts at -1585 million in early 2020, improves sharply to a positive 631 million in early 2021, but then reverts to negative territory in the following years, reaching its lowest point at -1806 million in early 2024 before slightly recovering to -1345 million in early 2025.

Net sales exhibit a consistent upward trend until early 2023, increasing from 78,112 million in early 2020 to a peak of 109,120 million in early 2023. Post-peak, net sales experience a minor decline over the next two years, dropping to 107,412 million in early 2024 and further to 106,566 million in early 2025. Despite this slight decrease, the overall sales figures remain substantially higher than the starting value in 2020, indicating a general growth trajectory over the longer term.

The working capital turnover ratio is only reported for early 2021 and shows an exceptionally high value of 148.27. This unusually high ratio may reflect the temporary positive working capital combined with high net sales during that specific period. The absence of this ratio for other years precludes a trend analysis but suggests that this metric could be influenced heavily by the working capital volatility observed.

Working Capital

Fluctuates significantly, with a brief positive phase in 2021, but predominantly negative values indicating ongoing challenges in managing current assets and liabilities.

Net Sales

Displays a general upward trend until early 2023, followed by a slight decline in the subsequent two years, maintaining levels substantially above 2020 figures.

Working Capital Turnover

Reported only in early 2021, showing an unusually high ratio, likely reflecting temporary working capital normalization and high sales volume.

Overall, the data suggest that while sales growth has been relatively strong and sustainable, working capital management remains a concern due to persistent negative values and volatility. This imbalance could impact liquidity and operational efficiency if not addressed, despite the favorable sales performance.

Inventory Turnover

The inventory turnover ratio exhibited some fluctuations over the observed periods. Initially, it showed a slight increase from 6.1 in early 2020 to 6.21 in early 2021, indicating a marginal improvement in inventory efficiency. However, a notable decline occurred in early 2022, with the ratio dropping to 5.39. This suggests a slower movement of inventory during that period. Subsequently, the turnover ratio rebounded to 6.1 in early 2023 and continued to rise to 6.55 in early 2024, signaling enhanced inventory management or stronger sales activity. The most recent data from early 2025 indicates a decrease to 6.0, reflecting a slight reduction in turnover efficiency but still relatively stable compared to the initial year.

Average Inventory Processing Period

The average inventory processing period, expressed in days, generally moved inversely relative to the inventory turnover ratio, as expected. Beginning at 60 days in early 2020, it marginally decreased to 59 days in early 2021, coinciding with the initial increase in turnover. A marked increase to 68 days was observed in early 2022, reflecting the period where inventory turnover declined, indicating slower inventory movement or longer holding periods. This period shortened substantially to 60 days in early 2023 and further improved to 56 days by early 2024, aligning with the inventory turnover's increase. In early 2025, the processing period slightly extended to 61 days, mirroring the slight dip in turnover ratio.

Overall Insights

The data reflects cyclical changes in inventory management efficiency. The period around early 2022 stands out as an anomaly with reduced turnover efficiency and prolonged inventory holding, possibly due to external factors affecting sales or supply chain. Post-2022, there is evidence of recovery and improvement in inventory handling until early 2024, followed by a minor regression in early 2025. Monitoring these trends is critical for optimizing working capital and operational performance.

Receivables Turnover

The receivables turnover ratio experienced a general decline from 156.85 in February 2020 to 93.34 in January 2023, indicating a reduced efficiency in collecting receivables over these years. However, there was a partial recovery in the following periods, reaching 120.55 in February 2024 before slightly decreasing again to 106.78 by February 2025.

Average Receivable Collection Period

The average receivable collection period increased from 2 days in 2020 and 2021 to 4 days in 2023, reflecting a lengthening in the time taken to collect receivables. This period decreased somewhat afterward, stabilizing at 3 days in both 2024 and 2025. This suggests some improvement in collection efficiency after the peak delay but still longer compared to earlier years.

Overall Analysis

The data indicates an initial deterioration in the management of receivables, with slower collections and a significant drop in turnover ratio through 2023. Although some recovery is noted in the subsequent years, efficiency levels have not returned to the high levels observed at the start of the period. The increase in collection days during the middle years corresponds inversely with the turnover ratio declines, supporting a trend of temporarily weakened receivables management.

Average Inventory Processing Period

The average inventory processing period exhibited fluctuations over the analyzed timeframe. Starting at 60 days in early 2020, there was a slight decline to 59 days in early 2021, followed by an increase to 68 days in early 2022. Subsequently, the period decreased to 60 days in early 2023, then further dropped to 56 days in early 2024 before rising again to 61 days in early 2025. Overall, the inventory processing period has shown variability, with periods of both acceleration and deceleration in inventory turnover.

Average Receivable Collection Period

The average receivable collection period remained relatively stable but showed a gradual increase over the years. Beginning at 2 days in 2020 and 2021, it rose to 3 days in 2022, then peaked at 4 days in 2023 before slightly decreasing back to 3 days in the subsequent two years. This trend suggests a generally short collection period with minor variations, indicating consistent efficiency in receivables management.

Operating Cycle

The operating cycle followed a pattern similar to the inventory processing period, reflecting changes in both inventory and receivables management. It started at 62 days in 2020, dipped slightly to 61 days in 2021, then increased significantly to 71 days in 2022. Following that peak, the operating cycle shortened to 64 days in 2023, further declined to 59 days in 2024, and then rose modestly to 64 days in 2025. This suggests that while there was a period of lengthening operating cycle around 2022, the company managed to reduce it afterward, though it remains higher than the early years.

Payables Turnover

The payables turnover ratio demonstrates a fluctuating trend over the examined periods. Initially, it declined from 5.53 in February 2020 to 4.84 in January 2022, indicating a slower rate of payment to suppliers. However, it then increased significantly to 6.1 in January 2023, peaking at 6.43 in February 2024, before decreasing slightly to 5.86 in February 2025. This overall pattern suggests a period of slower payables processing followed by a phase of more rapid payment activity, with a minor retracement in the latest year.

Average Payables Payment Period

The average payables payment period, measured in days, exhibits an inverse pattern to payables turnover, as expected. It rose from 66 days in February 2020 to a higher duration of 75 days in January 2022, indicating slower payment practices. Subsequently, the payment period shortened substantially, reaching its lowest point of 57 days in February 2024. By February 2025, the period lengthened slightly to 62 days. These changes highlight a strategic shift from elongating payment terms toward faster settlement of payables, followed by a minor extension in the most recent year.

Overall Analysis

The data reveal a cyclical trend in the company's management of payables, with an initial phase of extending payment terms (lower turnover and higher days outstanding) which might have served cash flow or negotiation objectives. This phase was succeeded by a clear acceleration in payables turnover and reduction in payment days, possibly reflecting improved liquidity or changes in supplier agreements. The slight reversal in the latest year suggests some moderation in payment speed, which could be due to operational adjustments or external economic factors. The interplay between both metrics is consistent and indicates deliberate management of payables to optimize working capital.

Average Inventory Processing Period

The average inventory processing period fluctuated over the years presented. It began at 60 days in early 2020, slightly decreased to 59 days in 2021, then increased notably to 68 days in 2022. Subsequently, it returned closer to the initial levels, with 60 days in 2023, a further reduction to 56 days in 2024, and a modest rise to 61 days in 2025. This indicates variability in how long inventory remains on hand before being processed or sold, with a peak in 2022 followed by a general decrease and stabilization.

Average Receivable Collection Period

The average receivable collection period showed a generally low level throughout the period, starting at 2 days in 2020 and maintaining that through 2021. It increased slightly to 3 days in 2022, rose to 4 days in 2023, and then decreased again to 3 days in 2024 and 2025. Overall, the collection period remains very short, suggesting efficient management of receivables with a minor peak in 2023.

Average Payables Payment Period

This period showed more variation. It increased from 66 days in 2020 to 71 days in 2021 and further to 75 days in 2022, indicating a lengthening in the time taken to pay suppliers. However, a significant reduction occurred in 2023 down to 60 days, followed by a decrease to 57 days in 2024 and a slight increase to 62 days in 2025. The trend indicates an initial extension of payables period, then a marked shortening starting in 2023 with some stabilization thereafter.

Cash Conversion Cycle

The cash conversion cycle, representing the net time between cash outlays and cash inflows, started negative at -4 days in 2020, improved to a more efficient -10 days in 2021, then rose back to -4 days in 2022. From 2023 onward, it became positive, registering 4 days in 2023, 2 days in 2024, and remaining at 2 days in 2025. This shift from a negative to a positive cash conversion cycle suggests a transition from receiving cash before payment obligations are due, to a situation where cash outflows precede inflows by a small margin, indicating reduced efficiency in cash flow management after 2021.