Walt Disney Co. (NYSE:DIS)

The financial ratios and periods reflect significant shifts in operational efficiency and working capital management over the analyzed years.

Inventory Turnover

The inventory turnover ratio exhibits an overall increasing trend from 25.48 in 2019 to a peak of 33.91 in 2021, suggesting improved efficiency in inventory management during that time. However, the ratio declines slightly after 2021, reaching 29.03 by 2024, indicating a moderate slowdown in inventory turnover but still maintaining levels above those in 2019.

Receivables Turnover

The receivables turnover ratio increases steadily from 4.49 in 2019 to 7.18 in 2024. This suggests enhanced effectiveness in collecting receivables and a shortening of the credit period offered to customers, which could positively impact liquidity.

Payables Turnover

There is modest variability in payables turnover, with a decline to 2.76 in 2021, followed by an upward movement to approximately 3.97 in 2024. This indicates a return to faster payments to suppliers after a temporary elongation in payment cycles around 2021.

Working Capital Turnover

The working capital turnover displays substantial volatility, with an extremely high value of 3308.88 in 2022 that appears anomalous relative to other years. Excluding the outlier, the ratio increases from 7.58 in 2020 to 54.74 in 2023, reflecting improvements in efficient use of working capital, suggesting better asset utilization to generate sales.

Average Inventory Processing Period

This metric shows a decrease from 14 days in 2019 to 11 days in 2021, reflecting faster inventory processing. There is a slight increase to 13 days by 2024, still lower than the initial period, indicating overall strong inventory handling efficiency.

Average Receivable Collection Period

The collection period decreases from 81 days in 2019 to 51 days by 2024. This reduction is consistent with the trend observed in receivables turnover, confirming faster conversion of receivables to cash and an improvement in cash flow management.

Operating Cycle

The operating cycle shortens over time from 95 days in 2019 to 64 days in 2024. This reflects the combined effect of decreased inventory processing and receivables collection periods, leading to a more efficient operation overall.

Average Payables Payment Period

The payment period decreases from 120 days in 2019 to 92 days in 2024, indicating a trend toward quicker payments to suppliers. The temporary increase to 132 days in 2021 suggests a delayed payments phase during that year, which was subsequently corrected.

Cash Conversion Cycle

The cash conversion cycle remains negative throughout the period, ranging from -25 days in 2019 to as low as -49 days in 2021 before rising again to -28 days in 2024. A negative cash conversion cycle indicates that the company collects cash from customers faster than it pays its suppliers, thus benefiting cash flow. The improvement in 2021 is particularly notable, suggesting exceptional working capital management that year, despite some reversal in following years.

Overall, the data indicates a trend of improving operational efficiency and more effective working capital management over the years, with enhanced inventory turnover, faster receivable collections, and a consistently negative cash conversion cycle supporting strong liquidity positions. Some volatility is observed, particularly in 2021 and 2022, which merit further investigation to understand underlying causes. Nevertheless, the general direction points to better asset utilization and cash flow management.

Cost of Revenues, Exclusive of Depreciation and Amortization

The cost of revenues showed a general upward trend over the six-year period under review. Starting at 42,018 million USD in 2019, it increased each year, peaking at 59,201 million USD in 2023. However, there was a slight decline in 2024, with the cost dropping to 58,698 million USD. This increase indicates rising expenses related to the company's core operations, with a minor reduction in the most recent year.

Inventories

Inventory levels fluctuated significantly during the period. Initially, inventories decreased from 1,649 million USD in 2019 to 1,331 million USD in 2021. Subsequently, there was a notable increase, reaching 2,022 million USD by 2024. This rise after 2021 suggests either an accumulation of stock or a strategic decision to hold more inventory, which could be reflective of changes in sales expectations or supply chain adjustments.

Inventory Turnover Ratio

The inventory turnover ratio increased sharply from 25.48 in 2019 to a peak of 33.91 in 2021, indicating an improvement in the efficiency of inventory management during this period. After 2021, the ratio gradually declined to 29.03 by 2024, suggesting a slight reduction in turnover speed but still maintaining a higher level than in 2019. This trend points to initially enhanced inventory utilization efficiency, followed by modest deceleration while remaining relatively strong.

Revenue Trends

Revenues exhibited a fluctuating but overall upward trend over the observed periods. After a decline from 69,570 million US dollars in 2019 to 65,388 million in 2020, revenues rebounded gradually to reach 67,418 million in 2021. A pronounced increase occurred in 2022, with revenues rising sharply to 82,722 million, continuing this upward momentum through 2023 and 2024, reaching 88,898 million and 91,361 million respectively. This pattern suggests recovery and growth following a dip, likely influenced by external or operational factors in 2020, with strong expansion thereafter.

Receivables, Net

Net receivables demonstrate a generally decreasing trend from 15,481 million in 2019 down to 12,652 million in 2022. Slight fluctuations occurred in subsequent years, with a small decline to 12,330 million in 2023 and a modest recovery to 12,729 million in 2024. The initial decrease may indicate tighter credit policies or improved collections, though the stability observed in recent years implies consistent management of receivables despite increasing revenues.

Receivables Turnover Ratio

The receivables turnover ratio increased significantly over the period under review. Starting at 4.49 in 2019, it rose to 5.15 in 2020, then experienced a slight dip to 5.04 in 2021. From 2021 onward, the ratio exhibited strong growth, reaching 6.54 in 2022, and peaking at 7.21 in 2023, with a marginal decrease to 7.18 in 2024. This increasing turnover ratio suggests an improvement in the efficiency with which receivables are collected, reflecting faster conversion of credit sales into cash.

Overall Insights

The combined analysis of these items shows that despite a temporary downturn in revenues in 2020, the company effectively managed its receivables, improving collection efficiency as evidenced by an increasing receivables turnover ratio. Revenues have generally grown substantially since 2021, indicating business expansion. At the same time, the controlled levels of net receivables amidst increasing sales point towards effective credit and collection policies, contributing to improved cash flows and operational efficiency.

Cost of Revenues, exclusive of Depreciation and Amortization

The cost of revenues increased steadily from September 2019 to September 2023, rising from approximately 42,018 million US dollars to 59,201 million US dollars. This represents a significant upward trend over the five-year period. However, in September 2024, there was a slight decline to 58,698 million US dollars, indicating a moderate decrease after several years of growth.

Accounts and Accrued Payables

Accounts and accrued payables showed some volatility over the years. They started at 13,778 million US dollars in September 2019, decreased slightly in 2020 to 13,183 million, then increased markedly to 16,357 million in 2021. After this peak, the values declined gradually to 15,125 million in 2023 and further to 14,796 million in 2024. The overall movement suggests fluctuating short-term obligations, with a peak in 2021 followed by a period of reduction.

Payables Turnover Ratio

The payables turnover ratio displayed a dynamic pattern across the analyzed years. It began at 3.05 in 2019, increased to 3.33 in 2020, then dropped significantly to 2.76 in 2021. Following this dip, it rebounded to 3.36 in 2022 and continued to rise in subsequent years, reaching 3.91 in 2023 and 3.97 in 2024. This suggests an improvement in the company's efficiency in paying its suppliers from 2021 onward, with a higher ratio indicating quicker payment cycles.

Working Capital

The working capital exhibited significant fluctuations over the analyzed periods. Initially, there was a negative working capital of -3,217 million USD in 2019, followed by a sharp increase to 8,623 million USD in 2020. Subsequently, it decreased to 2,580 million USD in 2021 and then dropped dramatically to 25 million USD in 2022. In 2023, working capital increased moderately to 1,624 million USD before experiencing a substantial decline to -9,358 million USD in 2024. This volatility suggests variability in short-term liquidity and operational efficiency.

Revenues

Revenue figures show a generally positive trend over the entire period. Starting from 69,570 million USD in 2019, revenues slightly declined to 65,388 million USD in 2020, likely reflecting external challenges. However, from 2021 onwards, revenues increased consistently year over year, reaching 91,361 million USD in 2024. This upward trajectory indicates growth and recovery, with the most significant gains observed in the years following 2020.

Working Capital Turnover

The working capital turnover ratio demonstrates substantial variability, with missing data for 2019 and 2024. The ratio was 7.58 in 2020, rising markedly to 26.13 in 2021. An extraordinary spike to 3,308.88 occurred in 2022, followed by a decrease to 54.74 in 2023. The extreme peak observed in 2022 could be attributed to the extremely low working capital, close to zero, which artificially inflated the turnover ratio. Overall, the pattern indicates inconsistencies in the efficiency of working capital utilization relative to revenues across the years.

Inventory turnover

The inventory turnover ratio demonstrated an overall increasing trend from 2019 to 2021, rising from 25.48 to a peak of 33.91. This suggests an improvement in the efficiency of inventory management during this period. However, from 2021 onwards, the ratio decreased progressively to 29.03 in 2024, indicating a reduction in the frequency at which inventory was sold and replaced.

Average inventory processing period

The number of days for average inventory processing showed a decrease from 14 days in 2019 to a low of 11 days in 2021, reflecting faster inventory turnover. Subsequently, this metric increased slightly to 13 days by 2024, indicating a modest lengthening of the inventory processing time parallel to the decline in inventory turnover ratio.

Overall analysis

The data reveals a period of efficiency improvement in inventory management up to 2021, characterized by higher turnover and shorter processing days. Post-2021, there is a gradual decline in inventory turnover efficiency accompanied by an increase in average processing days, which could suggest changes in operational practices or market conditions affecting inventory movement.

Receivables Turnover

The receivables turnover ratio shows an overall increasing trend from 4.49 in late 2019 to 7.18 in late 2024. This indicates that the frequency at which receivables are collected has generally improved. There is a slight dip observed in 2021 at 5.04 compared to 5.15 in 2020, but the ratio subsequently rose significantly to 6.54 in 2022 and peaked at 7.21 in 2023 before a marginal decline in 2024.

Average Receivable Collection Period

The average receivable collection period, which is inversely related to the turnover ratio, decreased significantly over the period analyzed. It went from 81 days in 2019 to 51 days by 2024. This indicates improved efficiency in collecting receivables, with the period shortening by approximately 30 days over five years. The trend is consistent with the increase in receivables turnover, as faster collection reduces the number of days receivables are outstanding.

Overall Insights

The company has demonstrated notable improvement in managing its receivables over the examined period. Enhanced receivables turnover combined with a shortened collection period suggests stronger cash flow management and possibly improved credit policies or customer payment behavior. The small fluctuations in individual years do not alter the overall positive trend in receivables efficiency.

Average Inventory Processing Period

The average inventory processing period shows a slight fluctuation over the years. It decreased from 14 days in 2019 to 11 days in 2021, indicating an improvement in inventory turnover efficiency. However, it increased again to 13 days by 2024, suggesting a modest decline in the speed of inventory processing compared to the peak efficiency year.

Average Receivable Collection Period

There is a clear downward trend in the average receivable collection period. Starting at 81 days in 2019, the period consistently decreased, reaching 51 days in 2023 and holding steady in 2024. This indicates enhanced effectiveness in collecting receivables, improving cash flow and reducing credit risk over time.

Operating Cycle

The operating cycle mirrors the trends in inventory and receivables periods, decreasing from 95 days in 2019 to 64 days in 2024. This trend reflects an overall improvement in the company's operational efficiency, reducing the time taken to convert inventory and receivables into cash. The most significant reduction occurred between 2021 and 2023, highlighting a period of noteworthy operational optimization.

Payables Turnover

The payables turnover ratio exhibited fluctuations over the period, initially increasing from 3.05 in 2019 to 3.33 in 2020. This was followed by a decline to 2.76 in 2021, indicating slower payment activity during that year. Subsequently, the ratio rose again to 3.36 in 2022, and continued to improve steadily to reach 3.91 in 2023 and 3.97 in 2024. Overall, the trend suggests an improvement in the company's efficiency in paying its suppliers in the most recent years.

Average Payables Payment Period

The average payables payment period showed an inverse trend relative to the payables turnover ratio, decreasing overall from 120 days in 2019 to 92 days in 2024. Notable changes include a steady reduction from 120 days in 2019 to 110 days in 2020, followed by an increase to 132 days in 2021, which corresponds with the dip in payables turnover previously noted. After 2021, the payment period consistently decreased to 109 days in 2022, 93 days in 2023, and slightly further to 92 days in 2024. This pattern signifies a trend towards faster payment cycles and improved management of payables over the most recent years.

Overall Insight

There is a clear inverse relationship between the payables turnover ratio and the average payables payment period, as expected. The data indicates a period of slower payment activity around 2021, but since then, there has been a consistent improvement with faster payments and higher payables turnover ratios. This trend may reflect improved liquidity management or stronger supplier relationships allowing for efficient payment practices in the later years.

Average Inventory Processing Period

The average inventory processing period demonstrated a generally decreasing trend from 14 days in September 2019 to 11 days in October 2021. Subsequently, this metric saw a slight increase to 13 days by September 2024, indicating a modest lengthening in the time inventory is held before processing in the most recent period compared to earlier years.

Average Receivable Collection Period

This period showed a consistent improvement over the years. It decreased from 81 days in September 2019 to 51 days in September 2023 and remained steady at 51 days through September 2024. This suggests enhanced efficiency in the collection of receivables, reducing the time customers take to pay outstanding amounts.

Average Payables Payment Period

The average payables payment period exhibited fluctuations, starting at 120 days in September 2019 and dropping to 110 days by October 2020. It then increased sharply to 132 days in October 2021 before decreasing steadily to 92 days by September 2024. This pattern indicates changes in payment strategies or terms with suppliers, ultimately leading to a shorter payment cycle in the latest period.

Cash Conversion Cycle

The cash conversion cycle remained negative throughout the analyzed periods, suggesting that the company efficiently manages its working capital by taking longer to pay suppliers than the time taken to sell inventory and collect receivables combined. This metric decreased sharply to -49 days in 2021, indicating improved liquidity, before rising slightly to -28 days by 2024. Despite this increase, the cycle remained favorable and below zero, supporting strong operational cash flow management.