Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
Short-term Activity Ratios (Summary)
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
- Inventory Turnover
- The inventory turnover ratio demonstrated a gradual decline over the observed periods, starting from approximately 93.97 in early 2017 and decreasing to around 82.30 by the end of 2021. This decreasing trend suggests a slower inventory movement, indicating either increased inventory levels or reduced sales velocity.
- Receivables Turnover
- The receivables turnover ratio showed relative stability with some fluctuations, ranging mostly between 7.5 and 8.5 throughout the periods. Minor increases and decreases may reflect changes in credit policies or customer payment behaviors, but the overall collection efficiency remained fairly consistent.
- Payables Turnover
- Payables turnover exhibited more variability, starting near 8.67 and peaking above 11 around mid-2017 and mid-2018, before decreasing to approximately 8 by late 2021. This suggests variations in the company's payment speed to suppliers, with periods of faster payment followed by a trend toward slower payment.
- Working Capital Turnover
- Data for working capital turnover are incomplete, yet available points indicate significant volatility, ranging from around 5 to an anomalous spike above 370 in one period. This irregular pattern suggests inconsistencies in managing working capital or possible one-time accounting or operational events impacting turnover.
- Average Inventory Processing Period
- The average inventory processing period remained stable at about 4 days initially and increased to approximately 5 days toward later periods. This slight increase aligns with the observed slower inventory turnover, indicating that inventory remained on hand longer over time.
- Average Receivable Collection Period
- The receivable collection period fluctuated between 43 and 50 days, with no distinct trend but periodic increases and decreases. This variability reflects the relative steadiness of receivables management, with collection times hovering around 1.5 months.
- Operating Cycle
- The operating cycle, combining inventory and receivables periods, showed a slight upward trend from about 49 days in early periods to roughly 54-55 days later. This indicates an overall lengthening of the time taken to convert resources into cash.
- Average Payables Payment Period
- The payables payment period experienced noticeable fluctuations, decreasing sharply from 42 days to 32 days mid-2017, then gradually increasing again to around 50 days by late 2021. This suggests the company initially sped up payments to suppliers but reverted toward longer payment terms over time.
- Cash Conversion Cycle
- The cash conversion cycle values varied but generally remained low and stable, within a 4 to 17 day range. After some peaks around 17 days, the cycle notably shortened to about 4-6 days near the end of the observed period, indicating improved efficiency in turning investments in inventory and receivables back into cash.
Turnover Ratios
Average No. Days
Inventory Turnover
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
1 Q4 2021 Calculation
Inventory turnover
= (Operating costsQ4 2021
+ Operating costsQ3 2021
+ Operating costsQ2 2021
+ Operating costsQ1 2021)
÷ Parts and supplies
= (2,955 + 2,906 + 2,736 + 2,514)
÷ 135 = 82.30
The analysis of the quarterly financial data reveals several notable trends and fluctuations over the examined periods.
- Operating Costs
- The operating costs exhibit a cyclical pattern with periodic rises and declines. Initially, from the first quarter of 2017 to the fourth quarter of 2018, there is a moderate upward trend with some fluctuations, moving from approximately 2166 million USD to a peak near 2379 million USD. In 2019, the costs show a mixed pattern, fluctuating around 2300 to 2440 million USD. There is a slight dip in mid-2020 followed by a general increase through 2021. The last recorded quarters show a marked escalation, with costs reaching nearly 2955 million USD by the fourth quarter of 2021, indicating increased spending in operations towards the end of the period under review.
- Parts and Supplies
- Spending on parts and supplies follows a gradual increasing trend throughout the entire period. Starting at 95 million USD in early 2017, there is a consistent upward movement, reaching 135 million USD by the last quarter of 2021. This steady increase suggests sustained or growing procurement of parts and supplies, possibly reflecting maintenance demands or inventory build-up aligned with operational needs. Minor fluctuations are observed but overall the upward trend is clear and steady.
- Inventory Turnover Ratio
- The inventory turnover ratio data is available from the first quarter of 2018. Initially, the ratio stands near 94, then shows a gradual decline over time with some oscillations. The ratio dips to the mid-80s range by late 2019 and further declines to a low of approximately 75 in late 2020. From 2021 onward, a recovery trend is observed as the ratio rises steadily back to above 80 by the end of 2021. This pattern suggests that inventory was being turned over more slowly during the middle part of the period, potentially indicating inventory accumulation or slower sales, but improved efficiency or sales velocity appears towards the end of the timeline.
Overall, the data points to rising operating costs and parts/supplies expenditures over the span of nearly five years, with some operational efficiency challenges reflected in the mid-period decline in inventory turnover. However, the latter quarters indicate attempts at operational improvements as inventory turnover ratios recover. Continuous monitoring of these metrics will be essential to understand underlying drivers and maintain operational control.
Receivables Turnover
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
1 Q4 2021 Calculation
Receivables turnover
= (Operating revenuesQ4 2021
+ Operating revenuesQ3 2021
+ Operating revenuesQ2 2021
+ Operating revenuesQ1 2021)
÷ Accounts receivable, net of allowance for doubtful accounts
= (4,678 + 4,665 + 4,476 + 4,112)
÷ 2,278 = 7.87
- Operating Revenues
- The operating revenues exhibit a generally upward trend over the analyzed period from March 2017 to December 2021. Early in the period, revenues fluctuated moderately around the 3,400 to 3,800 million US$ range. Starting around mid-2018, there is a noticeable upward trajectory with revenues rising consistently and reaching their highest levels in late 2021, peaking close to 4,678 million US$. Despite some short-term decreases, particularly around early 2020, the overall pattern shows sustained growth.
- Accounts Receivable, Net of Allowance for Doubtful Accounts
- The accounts receivable follow a somewhat cyclical pattern but generally trend upward throughout the period. Beginning near 1,634 million US$ in early 2017, receivables increase steadily, with some fluctuations and a peak in December 2020 at approximately 2,097 million US$. Afterward, figures oscillate slightly but maintain a higher level than in the earlier years, trending towards values above 2,200 million US$ by late 2021. This indicates an overall growth in receivables consistent with the rise in operating revenues, though there are periods of slight contraction or stabilization.
- Receivables Turnover
- The receivables turnover ratio, starting to be recorded from March 2018 onward, exhibits moderate variability but remains within a relatively narrow band from approximately 7.3 to 8.6 times annually. The ratio showed a peak near mid-2018 (around 8.56) and then generally decreases toward the end of 2021, reaching levels close to 7.46-7.87. This moderate decline suggests a slight slowdown in the frequency with which receivables are collected relative to sales, potentially reflecting longer collection periods or changes in credit policies as the company’s receivables increase with revenue growth.
- Overall Analysis
- The data reflects a company experiencing steady revenue growth over the period, with a corresponding increase in accounts receivable balances. The growth in receivables appears roughly proportional to revenue increases, though a slight decline in receivables turnover ratio indicates a modest easing in collection efficiency. Peaks and troughs in operating revenues and receivables coincide with typical business cycles and possibly temporary external impacts, such as the early 2020 dip, which may align with broader economic events. Overall, the trends indicate expanding business operations with manageable changes in receivables management.
Payables Turnover
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
1 Q4 2021 Calculation
Payables turnover
= (Operating costsQ4 2021
+ Operating costsQ3 2021
+ Operating costsQ2 2021
+ Operating costsQ1 2021)
÷ Accounts payable
= (2,955 + 2,906 + 2,736 + 2,514)
÷ 1,375 = 8.08
The analysis of the financial data reveals several noteworthy trends related to operating costs, accounts payable, and the payables turnover ratio over the examined periods.
- Operating Costs
- Operating costs exhibit fluctuations throughout the periods. Initially, there is a gradual increase from US$2,166 million in the first quarter of 2017 to a peak of US$2,379 million in the fourth quarter of 2018. After this peak, costs slightly decline and stabilize around the US$2,300 million mark until early 2020. Thereafter, a downward trend is observed in the first half of 2020, followed by a consistent increase reaching US$2,955 million by the fourth quarter of 2021. This upward movement towards the end of the period suggests rising operational expenses or possible expansion efforts.
- Accounts Payable
- Accounts payable show an overall increasing trend with some variability across quarters. Starting at US$720 million in the first quarter of 2017, accounts payable increased steadily with intermittent dips. Notably, the fourth quarter of 2017 sees a significant rise to US$1,040 million, which is not sustained and decreases in some subsequent quarters before increasing again. From early 2020 onwards, notably after the initial quarters of decline, accounts payable escalate consistently, peaking at US$1,466 million in the third quarter of 2021 before a slight decline in the last quarter. This trend may indicate changes in payment policies, increased purchasing activities, or timing differences in settlements.
- Payables Turnover Ratio
- The payables turnover ratio, provided from the first quarter of 2018 onward, demonstrates a variable pattern with an overall declining trend through the periods. The ratio begins at 8.67 in the first quarter of 2018 and increases to 11.43 by the second quarter, indicating faster payments relative to purchases. Following this peak, a gradual decrease occurs, reaching a low point of 7.24 in the third quarter of 2021, with a slight rebound to 8.08 in the final quarter reported. This downward trend generally suggests longer payment periods or slower payables turnover, which could be a strategic approach to managing cash flow or reflect shifts in supplier credit terms.
Working Capital Turnover
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
1 Q4 2021 Calculation
Working capital turnover
= (Operating revenuesQ4 2021
+ Operating revenuesQ3 2021
+ Operating revenuesQ2 2021
+ Operating revenuesQ1 2021)
÷ Working capital
= (4,678 + 4,665 + 4,476 + 4,112)
÷ -1,013 = —
- Working Capital
- The working capital showed considerable fluctuations over the examined periods. Initially, it was negative and declined further from -335 million USD at the end of Q1 2017 to a low of -959 million USD by Q3 2017. After some improvement in late 2017 and early 2018, the working capital sharply worsened again, reaching -1124 million USD by Q1 2019. Following this, there was a significant positive reversal beginning in Q2 2019, with working capital improving drastically to 3065 million USD by Q4 2019. However, starting from Q1 2020, the value fell again, becoming negative in Q2 2020 and hovering around small negative to slightly positive amounts through 2021. Toward the end of the series, in late 2021, working capital deteriorated further to values near -1000 million USD.
- Operating Revenues
- Operating revenues demonstrated a consistent upward trend throughout the entire period. Starting at approximately 3440 million USD in Q1 2017, revenues increased steadily each quarter, reaching roughly 4678 million USD by Q4 2021. There were minor fluctuations from quarter to quarter, but the overall trajectory was positive, indicating sustained revenue growth over nearly five years.
- Working Capital Turnover
- Working capital turnover ratios were sporadically reported, primarily from Q2 2019 onwards. The ratio initially stood at 7.69 in Q2 2019 and then showed a declining trend to 5.04 by Q4 2019, suggesting a gradual increase in the amount of working capital relative to revenue generation efficiency. The value then improved again in Q1 2020 to 6.04, and a significant peak of 27.22 was recorded in Q3 2020, possibly reflecting unusual conditions or distortions such as low working capital relative to revenues. Other periods showed either no data or unusually high ratios like 371.45, which may indicate data anomalies or one-off events. Overall, the inconsistency in reporting and the extreme values limit interpretation but indicate volatility in managing working capital relative to revenue generation.
Average Inventory Processing Period
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
1 Q4 2021 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 82.30 = 4
- Inventory Turnover
- The inventory turnover ratio is available starting from the first quarter of 2017. From this point, there is a noticeable downward trend over the analyzed period. Initially, the ratio stood near 94 in March 2017, gradually declining to approximately 83 by the end of 2021. This steady decrease suggests a slower rate of inventory turnover over time, indicating that the company is turning over its inventory less frequently as the periods progress.
- Average Inventory Processing Period
- The average inventory processing period has been relatively stable, maintaining a consistent duration of 4 days from March 2017 through December 2019. Starting in the first quarter of 2020, this period increased slightly to 5 days and remained at that level through most of 2021 before returning to 4 days in the last quarter of 2021. This minor increase followed by a return to the original processing period aligns logically with the decreasing inventory turnover ratio, as a longer processing period typically corresponds to fewer inventory turns.
- Overall Analysis
- The trends observed in both the inventory turnover ratio and the average inventory processing period indicate a gradual decline in inventory turnover efficiency over the five-year span. The consistent processing period in early years followed by a slight extension around 2020 may reflect operational adjustments or external factors impacting inventory management. The final data point suggests a tentative improvement or normalization in inventory processing time at the end of the period.
Average Receivable Collection Period
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
1 Q4 2021 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 7.87 = 46
The receivables turnover ratio exhibits relatively stable behavior over the reported periods, ranging primarily between 7.26 and 8.56 times per year. Notably, the highest turnover ratio is observed in the second quarter of 2017 at 8.56, indicating a more efficient receivables collection cycle during that period. Following that, there is a modest decline and subsequent fluctuations with no clear upward or downward long-term trend over the four years.
Correspondingly, the average receivable collection period, expressed in days, moves inversely to the turnover ratio and ranges from 43 to 50 days. The shortest collection period is seen in the second quarter of 2017 at 43 days, which aligns with the peak turnover ratio. Over time, there is a slight increase in the collection period, reaching up to 50 days in the third quarter of 2020, suggesting a somewhat slower collection process during certain intervals.
Overall, while the receivables turnover ratio and average collection period fluctuate moderately, the company maintains a relatively consistent credit collection performance throughout the timeframe. The variations appear cyclical and short-term rather than indicative of a sustained trend toward either improved or deteriorated efficiency in receivables management.
- Receivables Turnover Ratio:
- Ranges from 7.26 to 8.56 times; highest in Q2 2017; shows moderate fluctuations without a definitive trend.
- Average Receivable Collection Period:
- Varies between 43 and 50 days; generally inversely related to turnover ratio; slight increase noted around 2020.
- Trend Analysis:
- Receivables management remains fairly stable with minor cyclical fluctuations; no clear long-term improvement or decline.
Operating Cycle
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
1 Q4 2021 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= 4 + 46 = 50
- Average inventory processing period
- The average inventory processing period remained stable at 4 days from the first available data in March 2018 through June 2020. Starting from September 2020, this period increased to 5 days and maintained that level through December 2021, except for a decrease back to 4 days in the final quarter. Overall, the period experienced a slight elongation in late 2020 and throughout 2021 compared to the earlier stable phase.
- Average receivable collection period
- The average receivable collection period showed notable fluctuations over the analyzed quarters. Beginning at 45 days in March 2018, it slightly decreased to 43 days by June 2018, followed by an upward trend peaking at 50 days in September 2021. Throughout the period, the collection days hovered mostly between 44 and 50 days, evidencing some variability but no clear directional trend. This suggests a persistent challenge in maintaining consistent receivables collection duration.
- Operating cycle
- The operating cycle mirrored the combined impact of inventory processing and receivables collection periods. Starting from 49 days in March 2018, it increased and stabilized around the low 50s range, peaking at 55 days in September 2021. The operating cycle exhibited an overall upward trend, indicating a lengthening in the time required to convert inventory and receivables into cash. this suggests a gradual decrease in operational efficiency or a strategic extension of working capital turnover times during the period.
Average Payables Payment Period
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
1 Q4 2021 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 8.08 = 45
- Payables turnover ratio
- The payables turnover ratio exhibits a fluctuating trend over the periods observed. Starting at 8.67 in the earliest available quarter, it peaked at 11.43 before declining steadily through subsequent quarters, reaching a low of 7.24 within the 2021 fiscal year. A slight recovery is noted towards the end of 2021, with the ratio increasing to 8.08. This volatility suggests variability in the company's efficiency in managing its payables, potentially influenced by changes in purchasing patterns or payment policies.
- Average payables payment period (number of days)
- The average payables payment period inversely correlates with the payables turnover ratio, reflecting the number of days taken to settle payables. Initially, the payment period shortened from 42 days to a low of 32 days, indicating quicker payments to suppliers. However, from late 2019 onwards, there is a clear upward trend, with payment days increasing to 50 days by late 2021, followed by a slight decrease to 45 days. This lengthening suggests a strategic extension in payment terms or delays in payments, which may be a response to cash flow management pressures or renegotiations with suppliers.
- Overall insights
- The data reveals a shift toward longer payment cycles over time, reflected by the decreasing payables turnover ratio and increasing payment period. This shift could imply a deliberate policy to conserve cash or adjust to external financial conditions. While a longer payable period can improve short-term liquidity, it may also impact supplier relationships or credit terms. Monitoring these trends is crucial to balance operational efficiency and financial stability.
Cash Conversion Cycle
Based on: 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31), 10-K (reporting date: 2017-12-31), 10-Q (reporting date: 2017-09-30), 10-Q (reporting date: 2017-06-30), 10-Q (reporting date: 2017-03-31).
1 Q4 2021 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 4 + 46 – 45 = 5
The analysis of the financial periods reveals distinct patterns and fluctuations in key operational efficiency metrics over the observed quarters.
- Average Inventory Processing Period
- This metric remained steady at 4 days for the majority of the periods from March 2018 through June 2021, indicating consistent inventory management practices. A slight increase to 5 days occurred from September 2020 through December 2021, with a brief return to 4 days in the last observed quarter, suggesting a minor change in inventory turnover speed during the latter period.
- Average Receivable Collection Period
- The receivable collection period exhibited variability over time, fluctuating between 43 to 50 days. Early periods showed modest improvements from 45 down to 43 days, then increased again, reaching a peak of 50 days in September 2021. The collection period decreased slightly to 46 days by the final quarter, underlining some volatility in receivables management and potential challenges in collections during certain quarters.
- Average Payables Payment Period
- There is notable variation in the payables payment period across the quarters, ranging from a low of 32 days to a high of 50 days. The metric initially decreased sharply to 32 days by June 2017, followed by a general upward trend, peaking consistently around 50 days in the fourth quarter of 2021. This pattern suggests a progressive lengthening in payment terms or delays in payables settlement over time, which could impact supplier relations.
- Cash Conversion Cycle
- The cash conversion cycle (CCC) demonstrated fluctuations between 4 and 17 days. Early in the data, CCC increased from 7 to 17 days, indicating a worsening of cash flow efficiency. This was followed by a reduction to single-digit days at certain points (e.g., 9 days in March 2020 and 6 days in March 2021), implying improvements in the cash cycle. The latest periods show stabilization with a CCC of approximately 4 to 5 days, reflecting balanced operational management involving inventory, receivables, and payables.
In summary, while inventory processing remained fairly stable, the collection of receivables and payment of payables displayed more pronounced variability with general trends toward longer durations. The cash conversion cycle, despite some volatility, shows periods of improvement and relative stabilization in recent quarters, suggesting enhanced short-term liquidity management.