Thermo Fisher Scientific Inc. (NYSE:TMO)

Inventory Turnover

Inventory turnover remained fairly consistent from late 2020 through mid-2021, fluctuating slightly around 4.0. Starting in early 2022, a noticeable improvement occurred, with the ratio rising steadily to peak above 5.0 in late 2023. This suggests an increasing efficiency in inventory management over the latter periods.

Receivables Turnover

The receivables turnover ratio showed an increase from approximately 5.6 in early 2020 to around 7.0 by the end of 2020, indicating faster collection of receivables during that period. However, from 2021 onward, the ratio declined and stabilized around 5.0 to 5.5, reflecting moderate variability but relatively steady receivables management in more recent quarters.

Payables Turnover

Payables turnover exhibited a rising trend from roughly 7.5 in early 2020 to above 10.0 in late 2022, indicating that the company increased the frequency of payments to suppliers. Following this peak, a moderate decline occurred but the turnover ratio remained strong, consistently above 8.0 through mid-2025, suggesting sustained prompt payment practices.

Working Capital Turnover

Working capital turnover showed significant volatility. Starting near 2.3 in December 2020, it rose sharply to above 6.0 in early 2022, even reaching a high of over 10.0 in mid-2023. Subsequently, the ratio decreased again, leveling around 4.0 to 5.0 in the latest quarters. This fluctuation may indicate changes in operating efficiency or shifts in asset and liability management strategies over time.

Average Inventory Processing Period

This metric decreased steadily from a high of about 94 days in early 2021 to approximately 72 days by late 2023. A slight rise occurred in some quarters, but overall the trend points to an acceleration in inventory turnover and a reduction in the time inventory is held.

Average Receivable Collection Period

The collection period shortened from 65 days in early 2020 to roughly 52 days by the end of 2020, indicating improved collection efficiency initially. However, starting in 2021, it lengthened again and oscillated between 66 and 74 days, remaining relatively stable but longer than during 2020.

Operating Cycle

The operating cycle generally declined from about 156 days in early 2020 to around 143 days by late 2020, signaling more efficient operations. Afterward, it increased again to a range between 145 and 168 days during 2021 and 2022, before settling back around 142 to 150 days in the most recent periods.

Average Payables Payment Period

The average payment period to suppliers decreased from 49 days in early 2020 to around 34-37 days in late 2022 and early 2023, indicating faster payments during that time. More recently, this period has gradually increased again to near 44-45 days by mid-2025, suggesting a moderate relaxation in payment speed.

Cash Conversion Cycle

The cash conversion cycle fluctuated between 97 and 118 days over the observed periods. It initially improved slightly from 107 days in early 2020 to about 102 days in late 2020, then worsened to reach over 115 days in 2021 and 2022. A gradual improvement occurred afterward, lowering the cycle duration to near 97 days sporadically, though some volatility remains evident.

Cost of Revenues

The cost of revenues demonstrated a general upward trend between March 2020 and December 2022, rising from $3,490 million to a peak of $6,844 million. This increase reflects elevated production or supply costs over this period. Subsequently, the cost of revenues showed some fluctuations with a modest decline towards mid-2024, followed by periodic increases and decreases, ending at $6,129 million in March 2025. The values suggest variability in production cost control or changes in sales volume affecting costs.

Inventories

Inventories steadily increased from $3,454 million in March 2020 to a high of $5,722 million recorded in October 2022. After this peak, inventories exhibited relative stabilization, fluctuating slightly but generally maintaining levels just above $5,000 million. Towards early 2025, inventories decreased somewhat, reaching $5,224 million in March 2025, which could indicate improved inventory management or a shift in demand expectations.

Inventory Turnover Ratio

This ratio, which was only available from December 2020 onwards, remained fairly consistent around 4.0 through the end of 2021, indicating moderate efficiency in converting inventory into sales. From 2022 through 2024, the ratio improved steadily, reaching values above 5.0 at times, signifying enhanced inventory management efficiency and faster turnover. However, towards late 2024 and early 2025, the ratio again slightly declined to around 4.8, suggesting a minor decrease in turnover speed, though still above earlier levels.

Summary Insights

Overall, the data reveals significant growth in both cost of revenues and inventories through late 2022, followed by a period of relative stabilization and moderate declines in early 2025. The inventory turnover ratio's improvement indicates increasing operational efficiency in managing stock relative to sales. Fluctuations in both cost and turnover metrics in the most recent quarters may reflect adjustments to market conditions or supply chain factors. Continued monitoring is advisable to assess whether recent trends represent temporary variability or a shift in operational dynamics.

Revenues

Revenues exhibit a generally positive trend with fluctuations across the analyzed periods. Initially, from March 2020 to December 2020, revenues increased significantly from 6,230 million to 10,550 million US dollars, reflecting a period of strong growth. In the first half of 2021, revenues slightly declined, falling to 9,273 million by July 2021, before rebounding towards the end of the year to 10,702 million. Throughout 2022, revenues remained relatively stable, fluctuating around the 10,677 to 11,818 million range, indicating a plateau phase following earlier growth. In 2023, revenues showed slight variability but maintained a range between approximately 10,574 million and 10,886 million. Moving into 2024 and early 2025, revenues demonstrated moderate oscillations, ending at 10,364 million in March 2025, which is somewhat lower than the prior peak levels.

Accounts Receivable, Less Allowances

Accounts receivable displayed an overall upward trajectory, with notable spikes and fluctuations. From March 2020 until December 2020, receivables increased from 4,508 million to 5,741 million US dollars, consistent with growing revenues during that period. A significant jump occurred at the end of 2021, reaching 7,977 million, which is markedly above prior levels and suggests an accumulation of receivables possibly related to sales terms or collection dynamics. Through 2022, receivables hovered relatively high, varying slightly but remaining above 7,600 million. The levels in 2023 remained elevated, staying roughly between 7,922 million and 8,370 million. In the first quarter of 2024 and into early 2025, accounts receivable values remained steady within the 7,900 to 8,455 million range, indicating a sustained higher base compared to earlier years.

Receivables Turnover Ratio

This ratio appeared only from September 2020 onwards and showed some volatility over the periods. Initially, it rose from 5.61 to 7.03 until December 2020, indicating improved efficiency in collecting receivables relative to sales during that timeframe. However, a sharp decline to 4.92 was observed in the first quarter of 2022, suggesting a slowdown in collections or increased outstanding receivables relative to revenues. Subsequently, the turnover ratio ranged between approximately 5.07 and 5.76 throughout the remainder of the periods, displaying moderate fluctuations but generally lower than the peak in late 2020. This pattern points to a consistent but reduced efficiency in accounts receivable management compared to earlier improvements.

Summary Insights

The financial data shows that while revenue growth was strong initially, it stabilized and slightly declined in recent quarters. Concurrently, accounts receivable increased markedly and remained at a high level, especially after 2021, hinting at possible changes in payment terms or collection delays. The receivables turnover ratio, after an initial upward trend, decreased and stabilized at moderate levels, aligning with the elevated receivables balances. The collective data suggests that while sales volumes remained solid, the company's receivables management became less efficient over time, potentially impacting cash flow. Further attention to receivables collection strategies may be warranted to optimize working capital.

The analyzed data reveals notable fluctuations both in the company’s cost of revenues and accounts payable over the reported periods. These movements suggest dynamic operational and procurement activities, which may be influenced by internal and external factors such as supply chain conditions, production levels, and market demand.

Cost of Revenues

The cost of revenues initially exhibits a gradual increase from $3,490 million in March 2020 to a peak around December 2020 at $4,994 million. Following this peak, there is a slight decline through mid-2021, with values hovering just below $5,000 million. However, from late 2021 onwards, the trend shifts upward with a pronounced increase reaching $6,844 million by December 2022, indicating expanding production costs or increased sales volume. In the most recent quarters up to March 2025, the cost of revenues mildly fluctuates but remains elevated around the $6,000 to $6,500 million mark, suggesting sustained high operational expenses.

Accounts Payable

Accounts payable demonstrate an overall rising pattern from $1,599 million in March 2020 to $3,381 million in December 2022, reflecting potentially greater credit purchases or extended payment terms with suppliers. Post-December 2022, a degree of variability is observed, but values generally plateau around $2,500 to $3,000 million through to March 2025. This stabilization could indicate better working capital management or adjustments in procurement practices.

Payables Turnover Ratio

The payables turnover ratio shows significant variation between 6.83 and 10.82 over the reported quarters. Initially, the turnover ratio increases from 7.45 in December 2020 to a peak of 10.82 by October 2022, suggesting a quicker rate of paying suppliers relative to purchases. However, following this peak, a decline occurs, lowering the ratio to around 8.18 by March 2025, reflecting slower payments or higher outstanding payables relative to cost of revenues during this time. Such shifts imply changes in payment policies or negotiation terms with vendors.

In summary, the cost structure displayed by the cost of revenues has generally risen over the five-year span, with accounts payable also increasing albeit with recent stabilization. The payables turnover ratio’s fluctuations highlight evolving payment behaviors, which may impact liquidity and supplier relationships. These insights suggest careful monitoring of working capital components is essential to optimize financial performance and operational efficiency.

Working Capital

The working capital demonstrates considerable fluctuations over the observed periods. Initially, from March 2020 to October 2021, there is a general upward trend, peaking at 16,971 million USD in October 2021. Subsequently, a sharp decline occurs in December 2021 to 6,677 million USD, followed by a period of relative stability and modest growth until December 2022. From early 2023 onwards, the working capital shows volatility but overall maintains a range between approximately 4,300 million USD and 10,500 million USD, ending at 10,204 million USD in March 2025.

Revenues

Revenues experienced growth from March 2020 through December 2020, rising from 6,230 million USD to 10,550 million USD. After a slight drop in early 2021, revenues fluctuate moderately within the range of 9,270 to 11,450 million USD across subsequent quarters. Notable peaks appear around April 2022 and December 2024, while some declines are seen towards the latest quarters, specifically ending at 10,364 million USD in March 2025. Overall, revenues exhibit resilience with cyclical variations but no sustained downward or upward long-term trend.

Working Capital Turnover

The working capital turnover ratio is not provided for the initial quarters but begins at 2.76 and gradually increases to a notable peak of 10.13 in April 2023. Following this peak, the ratio declines steadily, stabilizing between approximately 4.0 and 5.0 in the subsequent quarters through March 2025. The peak in early 2023 suggests an unusually high efficiency in utilizing working capital to generate revenues during that period, though this level was not sustained.

Summary of Patterns and Insights

There is an observed inverse relationship between working capital and its turnover ratio, especially evident around late 2021 and early 2023. When working capital decreases sharply, turnover ratio tends to increase, indicating improved asset efficiency or tighter capital management. Revenues, by contrast, show moderate volatility without drastic changes corresponding directly to working capital movements. This pattern may imply effective revenue generation despite variations in net short-term resources availability. The data suggest periods of strategic inventory and receivables management impacting working capital levels significantly, with corresponding effects on turnover efficiency. The overall financial performance appears stable with transient fluctuations likely tied to operational adjustments or external factors.

Inventory Turnover

The inventory turnover ratio demonstrates a generally increasing trend from the first recorded value in December 2020 (4.02) through to the most recent data point in March 2025 (4.82). Initial values fluctuated slightly around the 4.0 mark, maintaining stability until mid-2022, after which a more pronounced upward trajectory is observed, peaking at 5.06 in both December 2023 and September 2024. Although there is some minor volatility, the overall pattern indicates improved efficiency in inventory management over this period.

Average Inventory Processing Period

The average inventory processing period, expressed in days, moves inversely to inventory turnover, decreasing significantly from 91 days in December 2020 to a low of 72 days in March 2024. After reaching this minimum, the period shows some variation, ranging between 72 and 79 days through to March 2025. This decline indicates a faster cycle of inventory turnover, reflecting enhanced operational efficiency. However, the slight increase towards the later dates suggests some stabilization or potential operational adjustments.

Overall Insights

The combined trends in inventory turnover and average inventory processing period imply that the company has progressively optimized its inventory management processes over the assessed timeframe. The increase in turnover ratio alongside the reduction in processing days denotes a more effective conversion of inventory into sales, improving working capital utilization. The fluctuations toward the end of the dataset warrant monitoring to ensure sustained efficiency gains.

The data presents quarterly trends for receivables turnover and average receivable collection period over multiple periods from 2020 to 2025. These two metrics provide insight into the company's efficiency in collecting its receivables.

Receivables Turnover Ratio

The receivables turnover ratio began to be reported starting from December 31, 2020. Initially, it showed a progressive increase from 5.61 to a peak of 7.03 by the end of 2021. This upward trend indicates improving efficiency in collecting receivables during this period. However, beginning in 2022, there is a noticeable decline with the ratio decreasing from 4.92 in April 2022 to a range around 5.07 to 5.53 thereafter through to March 2025. The values post-2022 remain relatively stable but below the peak, suggesting a moderation in collection efficiency compared to the highest levels observed in 2021.

Average Receivable Collection Period

This metric, measured in number of days, inversely corresponds to the receivables turnover ratio. From December 31, 2020, the average collection period decreased from 65 days down to 52 days by the end of 2021, reflecting faster collections during this time frame. In contrast, starting in April 2022, there is an increasing trend in the number of days, rising from 74 days and fluctuating around the mid-to-high 60s and low 70s in subsequent quarters through to 2025. This increase aligns with the decline in receivables turnover and indicates that the company took longer to collect receivables in recent years relative to the earlier period.

Overall, the data shows that the company experienced an improvement in receivables collection efficiency through 2021, with higher turnover ratios and shorter collection periods. After 2021, the collection efficiency declined, stabilizing at lower turnover ratios and increased days for collection. This suggests either changing credit terms, customer payment behavior, or other operational factors influencing receivables management in the latter years.

Average Inventory Processing Period

The average inventory processing period exhibits a generally declining trend from the earliest available data point with 94 days at the end of 2021 to 72 days as of March 2024. After peaking at 94 days during 2021 and early 2022, it steadily decreases through 2022 and into 2023, reaching a low of 72 days. Minor fluctuations occur thereafter, with the period rising slightly again to 76 and 79 days in late 2024 before consolidating at 76 days by the first quarter of 2025. Overall, the trend suggests improvements in inventory turnover efficiency over the observed time frame.

Average Receivable Collection Period

The average receivable collection period demonstrates more variability compared to inventory days. It initially improves from a high of 74 days in early 2022 to a low near 63 days by the end of 2022. However, during 2023 and into 2024, the collection period generally lengthens, fluctuating between 66 and 72 days. This implies some challenges in receivable management recently, with a persistence of longer collection durations through to early 2025. The pattern indicates less consistency than seen with inventory, which may merit monitoring to prevent adverse impacts on cash flow.

Operating Cycle

The operating cycle, representing the total time between inventory acquisition and cash collection from sales, fluctuates in accordance with its components. After peaking at 168 days in early 2022, it declines steadily to around 142 days by early 2024, reflecting the reduced inventory days and a relatively stable, though somewhat increasing, receivables period. The cycle then exhibits mild fluctuations, rising to 150 days toward the end of 2024 before dropping again to 142 days in the first quarter of 2025. This pattern suggests an overall improvement in the operating cycle efficiency over the medium term, with some recent volatility.

Payables Turnover

The payables turnover ratio exhibits a noticeable degree of fluctuation across the periods analyzed. Starting from a value of 7.45 in late 2020, the ratio increased to reach 8.88 by the third quarter of 2020. This upward trend was somewhat interrupted in the following quarter with a decrease to 8.31, and further declined to 6.83 in the second quarter of 2021. Thereafter, a recovery was seen as the ratio rose steadily, reaching a peak of 10.82 in the third quarter of 2023.

Subsequent values post-peak showed minor variations but remained relatively high, with the payables turnover hovering near values between 8.18 and 10.41. In general, the ratio increased over the examined period, indicating that the company improved its efficiency in paying off its suppliers, turning over payables more frequently as time progressed.

Average Payables Payment Period

The average payables payment period, expressed in days, moved inversely to the payables turnover ratio, consistent with expectation. Starting at 49 days towards the end of Q2 2020, it decreased steadily to reach its lowest point at 34 days in Q3 2023.

This decline in days payable outstanding suggests that the company shortened the average time taken to pay its suppliers over the observed timeline. Following this low point, the payment period slightly increased again, fluctuating between 35 and 45 days through the most recent quarters.

Overall, the trend shows a commitment to quicker payments with some stabilization in the most recent periods, reflecting potentially more disciplined payment practices or improved liquidity management.

Average Inventory Processing Period

The average inventory processing period displayed a general decreasing trend starting from 94 days in December 2020 to 72 days in March 2024. Some fluctuations were observed along the way, with occasional slight increases to 76 or 79 days, but the overall pattern suggests improving inventory turnover efficiency over the analyzed period.

Average Receivable Collection Period

The average receivable collection period initially decreased from 65 days in April 2021 to 52 days by October 2020, then experienced notable volatility. There were increases reaching up to 74 days in April 2022, followed by a period of relative stability around the mid-60s to low-70s. This indicates some variability in the company's ability to collect receivables, without a clear long-term improvement or deterioration.

Average Payables Payment Period

The average payables payment period showed a fluctuating pattern, initially decreasing from 49 days in April 2021 to a low of 34 days in July 2023, then rising back to approximately 44-45 days by the end of the period in March 2025. The variability suggests changes in payment policies or working capital management strategies over time. The peaks and troughs indicate a balancing act between optimizing payment terms and maintaining supplier relationships.

Cash Conversion Cycle

The cash conversion cycle (CCC) fluctuated throughout the period, ranging between a high of 118 days in July 2022 and a low of 97 days in April 2023 and March 2025. Despite the volatility, there is a slight downward tendency toward the end of the period. This suggests incremental improvements in managing the overall liquidity and operational efficiency, but the periodic spikes indicate ongoing challenges or external factors affecting working capital components.