Thermo Fisher Scientific Inc. (NYSE:TMO)

The analysis of the quarterly financial ratios from the available periods reveals several noteworthy trends and fluctuations across key efficiency and liquidity metrics.

Inventory Turnover

This ratio showed relative stability around 4.0 in 2020, with a gradual improvement observed from early 2022, peaking at 5.06 in late 2023 and maintaining elevated levels through 2024. This indicates enhanced efficiency in managing inventory despite some minor declines in mid-2024.

Receivables Turnover

The receivables turnover increased significantly from approximately 5.6 in early 2020 to above 7.0 by late 2020, suggesting faster collection of receivables. Subsequently, the ratio declined sharply in early 2022 to below 5.0, followed by a modest recovery stabilizing around 5.0 to 5.3 through 2024, indicating a slower receivable collection pace compared to 2020 but less volatile thereafter.

Payables Turnover

Payables turnover exhibited considerable variability, rising from around 7.5 in early 2020 to a peak near 10.8 in late 2021. The ratio generally remained elevated above 8.0 thereafter, with minor fluctuations indicating faster payment cycles, although a downward trend is visible towards mid-2025, suggesting a slight extension in payment terms.

Working Capital Turnover

The working capital turnover ratio showed high volatility. It improved sharply from around 2.3 in late 2020 to a peak above 10.1 in mid-2023, reflecting highly efficient use of working capital during this period. However, this was followed by a steep decline to values near 3.6 by mid-2025, indicating decreasing efficiency in converting working capital into sales in recent quarters.

Average Inventory Processing Period

This period remained fairly steady around 90 days through 2020, then shortened gradually from 85 days in late 2021 to about 72 days in late 2023, suggesting faster inventory turnover. The period increased slightly again towards mid-2025, indicating some slowing in inventory processing.

Average Receivable Collection Period

The receivable collection days decreased from 65 days in early 2020 to about 52 days in late 2020, reflecting quicker collections. This was followed by an increase to over 70 days from 2022 through 2025, demonstrating a lengthening in the collection cycle and a less favorable trend from a liquidity standpoint.

Operating Cycle

The operating cycle shortened from 156 days in early 2020 to a trough near 142 days throughout 2023 and early 2024, indicating improved efficiency in managing overall operating processes. However, an upward trend is noted towards late 2024 and into 2025, suggesting a moderate elongation in operating cycle duration.

Average Payables Payment Period

Payment periods fluctuated, starting near 49 days in 2020, descending to as low as 34 days in late 2023, implying faster supplier payments. In 2024 and into 2025, the payment period increased again to approximately 43-45 days, reflecting a trend towards extending payment terms.

Cash Conversion Cycle

The cash conversion cycle remained fairly constant around 100 to 110 days, with peaks close to 115 days in early 2022 and mid-2023, and dips below 100 days in late 2022 and mid-2024. These fluctuations indicate periods of both tightened and loosened cash flow management, but overall the cycle exhibits moderate stability over the observed timeline.

The analysis of the quarterly financial data indicates several notable trends related to cost of revenues, inventories, and inventory turnover ratios over the periods under review.

Cost of Revenues

The cost of revenues displays an overall upward trend from March 2020 through December 2024, with certain fluctuations. Starting at 3,490 million USD in March 2020, it rose steadily, peaking at 6,573 million USD in December 2024. There are some periods of slight decline or stabilization, such as between April 2023 and September 2023 where costs decreased gently, and again in some quarters thereafter, but the general movement is a rise indicating increased cost outlays potentially linked to expanded operations or rising input prices.

Inventories

Inventories have also generally increased across the timeline, starting from 3,454 million USD in March 2020 to a peak near 5,559 million USD in June 2025. The increases appear gradual with intermittent minor declines, particularly observed after peaks at various points, such as after December 2022. Inventory levels maintain a positive trajectory, suggesting accumulation to support sales growth or precautionary buildup amid supply chain variables.

Inventory Turnover Ratio

Inventory turnover ratios, available mainly from late 2020 onwards, remain relatively stable, ranging roughly between 3.87 and 5.06. The ratios generally exhibit a modest incremental trend after December 2020, indicating improved efficiency in converting inventory into sales. Peaks observed around December 2023 and April 2025 suggest periods of enhanced inventory management effectiveness. However, some fluctuations imply periodic changes in sales velocity or inventory policies.

In summary, the data reveals consistent increases in cost of revenues and inventory levels over the years, aligned with business growth or operational scale-up. Concurrently, inventory turnover ratios show slight improvements in efficiency but with expected periodic variability. This combination points to an expanding business footprint with an emphasis on balancing inventory holding and turnover efficiency to support ongoing commercial activity.

The analysis of the quarterly financial data reveals several trends and variations over the observed periods.

Revenues (in US$ millions)

Revenues exhibit notable fluctuations throughout the quarters. Initially, there is a consistent increase from 6,230 million USD in March 2020 to a peak of 10,550 million USD in December 2020. This is followed by a decline in early 2021, with revenues dropping to 9,273 million USD in July 2021. Subsequently, revenues experience some oscillations but generally remain within a range of approximately 10,000 to 11,800 million USD until the end of 2022.

In 2023, revenues show a slight downward trend, moving from around 10,710 million USD in April to a low of 10,345 million USD in March 2024, before recovering modestly to approximately 11,395 million USD in December 2024. The first half of 2025 shows a small decline again, down to 10,855 million USD by June.

Accounts Receivable, less allowances (in US$ millions)

Accounts receivable values display a distinct upward pattern overall. Starting at about 4,508 million USD in March 2020, the figures increased steadily, notably peaking at 7,977 million USD in December 2021. Following this peak, the amounts stabilize within the 7,800 to 8,400 million USD band through mid-2025, indicating a higher level of outstanding receivables compared to the initial quarters.

Receivables Turnover Ratio

The receivables turnover ratio, which was unavailable for the earliest quarters, begins at 5.61 in September 2020 and increases to a high of 7.03 in December 2020. This suggests an improved efficiency in collecting receivables during this period. However, post-December 2020, the ratio experiences a marked decline to 4.92 in April 2021, indicating slower collections or rising receivables.

Following the drop, the ratio fluctuates moderately within a range of approximately 5.0 to 5.7 through June 2025, displaying relatively stable but somewhat reduced efficiency in managing receivables compared to the peak in late 2020.

In summary, the company experienced strong revenue growth through 2020, followed by periods of volatility and modest recovery through 2024. Accounts receivable rose significantly over the period, reflecting increased credit sales or slower collection. The receivables turnover ratio mirrored this behavior, peaking sharply at the end of 2020 before settling into a lower but relatively stable range, suggesting adjustments in credit and collection dynamics.

The analysis of the quarterly financial data reveals several notable trends in cost of revenues, accounts payable, and payables turnover ratios over the observed periods. These trends provide insights into the cost management, payment cycles, and supplier relations of the company.

Cost of Revenues

The cost of revenues exhibits an overall increasing trend from March 28, 2020, through December 31, 2024, with some fluctuations. Starting at $3,490 million in Q1 2020, it showed steady increases through 2020 and 2021, peaking at $6,573 million in Q4 2024. There are some fluctuations in the latter years, such as a decrease from $6,844 million in Q4 2022 to $6,570 million in Q1 2023, followed by minor decreases and increases up to Q4 2024. These fluctuations suggest variable production or procurement costs, possibly influenced by operational adjustments or market conditions.

Accounts Payable

Accounts payable amounts also generally increased over time, with initial values around $1,599 million in Q1 2020 rising to a peak of $3,381 million in Q4 2022. Following this peak, payables decreased somewhat but remained elevated relative to early periods, fluctuating around $2,423 million to $3,079 million between Q1 2023 and Q4 2024. This pattern indicates growth in outstanding liabilities to suppliers, reflecting perhaps increased purchasing activity or extended payment terms.

Payables Turnover Ratio

The payables turnover ratio, which measures how quickly the company pays off its suppliers, shows an overall upward trend, with some volatility. Starting at 7.45 in Q4 2020, it increased steadily to a high of 10.82 in Q3 2023, indicating faster payments. The ratio then slightly declined but remained relatively high, oscillating between approximately 8.18 to 9.91 through 2024 and into mid-2025. This suggests improved efficiency or strategic adjustments in payment policies, allowing the company to better manage its short-term liabilities.

Working Capital

The working capital exhibits significant fluctuations over the observed periods. Initially, from March 2020 to December 2021, the value increased substantially, reaching a peak in October 2021 at 16,971 million USD. However, this peak is followed by a sharp decline in December 2021 to 6,677 million USD. From this low point, the working capital shows a general trend of recovery, gradually increasing through the subsequent quarters, reaching 11,866 million USD by June 2025. Some volatility persists, with certain quarters, such as April 2023 and September 2024, displaying decreases relative to the preceding periods.

Revenues

Revenues demonstrate a generally upward trend with some variability. Starting at 6,230 million USD in March 2020, revenues increased progressively to a high of 11,818 million USD in April 2022. Following this peak, revenues slightly decline and then stabilize, fluctuating mostly between 10,300 million USD and 11,400 million USD from mid-2022 to mid-2025. The revenue pattern indicates some cyclicality but overall maintains a position above the initial levels recorded in early 2020.

Working Capital Turnover Ratio

This financial ratio, available only from September 2020 onwards, reveals an interesting pattern. Initially observed values start in the 2.3 to 3.36 range during late 2020 and early 2021. A notable spike occurs in December 2021 with a ratio of 5.87, increasing slightly to a peak of 10.13 in April 2023. Following this peak, the turnover ratio decreases progressively over subsequent quarters, falling to a level around 3.64 by June 2025. The elevated ratios between late 2021 and early 2023 suggest more efficient use of working capital during those periods, while the subsequent decline may reflect either an increase in working capital or relative stabilization in revenues.

Overall Observations

The data indicates that working capital management and revenue generation experienced distinct phases of expansion and contraction. The sharp fall in working capital at the end of 2021, coupled with a spike in turnover ratio, points to a period of heightened efficiency or changes in operating conditions. Revenues show steady growth with some volatility but remain robust throughout. From mid-2023 onwards, there is evidence of moderation in working capital turnover, suggesting adjustments in asset utilization or changes in business dynamics. The interplay between working capital levels and turnover ratios reflects differential phases in operational and financial performance during the timeframe examined.

Inventory Turnover

The inventory turnover ratio shows a largely stable and slightly improving trend over the periods analyzed. Starting at 4.02 in the first reportable quarter, the ratio remains almost constant near 4.0 through 2020 and into mid-2021. From late 2021 onwards, there is a noticeable increase, peaking at 5.06 in the first quarter of 2024 and again in the fourth quarter of 2024. However, slight fluctuations are observed with some declines following peaks, but values consistently remain above the early period levels, indicating improved efficiency in inventory management over time.

Average Inventory Processing Period

The average inventory processing period, expressed in days, inversely correlates with the inventory turnover. Early values indicate processing periods around 91 to 94 days, with a gradual decline beginning in late 2021. The lowest processing period was observed in the first quarter of 2024 with 72 days. After this low point, minor fluctuations occur, but the period generally remains below the initial levels, suggesting that inventory is being converted to sales more rapidly over time.

Overall Analysis

The data reveals a gradual improvement in inventory management efficiency over the analyzed timeframe. The increasing ratio of inventory turnover combined with the decreasing average inventory processing days suggests enhanced operational performance, possibly through better supply chain management, improved sales velocity, or optimized inventory levels. Minor fluctuations imply periodic adjustments or market factors influencing inventory dynamics, but the overall trajectory is favorable.

The financial data indicates observable trends in the receivables turnover ratio and the average receivable collection period over the analyzed periods.

Receivables Turnover Ratio

The receivables turnover ratio shows an initial increase from 5.61 to a peak value of 7.03 by the period ending December 31, 2020, suggesting an improvement in the efficiency of receivables collection during this timeframe. However, starting from the first quarter of 2022, the ratio exhibits a declining trend, decreasing gradually to 5.03 by the period ending June 28, 2025. This decline implies a reduction in the frequency at which receivables are collected, potentially indicating slower collection processes or changes in credit policies.

Average Receivable Collection Period

The average receivable collection period inversely correlates with the turnover ratio, initially dropping from 65 days to 52 days in the latter part of 2020, reflecting faster collection of receivables. Subsequently, there is a marked increase to 74 days by the period ending April 2, 2022, corresponding with the decline observed in the turnover ratio. Following this peak, the collection period slightly decreases and then stabilizes around 66 to 73 days in the later periods, which indicates a general lengthening of the time taken to collect receivables compared to the earlier periods.

Overall Analysis

These movements suggest that while receivable management improved considerably through 2020, efficiency diminished somewhat from 2022 onwards. The increase in the collection period combined with a decreasing turnover ratio may reflect changes in customer payment behavior, credit terms, or potential operational challenges in collections. Close monitoring and further analysis of underlying causes would be advisable to ascertain the impact on cash flow and working capital management.

Average Inventory Processing Period

The average inventory processing period remained stable at 91 days from April to September 2020. It then increased slightly to 94 days by December 2020 and remained at this elevated level through the first three quarters of 2021. Subsequently, a declining trend began in late 2021, reaching a low of 72 days by March 2024. Following this, some fluctuations occurred, with the period rising to 80 days by June 2025. Overall, a gradual improvement in inventory processing efficiency is indicated over the longer term, with some short-term variability in 2024 and 2025.

Average Receivable Collection Period

The average receivable collection period showed a decreasing trend from 65 days in April 2020 to 52 days by September and December 2020, suggesting improved collections efficiency at that time. However, this metric increased sharply to 74 days by April 2021 and fluctuated around the mid-60s through 2021 and 2022. From 2023 onward, the period stabilized around the high 60s to low 70s, with minor fluctuations. This indicates a moderate increase in the time required to collect receivables compared to the earlier part of the period, stabilizing at a higher level in recent years.

Operating Cycle

The operating cycle, reflecting combined inventory and receivables management, decreased from 156 days in April 2020 to a low of 143 days by September 2020, indicating improved overall operational efficiency initially. However, it increased again to 168 days by April 2021, correlating with the rise in receivable collection period. Thereafter, it gradually declined to 142 days by March 2024 but experienced fluctuations thereafter, reaching 153 days by June 2025. This pattern reflects variability in the efficiency of working capital management, with periods of both improvement and deterioration observed mostly in recent years.

Payables Turnover

The payables turnover ratio shows a generally fluctuating trend over the observed periods. Starting from a lower value of 7.45 in late 2020, it increased to a peak of 10.82 by the first quarter of 2023, indicating a more frequent payment of payables during that time. After reaching this peak, the ratio declined, maintaining values in the range of approximately 8.18 to 9.91, with some moderate volatility, towards mid-2025. This variation suggests periods of both accelerated and decelerated payment cycles.

Average Payables Payment Period

The average payables payment period, expressed in days, exhibits an inverse relationship with the payables turnover ratio, as expected. Initially, in early 2021, the payment period was relatively high at 49 days but decreased to a low of 34 days by the third quarter of 2023, indicating quicker settlement of payables. Following this minimum, the period began gradually increasing again, reaching about 45 days by mid-2025. This pattern reflects changing supplier payment practices, with phases of faster payments followed by some lengthening of the payable cycle.

Overall Insights

The data indicates that the company experienced periods of improving payables turnover and shortening payment periods up to early 2023, suggesting an efficient utilization of credit terms or improved liquidity positions. Post this period, a modest reversal in these trends is observed, implying a potential adjustment in cash management strategies or supplier terms. The fluctuations in these metrics highlight a dynamic management of payables that could be responsive to operational or market conditions.

Average inventory processing period

The average inventory processing period demonstrates a gradual downward trend beginning at 94 days in December 2020, decreasing consistently to 72 days by March 2024. This decline indicates improved efficiency in inventory turnover. However, some minor fluctuations occur in the latter periods, with the figure rising back to 80 days by June 2025, suggesting occasional variability in inventory management.

Average receivable collection period

The average receivable collection period exhibits variability across the observed timeframe. Initially, it decreases from 65 days in April 2021 to a low of 52 days in September and December 2020, but then increases sharply to 74 days in April 2022. From there, the period fluctuates moderately around the mid-to-high 60s and low 70s, indicating less stable collection efficiency with a tendency toward longer collection times in recent quarters.

Average payables payment period

The average payables payment period shows a general decrease from 49 days in April 2021 to 34 days in October 2022, reflecting faster payments to suppliers. After this low point, the period fluctuates moderately, increasing to 45 days by June 2025. This suggests a tendency to extend payment terms again in more recent quarters.

Cash conversion cycle

The cash conversion cycle (CCC) generally hovers around the 100-115 day range, starting at 107 days in April 2021 and peaking at 118 days by July 2022. Following this peak, the CCC trends downward to a low of 97 days in April 2023 and March 2025, indicating improved working capital efficiency during these periods. However, the cycle rises again towards the end of the data set, reaching 110 days in June 2025. These fluctuations suggest a dynamic balance between inventory management, receivables collection, and payables payment strategies.