Thermo Fisher Scientific Inc. (NYSE:TMO)

Inventory Turnover

The inventory turnover ratio exhibits an overall increasing trend from 4.01 in early 2021 to peaks above 5.0 observed intermittently in late 2023 and again in late 2024. This suggests improving efficiency in the management of inventory, with a decrease in the average time goods remain in inventory before being sold. However, some fluctuations are evident, showing periodic slight declines which may indicate variations in sales or inventory stocking strategies.

Receivables Turnover

The receivables turnover ratio shows a decline from above 7.0 in late 2021 to below 5.0 by late 2025, indicating that the company is collecting payments from customers more slowly over time. This trend is also reflected in the increase of the average receivable collection period, rising from around 52 days in mid-2021 to approximately 74 days by late 2025. This deterioration in receivables management could have implications on cash flow and working capital.

Payables Turnover

Payables turnover displays considerable variability, peaking near 10.8 in mid-2023 and then declining towards the 8.0 range by late 2025. The average payables payment period corroborates this observation, fluctuating between approximately 34 days and 53 days across the timeline, with a trend toward moderately lengthening payment periods later in the period. Such fluctuations suggest adjustments in payment policies or supplier negotiations.

Working Capital Turnover

This ratio shows significant volatility but with an overall downward trend following a peak of 10.13 in early 2023, declining to lower levels around 3.6 to 5.9 by the end of the period. This indicates less efficient use of working capital in generating sales, potentially reflecting higher working capital requirements or lower sales growth in relation to working capital.

Average Inventory Processing Period

The days inventory outstanding reduces moderately from 91-94 days in early periods down to a low of 72 days in some quarters of 2023 and 2024, signaling an improvement in inventory turnover speed. Slight increases toward the end of the series indicate some lengthening. Overall, inventory management appears to have become more effective during the observed timeframe.

Average Receivable Collection Period

The number of days to collect receivables noticeably increases from the low 50s in earlier periods up to around 74 days at the end of the analysis period. This sizeable increase signals potential challenges or policy changes leading to longer durations to collect customer payments, which could impact liquidity.

Operating Cycle

The operating cycle remains relatively stable, fluctuating between approximately 140 and 170 days, indicating consistency in the combined duration of inventory holding and receivables collection. Despite some minor variations, this stability suggests no major shifts in the overall operating cycle duration.

Average Payables Payment Period

The average payables payment period varies over the quarters, mostly ranging between 34 and 53 days, without a clear long-term trend. This suggests that the company adjusts its payment timing to suppliers according to operational needs or market conditions.

Cash Conversion Cycle

The cash conversion cycle generally hovers around 100 to 115 days, with occasional reductions near 97 days and peaks up to 118 days. A modest upward trend is noticeable from mid-2023 onwards, indicating a slight lengthening in the net time taken to convert resource inputs into cash inflows. This trend might reflect the combined effects of slower receivables collection and stable inventory and payables management.

Cost of revenues

The cost of revenues exhibits a general upward trend from April 2021 to December 2022, increasing from $4,697 million to $6,844 million. Post-December 2022, fluctuations are evident with a moderate decline in mid-2023, followed by intermittent rises and falls through to September 2025. Despite these short-term variations, costs remain elevated compared to the early 2021 level, suggesting increased operational expenses or higher production activity during the period.

Inventories

Inventory levels steadily increased from April 2021 ($4,342 million) through October 2022 ($5,722 million), indicating accumulation of stock. After an initial peak, inventories then showed a declining trend finishing at $4,978 million by March 2025. Subsequently, inventories again rose towards $5,745 million by September 2025, highlighting potential restocking or preparation for anticipated demand.

Inventory turnover

Inventory turnover ratios remained relatively stable around 3.9 to 4.1 in 2021 and early 2022, then showed a consistent increase to a peak of approximately 5.06 in March and December 2024, suggesting improved efficiency in inventory management or stronger sales relative to inventory levels. Following this peak, turnover ratios slightly declined but generally stayed above historical levels, indicating sustained better inventory utilization compared to the initial periods.

Summary

The data reflects increasing cost pressures alongside strategic fluctuations in inventory holdings. The improvement in inventory turnover over time points to enhanced operational effectiveness, possibly through more efficient supply chain management or stronger sales execution. The upward movement in cost of revenues paired with inventory trends suggests the company faced higher costs but managed to optimize inventory usage well. These patterns imply a focus on balancing cost control with inventory efficiency to support business performance.

Revenues

Over the examined periods, revenues exhibit a generally fluctuating pattern without a consistent upward or downward trend. Initial quarterly results show revenues around the 9,200 to 10,700 million USD range, peaking notably in December 2021 at 10,702 million USD. Subsequently, a significant increase occurs in early 2022 reaching above 11,800 million USD, followed by some volatility through 2022 with values oscillating near the 10,600 to 11,450 million USD mark. During 2023 and into early 2024, quarterly revenues stabilize mostly between 10,300 and 11,400 million USD, reflecting moderate fluctuations but no extreme deviations. Towards the end of the data timeline in 2025, revenue figures show a general modest rise culminating near 11,100 million USD.

Accounts receivable, less allowances

Accounts receivable values show an overall upward trajectory over the timeframe analyzed. Starting from approximately 5,554 million USD in early 2021, balances remain relatively stable until a noticeable jump in December 2021 to near 7,977 million USD. Through 2022 and 2023, receivables slightly increase and fluctuate around the 7,900 to 8,300 million USD range. In the most recent quarters through 2025, there is a further steady increase bringing receivables close to 8,900 million USD. This trend suggests an increasing volume of outstanding customer balances relative to prior periods.

Receivables turnover ratio

The receivables turnover demonstrates a declining pattern across the observed periods. Initially, the ratio is strong near 6.5 to 7.0 times in early to mid-2021, indicating efficient collection of receivables relative to revenues. However, a marked drop occurs by the end of 2021, falling to below 5.0 times, identifying a slowdown in receivables collection efficiency. Through 2022 to 2025, the ratio remains relatively stable but on a downward trajectory, fluctuating near the 5.0 to 5.5 times range and gradually decreasing towards just below 5.0 times by late 2025. This decline points to a lengthening collection period or increased credit sales, which may have implications for cash flow management.

Overall analysis

The data indicates that while revenues have maintained a relatively stable but somewhat variable position, accounts receivable balances have grown steadily, resulting in a declining receivables turnover ratio. This combination suggests that sales on credit have increased, or that the company is facing slower payments from customers. The trend in receivables collection efficiency warrants monitoring to assess impacts on liquidity and working capital. The company’s ability to maintain revenues amid fluctuating market conditions is evident, but optimizing receivables management could enhance financial performance further.

Cost of Revenues

Over the observed periods, the cost of revenues shows a generally fluctuating trend with notable increases around the end of calendar years 2021 and 2022. Specifically, a pronounced rise occurs from April 2021 through December 2021, where costs ascend from approximately 4.7 billion to 5.4 billion US dollars. This trend continues with elevated figures in 2022 peaking near 6.8 billion US dollars at year-end. In the first quarters of 2023 and 2024, costs decline somewhat but remain above the levels seen in early 2021, ranging mostly between 6.1 and 6.6 billion US dollars. The fluctuations suggest seasonal or operational factors impacting cost levels, maintaining higher baseline expenses in the later years.

Accounts Payable

Accounts payable volumes also fluctuate considerably over the periods. Initial values near 2.1 billion US dollars in early 2021 rise through 2021’s final quarter and into early 2022, peaking again at over 3.3 billion US dollars by the end of 2022. Subsequent quarters exhibit some variability but generally sustain levels above 2.5 billion US dollars. Peaks in accounts payable often coincide with elevated cost of revenues figures, suggesting a relationship between procurement activities and liabilities. The trend indicates fluctuations in payable management possibly due to changes in purchasing practices or supplier payment terms.

Payables Turnover Ratio

The payables turnover ratio, which measures how many times payables are settled during a period, presents a mixed pattern. Initially, the ratio remains relatively stable between 8.1 and 8.9 in early 2021, dips to about 6.8 by the end of that year, then recovers to near 10 by mid-2022. Subsequent fluctuations show a decline to around 7.7 by late 2022, followed by a rise back above 9 in 2023 and 2024. The turnover ratio demonstrates periods of both faster and slower payment cycles, reflecting possible shifts in cash flow strategy or supplier negotiations. Lower ratios coincide with quarters of higher accounts payable balances, implying extended payment terms or delayed settlements at times.

Overall Insights

The data reveals cyclical fluctuations in costs and liabilities, with a noticeable pattern of higher expenditure and payables towards the end of calendar years. The interplay between rising cost of revenues and accounts payable suggests procurement scaling aligned with operational demand or inventory restocking. Variations in the payables turnover ratio indicate changes in payment behavior, alternating between accelerating and decelerating settlement of liabilities. These dynamics could be attributed to strategic cash management, supplier contract terms, or market conditions influencing working capital management. Continuous monitoring of these trends could provide insights into operational efficiency and financial policy effectiveness.

Working Capital

The working capital figures show considerable fluctuation over the observed periods. Initially, there is an increasing trend from approximately 10,690 million USD to a peak of about 16,971 million USD. This is followed by a steep decline to nearly 4,325 million USD by the April 2023 quarter. In subsequent quarters, working capital experiences fluctuations with moderate increases and decreases, reaching around 11,866 million USD before declining again to approximately 7,407 million USD in the last period observed.

Revenues

Revenue figures demonstrate relatively stable performance with mild volatility. Starting around 9,906 million USD, revenues dip slightly in the subsequent quarters but rise steadily to a peak near 11,818 million USD in early 2022. Following this, there is a modest downward adjustment and variability, with revenues generally oscillating between roughly 10,300 and 11,400 million USD. The most recent quarters show a modest increase, culminating in approximately 11,122 million USD by the end of the data set.

Working Capital Turnover Ratio

The working capital turnover ratio exhibits notable volatility throughout the periods. Initially, the ratio decreases from 3.36 to around 2.3, indicating a slower utilization of working capital relative to revenue during this time. It then surges sharply to values above 6 and peaks at over 10 in the April 2023 quarter, signaling a significant improvement in capital efficiency. Post this peak, the ratio declines steadily to a low point near 3.64, before rising again to 5.9 in the final period observed. This pattern suggests fluctuating efficiency in converting working capital into revenue.

Overall Observations

Over the analyzed quarters, the company’s working capital levels show a pattern of volatility with peaks and troughs rather than steady growth or decline. Revenue remains relatively stable compared to working capital, reflecting consistent operational performance despite capital fluctuations. The working capital turnover ratio’s considerable variability indicates changing efficiency in capital management, with periods of heightened effectiveness interspersed with declines. These fluctuations could point to cyclical factors, operational adjustments, or changes in asset and liability management strategies influencing liquidity and capital efficiency.

Inventory Turnover

The inventory turnover ratio exhibited a generally positive trend over the observed periods, starting at 4.01 and gradually increasing to reach a peak of 5.06 on two occasions (December 31, 2023, and December 31, 2024). This indicates an improvement in the efficiency with which the company managed its inventory, reflecting more frequent sales or better inventory control over time. After each peak, slight declines were noted but the ratio remained above 4.4, suggesting sustained strong inventory management overall.

Average Inventory Processing Period

The average inventory processing period, measured in days, showed a complementary downward trend in the earlier periods, decreasing from 91 days to a low of 72 days on two separate dates (December 31, 2023, and December 31, 2024). This decline aligns with the rising inventory turnover ratio, implying faster processing and movement of inventory. However, from late 2024 into 2025, the processing period increased again to around 80-82 days, indicating a potential slowdown in inventory turnover efficiency during the most recent quarters.

Overall Analysis

The trends demonstrate that the company enhanced its inventory management capabilities over multiple years, increasing turnover and reducing the days inventory was held. The recurring peaks in turnover ratio combined with troughs in processing days suggest periods of optimized operations, followed by slight reversals that may warrant attention for sustaining efficiency. Monitoring these indicators will be important for maintaining strong operational performance and minimizing capital tied up in inventory.

Receivables Turnover Ratio

The receivables turnover ratio started at 6.46 in early April 2021, gradually increased to a peak of 7.03 by October 2021, indicating improved efficiency in collecting receivables. However, there was a notable decline to 4.92 by the end of December 2021. Following this decline, the ratio experienced partial recovery, fluctuating between approximately 5.0 and 5.7 from early 2022 through mid-2025. The trend suggests a stabilization at a lower efficiency level compared to the early 2021 peak, with a slight downward tendency towards the end of the period, reaching 4.91 by late September 2025.

Average Receivable Collection Period (Days)

The average collection period began at 56 days in April 2021 and improved to 52 days by mid-2021 indicating faster collections. This was followed by a sharp increase to 74 days by the end of December 2021, which correlates with the decline in receivables turnover ratio during the same timeframe. Throughout 2022 and subsequent years, the days outstanding gradually fluctuated between 63 and 74 days. The trend indicates a sustained elongation of the collection period relative to early 2021 levels, with the collection period still near 74 days by late September 2025, implying slower cash conversion cycles over time.

General Insights

The inverse relationship between the receivables turnover ratio and average collection period is evident. Initially, collection efficiency improved early in 2021 but deteriorated significantly by the end of that year, likely affecting liquidity. Since then, both metrics have shown relative stabilization but at less favorable levels compared to early 2021. This persistence of longer collection periods and reduced turnover ratios may reflect changes in customer payment behavior, credit policies, or market conditions impacting cash flow management. Continuous monitoring and potentially tighter receivables management could be advisable to improve operational liquidity.

The analysis of the quarterly financial data reflects notable trends in the company's inventory management, receivables collection, and overall operating cycle over the examined periods.

Average Inventory Processing Period

The inventory processing period demonstrates a general downward trend from 91 days at the beginning of the timeline to a low of 72 days toward the end of the observed intervals. Initially stable around 91-94 days, the metric decreases progressively, reaching its minimum in the second quarter of 2024. Following this, there is a slight fluctuation with values rising moderately to 79-82 days by the final quarters, indicating improved efficiency in inventory turnover, although some variability persists.

Average Receivable Collection Period

The receivable collection period exhibits a more variable pattern with a general tendency to increase over time. Starting from 56 days, it initially decreases slightly but subsequently rises, peaking around the range of 70-74 days during recent quarters. This indicates a lengthening in the time taken to collect receivables, potentially suggesting a loosening of credit terms or challenges in collection efficiency.

Operating Cycle

The operating cycle, which combines inventory and receivables periods, mirrors the interaction of the two components. The cycle length increases from approximately 147 days to a high near 168 days within the early to mid periods, before declining to around 142 days in later quarters. Despite this mid-period peak, the operating cycle ends with a slight upward trajectory, reaching approximately 153-156 days toward the most recent quarters. This suggests that overall operational efficiency has variable momentum, influenced by changes in both inventory and receivables management.

Payables Turnover Ratio

The payables turnover ratio exhibited fluctuations over the analyzed periods, with values generally ranging between approximately 6.8 and 10.8. Initially, there was a decline from 8.12 in early April 2021 to 6.83 by the end of December 2021, indicating a slower rate of paying off suppliers during this timeframe. Subsequently, the ratio increased notably, peaking at 10.82 in mid-2023, suggesting an acceleration in the frequency of payments to suppliers during that period.

From mid-2023 onward, the ratio demonstrated a gradual downward trend, decreasing to 8.23 by late September 2025. This suggests a moderation in payables turnover, indicating payments are being made less frequently compared to the peak periods but still more frequently than the lowest observed values in late 2021.

Average Payables Payment Period

The average payables payment period moved inversely to the payables turnover ratio, as expected. It began at 45 days in early April 2021 and decreased to its lowest recorded levels between July 2022 (41 days) and October 2022 (37 days), reflecting faster payments to suppliers during these intervals.

In particular, the payment period shortened significantly towards mid-2023, hitting a low of 34 days, which corresponds with the peak in the payables turnover ratio noted in the same timeframe. Subsequently, the number of days extended again, oscillating between 37 and 45 days through to September 2025, indicating a return to more moderate payment terms.

Overall Observations

The data depict a cyclical pattern of payables management, with phases of accelerated supplier payments interspersed with periods of slower payments. The peak efficiency in paying suppliers was observed around mid-2023, where the firm exhibited its highest turnover ratio and lowest payment period, implying effective working capital management in this context.

However, after this peak, a moderate increase in the payment period and corresponding decrease in turnover ratio suggest a strategic adjustment, possibly to optimize cash flow or respond to changing operational conditions. The fluctuations throughout the period indicate a responsive approach to managing payables rather than a fixed policy.

The analysis of the quarterly financial data reveals significant variability across key working capital metrics over the observed periods.

Average Inventory Processing Period

This metric exhibited a gradual decline from 91-94 days in early 2021 to a low of 72 days in the latter part of 2023. However, there was a slight increase afterward, reaching around 80 days by the end of the latest period in 2025. This suggests an overall trend toward improved inventory turnover efficiency with some recent moderation.

Average Receivable Collection Period

The collection period started around 52-56 days and showed a marked increase in late 2021, peaking near 74 days in late 2021 and recurring peaks near that level afterward. This indicates a general elongation of the time customers take to pay, implying potential challenges in accounts receivable management or changing credit terms.

Average Payables Payment Period

There was notable variability in payables payment, ranging from a low in the mid-30s days to highs around the mid-40s days. Peaks and troughs suggest fluctuating payment strategies, possibly to optimize cash flow. The latter periods show a tendency toward maintaining payment periods in the high 30s to low 40s days.

Cash Conversion Cycle (CCC)

The CCC fluctuated significantly, starting at around 102 days, reaching a peak at 118 days in mid-2022, then declining to approximately 97 days in late 2022. It increased again crossing 110 days intermittently in 2023 and 2025. The pattern indicates oscillations in overall working capital efficiency, impacted by the combined variability of inventory, receivables, and payables. Despite periods of improvement, the CCC remained relatively extended, suggesting ongoing challenges in optimizing cash tied up in operations.

Overall, while inventory management has shown improvement, the lengthening receivable collection periods and mixed payables trends have weakened the cash conversion cycle performance. The company appears to be balancing between managing supplier payments and customer collections, with the overall cash cycle remaining elevated in recent quarters.