Illumina Inc. (NASDAQ:ILMN)

The financial data reveals several trends in the company's operational efficiency and working capital management over the five-year period.

Inventory Turnover

The inventory turnover ratio showed moderate fluctuation, increasing from 2.44 in 2016 to a peak of 3.00 in 2019 before declining slightly to 2.78 in 2020. This suggests an improvement in inventory management and sales efficiency up to 2019, with a minor regression in the final year.

Receivables Turnover

The receivables turnover ratio experienced slight variations but remained relatively stable, moving between 6.18 and 6.7. After a peak in 2017 at 6.7, there was a slight decrease followed by a recovery in 2020, indicating consistent efficiency in collecting receivables.

Payables Turnover

The payables turnover ratio was more volatile, notably spiking to 7.22 in 2019 from around 5.3 to 5.7 in previous years, before dropping back to 5.4 in 2020. This spike suggests faster payment to suppliers in 2019 followed by a return to more normalized payment practices.

Working Capital Turnover

There was a downward trend in working capital turnover from 1.49 in 2016 to 0.94 in 2019, indicating a decline in the efficiency with which the company used its working capital to generate sales. The figure rebounded slightly to 1.00 in 2020.

Average Inventory Processing Period

The number of days inventory is held decreased from 150 days in 2016 to 122 days in 2019, demonstrating improved inventory turnover speed, before rising again to 131 days in 2020.

Average Receivable Collection Period

The days sales outstanding remained fairly steady, ranging from 55 to 59 days, with a slight increase in 2019 and a return to 55 days in 2020, consistent with stable collection efficiency.

Operating Cycle

The operating cycle shortened from 208 days in 2016 to 181 days in 2019, reflecting improved overall operational efficiency, but extended slightly to 186 days in 2020.

Average Payables Payment Period

The average time taken to pay suppliers decreased from 69 days in 2016 to 51 days in 2019, indicating quicker payments, but then increased to 68 days in 2020, suggesting a strategic elongation of payables in the latter year.

Cash Conversion Cycle

The cash conversion cycle, representing the net time to convert resources into cash, decreased from 139 days in 2016 to 118 days in 2020, with a minor uptick in 2019. This overall improvement signifies better liquidity management and quicker cash turnaround.

The financial data over the five-year period from 2016 to 2020 reveals several key trends regarding cost of revenue, inventory levels, and inventory turnover ratios.

Cost of Revenue

The cost of revenue increased steadily from 732 million USD in 2016 to a peak of 1076 million USD in 2019, reflecting consistent growth in operational expenses related to producing goods or services. However, in 2020, the cost of revenue slightly declined to 1036 million USD, indicating a moderation or potential efficiency improvement in cost management during that year.

Inventory

Inventory levels showed a general upward trend, rising from 300 million USD in 2016 to 386 million USD in 2018. Following this peak, inventory decreased slightly to 359 million USD in 2019 before increasing again to 372 million USD in 2020. This indicates a growing investment in inventory over the period, with some fluctuations possibly related to inventory management strategies or demand variations.

Inventory Turnover Ratio

The inventory turnover ratio, which measures how efficiently inventory is managed by comparing cost of goods sold to average inventory, showed variability within a relatively narrow range. It improved from 2.44 in 2016 to 2.78 in 2017, dipped slightly to 2.68 in 2018, then increased to its highest point at 3.0 in 2019 before declining back to 2.78 in 2020. This suggests fluctuating but generally efficient inventory management, with the highest efficiency recorded in 2019.

Overall, the data indicate growth in both cost of revenue and inventory investment over the analyzed period, with some signs of cost control in the final year. Inventory turnover fluctuations suggest ongoing adjustments in inventory management practices to balance holding costs against sales demands.

The annual financial data demonstrates a general upward trend in revenue from 2016 through 2019, rising from 2,398 million US dollars to a peak of 3,543 million US dollars. However, there is a noticeable decline in revenue in 2020, decreasing to 3,239 million US dollars.

Regarding accounts receivable, net, there is a consistent increase from 381 million US dollars in 2016 to 573 million US dollars in 2019, followed by a decrease to 487 million US dollars in 2020. This pattern roughly parallels the variations observed in revenue during the same periods.

The receivables turnover ratio exhibits moderate fluctuations over the years. It starts at 6.29 in 2016, peaks at 6.7 in 2017, then slightly declines to 6.48 in 2018, further decreases to 6.18 in 2019, and finally recovers to 6.65 in 2020. This indicates some variability in the efficiency of collecting receivables, with a dip corresponding to the peak in accounts receivable in 2019 and an improvement when accounts receivable decreased in 2020.

Revenue

Increasing trend from 2016 to 2019, followed by a decrease in 2020.

Accounts Receivable, Net

Steady increase from 2016 to 2019, decreased in 2020 mirroring revenue changes.

Receivables Turnover Ratio

Fluctuating trend; improvement in early years, decline through 2019, and partial recovery in 2020, reflecting changes in collection efficiency.

The financial data indicates several notable trends over the five-year period ending December 31, 2020.

Cost of Revenue

The cost of revenue showed a consistent increase from 2016 to 2019, rising from $732 million to $1,076 million. However, in 2020, there was a slight decrease to $1,036 million. This suggests that while the company expanded its operational expenses substantially over the four years, it managed to reduce or control costs marginally in the final year.

Accounts Payable

Accounts payable increased generally over the period, starting at $138 million in 2016 and reaching $192 million in 2020, with a small dip in 2019 at $149 million. This overall upward trend may reflect a higher volume of purchases on credit or extended payment terms, contributing to greater short-term liabilities.

Payables Turnover Ratio

The payables turnover ratio fluctuated during the period. It increased from 5.31 in 2016 to a peak of 7.22 in 2019, indicating that the company was paying its suppliers more quickly or more frequently during that year. However, the ratio fell sharply to 5.4 in 2020, which may indicate a slower payment cycle or changes in credit terms with suppliers.

Overall, the data suggests that the company experienced growth in its operational costs year over year until 2019, then exercised greater cost control or efficiency in 2020. The increases in accounts payable parallel the rising costs, but the fluctuation in payables turnover ratio indicates variability in payment practices, with a notable acceleration in payment activity in 2019 followed by a slowdown in 2020.

The financial data exhibits notable trends over the five-year period ending in 2020.

Working Capital

Working capital demonstrated a consistent upward trajectory from 2016 through 2019, increasing from 1,613 million US dollars to 3,786 million US dollars. However, in 2020, this figure declined to 3,239 million US dollars, indicating a contraction following several years of growth.

Revenue

Revenue steadily increased from 2,398 million US dollars in 2016 to a peak of 3,543 million US dollars in 2019. In 2020, revenue decreased to 3,239 million US dollars, marking a reversal of the previous growth trend and a potential indicator of challenges faced during that year.

Working Capital Turnover

This ratio, which measures revenue generated per dollar of working capital, generally declined over the observed period. It started at 1.49 in 2016 and decreased to a low of 0.94 in 2019, before slightly improving to 1.00 in 2020. The downward trend until 2019 suggests that the company was generating less revenue per unit of working capital over time, which may reflect either increased capital investment or less efficient asset utilization. The minor rebound in 2020 may indicate some improvement in working capital efficiency despite the revenue decline.

Overall, the data suggests a period of growth in working capital and revenue through 2019, followed by declines in both metrics in 2020. The decreasing working capital turnover ratio through most of the period points to a potential reduction in operating efficiency, though the slight recovery in 2020 warrants further analysis to determine whether this signals a sustainable change or a temporary adjustment.

The inventory turnover ratio demonstrates a general upward trend from 2016 through 2020, with values starting at 2.44 in 2016 and rising to a peak of 3.00 in 2019, before declining slightly to 2.78 in 2020. This indicates improving efficiency in managing inventory over the majority of the examined period, despite a minor reduction in the final year.

Correspondingly, the average inventory processing period, measured in number of days, generally decreases over the same timeframe. The period shortens from 150 days in 2016 to 122 days in 2019, signifying faster inventory turnover and improved operational efficiency. However, this indicator slightly increases to 131 days in 2020, which aligns with the observed decrease in the inventory turnover ratio for the same year.

Inventory Turnover Ratio

Shows improvement from 2.44 in 2016 to a peak of 3.00 in 2019, decreasing slightly to 2.78 in 2020.

Average Inventory Processing Period

Declines overall from 150 days in 2016 to 122 days in 2019, then rises marginally to 131 days in 2020.

These trends suggest that inventory management became more efficient initially but experienced a minor setback in the final year of the data. The inverse relationship between the turnover ratio and processing period remains consistent, reflecting the typical dynamic between these two metrics.

Receivables Turnover

The receivables turnover ratio exhibited minor fluctuations over the five-year period. Starting at 6.29 in 2016, it increased to 6.7 in 2017, indicating improved efficiency in collecting receivables that year. However, the ratio slightly declined to 6.48 in 2018 and further to 6.18 in 2019, suggesting a marginal decrease in collection efficiency. By 2020, it rebounded to 6.65, nearly matching the 2017 peak. Overall, the ratio shows a general stability with moderate variability, reflecting consistent management of receivables.

Average Receivable Collection Period (Days)

The average collection period varied inversely with the receivables turnover ratio as expected, given their relationship. Beginning at 58 days in 2016, it improved to 55 days in 2017, corresponding with the higher turnover ratio that year. The period then slightly increased to 56 days in 2018 and further to 59 days in 2019, reflecting slower collection times. In 2020, the average collection period shortened again to 55 days. This suggests a return to more efficient receivables management, maintaining collection periods within a relatively narrow range over the examined years.

The analysis of the annual data reveals several notable trends regarding the company's operational efficiency metrics from 2016 through 2020.

Average Inventory Processing Period

The average inventory processing period shows a general decline over the observed years, starting from 150 days in 2016 and decreasing to 131 days by the end of 2020. This indicates an improvement in inventory turnover, suggesting that the company has been managing its inventory more efficiently, reducing the time stock remains in storage before being processed or sold. The period reached its lowest at 122 days in 2019 before slightly increasing again in 2020.

Average Receivable Collection Period

The average receivable collection period remains relatively stable throughout the period, fluctuating slightly between 55 to 59 days. This stability suggests consistent credit and collection policies without major changes in the company’s efficiency regarding how quickly it collects payments from customers. The highest collection period was 59 days in 2019, while the lowest was 55 days occurring in 2017 and again in 2020.

Operating Cycle

The operating cycle, which combines both inventory and receivables periods to reflect the total time taken from inventory acquisition to cash receipt, also shows a downward trend overall. It decreased from 208 days in 2016 to a low of 181 days in 2019, but increased slightly to 186 days in 2020. This gradual reduction implies an overall enhancement in operational efficiency, with the company shortening the time from investing in inventory to collecting cash from sales.

In summary, the company demonstrated improvements in inventory management effectiveness and maintained a steady approach to receivables collection. These factors combined led to a shorter operating cycle over the duration of the period, signaling enhanced liquidity and operational efficiency. The slight uptick in 2020 warrants attention but does not significantly detract from the overall positive trend observed.

The analysis of the payables turnover and average payables payment period over the five-year timeframe reveals distinct trends and fluctuations.

Payables Turnover Ratio

The payables turnover ratio exhibited variability throughout the period. Starting at 5.31 in 2016, the ratio increased moderately to 5.79 in 2017, indicating slightly quicker payments to suppliers. It then slightly declined to 5.61 in 2018, followed by a significant increase to 7.22 in 2019, suggesting a notable acceleration in the payment of payables during that year. However, in 2020, the ratio decreased to 5.40, returning closer to the initial levels observed at the start of the period.

Average Payables Payment Period

The average payables payment period, measured in days, inversely correlates with the payables turnover ratio and exhibits a complementary trend. Initially, the period decreased from 69 days in 2016 to 63 days in 2017, reflecting faster payments. Then, there was a slight increase to 65 days in 2018, followed by a substantial reduction to 51 days in 2019, consistent with the surge in payables turnover ratio. Finally, the period lengthened to 68 days in 2020, indicating a slower payment pace approaching the earlier period's length.

Overall, the data shows that the company accelerated its payment process significantly in 2019 but reverted to a slower payment pace in 2020. The fluctuations suggest changes in cash management strategies or variations in supplier payment terms, impacting liquidity management over the years.

Average Inventory Processing Period

The average inventory processing period shows an overall downward trend from 150 days in 2016 to 131 days in 2020, despite a slight increase in 2018 and again in 2020. The lowest point occurred in 2019 at 122 days, indicating improved inventory turnover efficiency in that year.

Average Receivable Collection Period

The average receivable collection period remained relatively stable over the five-year period, fluctuating between 55 and 59 days. It started at 58 days in 2016, dipped slightly in 2017, peaked at 59 days in 2019, and ended at 55 days in 2020, indicating consistent management of accounts receivable.

Average Payables Payment Period

The average payables payment period demonstrated some volatility, decreasing from 69 days in 2016 to 63 days in 2017 and fluctuating thereafter, with a notable drop to 51 days in 2019 followed by an increase back to 68 days in 2020. This suggests variability in the timing of supplier payments.

Cash Conversion Cycle

The cash conversion cycle indicates a general improvement, decreasing from 139 days in 2016 to 118 days in 2020. Although there was a slight increase from 123 days in 2017 to 130 days in 2019, the overall decline suggests enhanced efficiency in the company's working capital management over the analyzed period.