Gilead Sciences Inc. (NASDAQ:GILD)

The financial data reveals distinct trends in liquidity management and operational efficiency over the reported periods.

Inventory Turnover

The inventory turnover ratio steadily increased from 2.72 to a peak of 4.71 between early 2020 and the end of 2022, indicating improved inventory management and faster movement of stock. However, starting in early 2023, the ratio showed a gradual decline to approximately 3.55 by the first quarter of 2025, suggesting a possible easing in inventory efficiency over the most recent periods.

Receivables Turnover

This ratio demonstrated an upward trend overall, rising from around 4.98 in early 2020 to levels mostly above 6.0 thereafter. There was some fluctuation between quarters, but the turnover remained relatively strong, indicating effective collection of receivables and a generally improved credit management process over time.

Payables Turnover

The payables turnover experienced significant fluctuations. After an initial increase from 5.42 to a peak near 11.89 around mid-2022, the ratio decreased sharply to 6.25 at the end of 2022. Subsequent quarters showed volatility within the 7.5 to 12.57 range. This instability may reflect varying payment policies or changes in supplier terms.

Working Capital Turnover

Working capital turnover moved steadily upward from about 5.3 in early 2020 to peaks exceeding 8.5 by late 2021. Notably, an exceptional outlier of 84.15 occurred in mid-2023, which appears anomalous and may indicate a data irregularity or an extraordinary operational event. Aside from this, the ratio declined in the latest quarters, ending at 6.27, reflecting a moderate reduction in efficiency in utilizing working capital.

Average Inventory Processing Period

The days inventory outstanding reduced from 134 days in early 2020 to a low near 78 in late 2021, responsive to the earlier turnover improvements. Subsequent quarters saw a gradual increase to just over 100 days, suggesting a slight slowdown in inventory turnover pace more recently.

Average Receivable Collection Period

The collection period shortened significantly from 73 days in early 2020 to about 51 days in mid-2022, consistent with improved receivables turnover. Following mid-2022, it stabilized in the range of 55 to 64 days, indicating a maintained but less pronounced efficiency in receivables collection.

Operating Cycle

This metric shortened markedly from 207 days early in 2020 to approximately 130-140 days by late 2022, reflecting more efficient management of inventory and receivables. A slight increase in the operating cycle is observed in more recent periods, with values hovering around 150 to 160 days, indicating marginal lengthening in the overall operation timeline.

Average Payables Payment Period

The payables period generally declined from 67 days in early 2020 to near 30 days by late 2021 and remained mostly under 50 days thereafter. This trend suggests accelerated payments to suppliers or tighter control in accounts payable management during the observed periods.

Cash Conversion Cycle

The cash conversion cycle dropped from 140 days to about 100 days between early 2020 and late 2021, demonstrating enhanced operational efficiency and cash flow management. Nevertheless, beginning in 2022, this cycle increased again, fluctuating between 104 and 132 days, with values reaching 116 days by the first quarter of 2025. This implies a partial reversal in cash cycle improvement, potentially due to changes in working capital components.

The cost of goods sold (COGS) demonstrates a fluctuating trend over the analyzed quarters. From March 2020 to December 2020, COGS increased from 969 million to 1398 million US dollars, marking a significant rise. In the first half of 2021, COGS showed a slight increase, peaking at 1390 million in June before declining to 1223 million in September 2021. However, from December 2021 to December 2023, there was a marked increase with a peak at 2090 million US dollars in December 2023. This was followed by a reduction again in the subsequent quarters of 2024 and into March 2025, with values stabilizing around 1540-1581 million.

Inventories illustrate a similar pattern of overall growth with some variability. Starting at 986 million US dollars in March 2020, the inventories increased steadily and reached a notable spike at 1683 million in December 2020. From there, inventories continued to rise gradually to a peak of 1787 million in December 2023. In 2024, inventories peaked at 2026 million in September but then declined to 1710 million by March 2025, indicating some inventory management adjustments or reductions towards the end of the period.

The inventory turnover ratio exhibits notable fluctuations throughout the timeline examined. Early data for the first columns is missing, but from December 2020 onward the ratio rose from 2.72 to a high point of 4.71 in December 2022, indicating increased efficiency in managing and selling inventory. However, from December 2022 to March 2025, the turnover rate declined gradually and stabilized around 3.55-3.66, which might reflect changes in sales velocity, inventory levels, or market conditions impacting the company's operational efficiency.

Cost of Goods Sold (COGS)

Demonstrated significant growth from 2020 through late 2023 with peaks and troughs; peaked at 2090 million in December 2023, followed by a decline and stabilization in 2024 and early 2025.

Inventories

Generally increased steadily from 2020 through 2024 with a peak near 2026 million; subsequently decreased into early 2025, indicating possible inventory management optimization.

Inventory Turnover Ratio

Improved markedly until the end of 2022, reaching a high efficiency level; thereafter, the turnover ratio declined and plateaued at a moderate level throughout 2023 and early 2025.

Overall, the data suggests that after a period of rising costs and inventory accumulation, there has been a focus on improving inventory management and controlling COGS, as reflected in the stabilized inventory turnover and the recent reductions in both inventory and COGS figures. This may reflect strategic adjustments in response to market or operational challenges.

The analysis of the quarterly financial data reveals several notable trends and fluctuations across the key metrics presented.

Product Sales

Product sales demonstrate a cyclical pattern with noticeable seasonal variations within each fiscal year. Starting from US$ 5,467 million in March 2020, sales experienced a dip in mid-2020, followed by a strong recovery peaking in December 2020 at US$ 7,328 million. A similar seasonal trend repeats in subsequent years, with peaks often observed in the fourth quarter and troughs in the second quarter. Despite these oscillations, the overall sales figures remain relatively stable around a range of approximately US$ 6,000 to US$ 7,500 million, with occasional peaks above US$ 7,000 million. The data for 2024 continues this pattern, with slight growth noted towards the last two quarters before a dip in the first quarter of 2025.

Accounts Receivable, Net

Accounts receivable values exhibit fluctuations that roughly correspond with the movements in product sales. The figures start at US$ 3,907 million in the first quarter of 2020, drop sharply in the following quarter, and then rise again, demonstrating some volatility but generally staying within a range of US$ 3,700 million to US$ 4,900 million in the earlier years. In later periods, particularly from 2022 onwards, the figures show more stability, mostly oscillating around US$ 4,200 to US$ 4,800 million, with a slight decline observed entering 2025. This suggests consistent receivables management with minor variations that could be related to sales volume and credit policies.

Receivables Turnover Ratio

The receivables turnover ratio indicates the efficiency of the company's collections on credit sales. Beginning with a value of 4.98 in December 2020, the ratio improved significantly to peak at 7.18 in the first half of 2022. Thereafter, the metric fluctuated between approximately 5.6 and 6.5, maintaining relatively high turnover rates indicative of effective credit management. Although slight decreases appear in certain quarters, the ratio remains consistently above 5.5, suggesting steady operational efficiency in managing receivables throughout the period.

Overall, the data reflect stable revenue generation with predictable seasonal sales patterns, consistent management of accounts receivable relative to sales activity, and generally efficient credit collection practices. No extreme volatility or adverse trends are evident within the reviewed financial periods, suggesting operational resilience and financial discipline.

Cost of Goods Sold (COGS) Trends

Over the period analyzed, the Cost of Goods Sold exhibited a general upward trend with fluctuations. Starting at 969 million USD in March 2020, COGS increased notably to a peak of 2627 million USD by December 2021, indicating a significant rise in production or procurement costs during this period. After this peak, the values stabilized somewhat but remained elevated, with figures fluctuating between approximately 1400 million and 2090 million USD through December 2023. The most recent data from March 2025 shows a slight decline to 1540 million USD, suggesting some moderation in costs or adjustments in operations.

Accounts Payable Trends

Accounts Payable exhibited variable patterns without a clear directional trend. Initial values in March 2020 were 590 million USD, followed by declines and increases over the quarters. Significant peaks were observed in December 2020 (844 million USD), December 2022 (905 million USD), and September 2024 (903 million USD), suggesting periods of extended supplier credit or increased purchasing activity. Conversely, troughs such as 532 million USD in June 2020 and 537 million USD in June 2024 indicate tighter payment cycles or reduced payables during these quarters.

Payables Turnover Ratio Trends

The Payables Turnover ratio, reflective of how quickly payables are settled relative to purchases, showed considerable variation. Starting from March 2020 where data was not available, the earliest recorded ratio was 5.42 in September 2020, increasing to as high as about 12.57 in September 2024. This indicates increasingly rapid payment of payables over time. Notably, there were fluctuations with some quarters exhibiting reduced turnover ratios (e.g., 6.25 in December 2022 and 7.49 in December 2024), implying slower payables cycles during those periods.

Insights and Observations

The substantial rise in Cost of Goods Sold until the end of 2021 points to increased operational costs, which may relate to growth, inflationary pressures, or supply chain challenges. The peak in payables in December 2020 and late 2022 may reflect strategic management of cash flow by extending payment terms, though these periods also coincide with fluctuations in COGS. The increasing trend in payables turnover suggests an overall move toward paying suppliers more quickly in recent years, potentially indicating improved liquidity or changed supplier relationships. The oscillations in payables alongside fluctuating turnover ratios suggest a dynamic working capital environment that may require ongoing monitoring.

Working capital

The working capital exhibits considerable fluctuations over the analyzed periods. Initially, it decreased sharply from 18,071 million US dollars in March 2020 to 4,599 million by December 2020. Throughout 2021, it remained relatively stable within a range of approximately 3,100 to 3,700 million, followed by another dip to 323 million in June 2023. After this low point, working capital rebounded significantly, reaching 7,169 million by March 2025. This pattern suggests volatility in short-term liquidity management or changes in current assets and liabilities structures during the timeline.

Product sales

Product sales demonstrated a cyclical but generally stable trend with some variability. Sales ranged from a low of roughly 5,067 million in June 2020 to a peak of 7,536 million in March 2025. Sales volumes generally increased towards the end of each year, particularly notable at December 2020, 2022, and 2024, implying possible seasonality or successful year-end pushes. The first quarters often show decreases following year-end highs, indicating a potential temporal sales pattern.

Working capital turnover ratio

The working capital turnover ratio, which measures the efficiency with which working capital generates product sales, shows substantial variability and irregular reporting across periods. The ratio increased from 5.3 in September 2020 to a peak of 9.14 in March 2023, suggesting improved efficiency in early 2023. However, an extreme spike to 84.15 in June 2023 is noted, likely caused by the unusually low working capital at that time, followed by a rapid decline to more typical levels thereafter. The ratio fluctuates significantly, reinforcing the observation of volatile working capital relative to sales, implying inconsistent operational efficiency or working capital levels.

Overall insights

The company appears to experience marked volatility in working capital, with periods of sharp decreases and recoveries that do not consistently correlate with product sales trends. Product sales exhibit moderate growth with cyclical characteristics, possibly due to industry-specific demand cycles or internal sales strategies. The working capital turnover ratio's irregular behavior suggests episodic variations in asset management efficiency, influenced heavily by the changes in working capital volume rather than by steady sales growth. These patterns highlight potential challenges in balancing liquidity and operational needs over the reported time frame.

Inventory Turnover

The inventory turnover ratio shows an overall increasing trend from the first recorded value of 2.72 in March 2021 to a peak of 4.71 by December 2022. This indicates an improvement in the efficiency of inventory management, as the company was able to sell and replace its inventory more frequently over this period. After this peak, the ratio declines somewhat, stabilizing around values between 3.3 and 3.66 from March 2023 through March 2025. This suggests a slight deceleration in turnover efficiency but still maintaining higher levels relative to the initial data.

Average Inventory Processing Period

The number of days for average inventory processing exhibits a consistent downward trend initially, from 134 days in March 2021 to a low of 78 days by December 2022. This corresponds inversely with the inventory turnover ratio, reflecting shorter inventory holding periods and more efficient processing. However, following December 2022, the processing period increases again, stabilizing between 100 and 110 days from March 2023 to March 2025. This indicates a lengthening of the inventory cycle relative to the prior years, aligning with the reduced turnover ratio observed during the same period.

Summary

The data indicate a phase of improved inventory management efficiency from early 2021 through late 2022, characterized by increasing inventory turnover and decreasing inventory processing periods. From 2023 onwards, there is a noticeable reversal with turnover ratios declining and processing periods increasing, suggesting a moderation in inventory efficiency. This shift may reflect changes in market demand, supply chain dynamics, or internal operational adjustments. Overall, the company has experienced periods of both enhanced and stabilized inventory management performance over the timeframe studied.

Receivables Turnover Ratio

The receivables turnover ratio exhibits an overall upward trend from the first available data point in March 2020, starting at 4.98, and rising to 6.51 by March 2025. This indicates improved efficiency in collecting receivables over the analyzed period. Notably, there is a peak at 7.18 in June 2022, followed by a slight decline and stabilization around the 6.0 to 6.5 range in subsequent quarters. The ratio's fluctuations suggest periods of varying collection velocity but generally reflect an enhanced capability in managing receivables.

Average Receivable Collection Period (Days)

The average collection period in days reveals an inverse pattern relative to the receivables turnover ratio, which is consistent with the underlying relationship between these metrics. Starting at 73 days in March 2020, this period decreases notably to a low point of 51 days in June 2022, corresponding to the peak receivables turnover. Subsequently, there is a slight increase and fluctuations within the 55 to 65 days range through to March 2025, where it settles back to 56 days. This variation indicates some cyclicality in collection periods but an overall improvement compared to the initial period observed.

Overall Insights

The data collectively indicate a strengthening in receivables management over the time frame, with faster turnover rates and shorter collection periods. Despite some periodic variability, the trends point to increased financial efficiency in receivables collection. The peaks and troughs suggest responsiveness to short-term operational or market influences, but the long-term trajectory reflects enhanced cash flow effectiveness.

Average Inventory Processing Period

The average inventory processing period shows a general downward trend from March 2021 to December 2022, decreasing from 134 days to 78 days, indicating an improvement in inventory turnover efficiency. However, starting in March 2023, this trend reverses, exhibiting a gradual increase to approximately 106 days by September 2023 before slightly fluctuating around 100 to 110 days through March 2025. This suggests some variability or softness in inventory management after a period of steady improvement.

Average Receivable Collection Period

The average receivable collection period demonstrates moderate variability throughout the observed periods. It decreased significantly early on, from 73 days in March 2021 to a low of 51 days in June 2022, implying more effective collection processes. From that point, it fluctuates between 55 and 65 days, with a mild increasing trend from mid-2023 to the end of 2024, stabilizing around 56 days by March 2025. Overall, receivable collection remains relatively stable but with some periods of slight delays.

Operating Cycle

The operating cycle, a combination of inventory processing and receivable collection periods, followed a consistent downward trend from March 2021, starting at 207 days, to June 2022 at 132 days, reflecting improved operational efficiency and quicker cash conversion. Post-June 2022, the operating cycle shows an upward adjustment and some volatility, rising to around 169 days by December 2023. From early 2024 onwards, it decreases moderately again, maintaining a tighter range of 156 to 172 days, closing at 159 days by March 2025. This indicates some operational challenges dampening efficiency gains but maintaining overall control relative to earlier cycles.

Payables Turnover Ratio

The payables turnover ratio exhibits a generally fluctuating trend over the observed periods. Starting from 5.42, it rises sharply to levels above 8 from mid-2020 onwards, peaking at 12.57 in the third quarter of 2024. Notable peaks occur during the second and third quarters of 2022 and again in early 2025, while some periods such as the fourth quarter of 2022 and late 2024 show a decline to around 6 to 7.5. This pattern indicates variability in the efficiency with which the company settles its payables, with periods of faster payment interspersed with slower paydown phases.

Average Payables Payment Period

The average payables payment period in days displays an inverse relationship with the payables turnover ratio, as expected. It begins at 67 days and progressively declines to its lowest points around 29 days in the third quarter of 2024. Occasional increases are observed, such as in the fourth quarter of 2022 when it rises to 58 days, and similarly in the end of 2024 and early 2025 periods. Overall, the trend suggests improving payment efficiency over time, with shorter durations to settle payables, although some fluctuations indicate variability in payment practices or possible changes in supplier terms.

Summary

Collectively, the data points reveal a trend toward greater payment efficiency, demonstrated by an increase in payables turnover ratio and a concurrent decrease in average payment days. However, this trend is not strictly linear, as notable fluctuations suggest periods where payment speed slows down temporarily. These variations may reflect strategic decisions, seasonal impacts, or changes in working capital management approaches. The company appears to have improved its ability to turnover payables more rapidly over the long term while maintaining some flexibility in payment timing.

Inventory Processing Period

The average inventory processing period showed a consistent decline from March 2021 through December 2022, dropping from 134 days to 78 days. Following this, a gradual increase was observed, reaching 106 days by September 2023. The period then stabilized around 100 to 110 days through the end of the projection in March 2025, indicating a moderate lengthening of inventory turnover time after initial improvements.

Receivable Collection Period

The average receivable collection period exhibited a general downward trend starting at 73 days in March 2021, reducing notably to 51 days by June 2022. Afterward, it fluctuated modestly between 55 and 65 days, without a clear directional trend. From mid-2023 onward, this period remained relatively stable, hovering around 56 to 64 days towards March 2025, suggesting consistent efficiency in receivables management.

Payables Payment Period

The payables payment period demonstrated more volatility across the timeline. It decreased from 67 days in March 2021 to a low of approximately 29 days in the third quarter of 2024, indicating faster payments to suppliers. However, there were intermittent increases, notably an elevation to 58 days in December 2022 and around 49 days in September 2024. The fluctuation suggests variations in payment policies or cash management strategies throughout the periods.

Cash Conversion Cycle

The cash conversion cycle, reflecting the net time between cash outflows and inflows, declined from 140 days in March 2021 to around 100-105 days by mid-2022, signaling improved operational efficiency. Subsequently, it increased gradually to approximately 132 days by the end of 2023, before stabilizing between 107 and 116 days during 2024 and early 2025. This pattern reflects initial gains in working capital efficiency followed by a moderate lengthening of the cycle, which may be influenced by the changes noted in inventory and payables periods.