Illumina Inc. (NASDAQ:ILMN)

Inventory Turnover

The inventory turnover ratio showed an overall upward trend from 2.44 in April 2017 to 3.28 in October 2021, indicating improved efficiency in managing inventory. Some fluctuations occurred, with notable dips around mid-2020, but the general pattern suggests enhanced inventory utilization over the period.

Receivables Turnover

Receivables turnover increased from 6.29 in April 2017 to a peak of 8.7 in September 2020, demonstrating faster collection of receivables. However, the ratio experienced variability, declining in some quarters before stabilizing around 7.09 by October 2021. This indicates generally effective receivables management with occasional slowdowns.

Payables Turnover

The payables turnover ratio exhibited volatility, rising from 5.31 in April 2017 to a high of 8.11 in June 2020, then declining to 5.3 by October 2021. The fluctuations suggest variability in the company's payment patterns to suppliers, with periods of quicker and slower payments.

Working Capital Turnover

Working capital turnover declined from 1.49 in April 2017 to a low near 0.79 in April 2021, indicating reduced efficiency in using working capital to generate sales. A sharp increase occurred in October 2021 to 2.78, which may reflect a significant operational or financial change toward improved capital utilization.

Average Inventory Processing Period

The average inventory processing period decreased from 150 days in April 2017 to 111 days by October 2021, reflecting faster inventory turnover and improved inventory management. Occasional increases to around 160 days occurred but were followed by reductions, showing a downward trend in the number of days inventory is held.

Average Receivable Collection Period

The receivable collection period generally contracted from 58 days in April 2017 to approximately 50-52 days by late 2021, with some variability throughout the timeframe. This suggests the company has been moderately successful in shortening the time to collect receivables, albeit with some quarter-to-quarter inconsistency.

Operating Cycle

The operating cycle showed a modest decline from 208 days in April 2017 to 163 days by October 2021. This reduction indicates the overall efficiency of converting raw materials into cash improved slightly, supported by shorter inventory and receivables periods.

Average Payables Payment Period

The average payables payment period fluctuated, decreasing from 69 days in April 2017 to a low of 45 days in March 2020 before increasing again to 69 days by October 2021. This suggests changes in payment terms or supplier negotiations, with the company sometimes extending payment periods and other times paying sooner.

Cash Conversion Cycle

The cash conversion cycle trended downward from 139 days in April 2017 to 94 days in October 2021, indicating improved efficiency in managing the time between cash outflows and inflows. Despite periodic increases, the overall decline reflects better working capital management and quicker cash recovery.

The financial data reveals several noteworthy trends concerning cost of revenue, inventory levels, and inventory turnover ratios over the examined periods.

Cost of Revenue

The cost of revenue demonstrates an overall upward trajectory from April 2016 to October 2021. Beginning at $175 million in April 2016, the cost generally rises, peaking at several points, including $290 million in December 2019 and reaching a high of $338 million in October 2021. There are intermittent fluctuations, such as a decrease from $290 million in December 2019 to $240 million in March 2020, followed by a recovery and further increases. This pattern suggests periods of volatility but with a strong general growth trend in costs incurred to generate revenue.

Inventory

Inventory levels steadily increased from $288 million in April 2016 to a peak of $420 million around June 2019. Subsequently, inventory values exhibit fluctuations, dropping to $359 million by December 2019 before surging again to $435 million in June 2020. After some volatility, inventory stabilizes around the $380–$400 million range in mid to late 2021. The overall trend of accumulation followed by stabilization could indicate efforts to optimize inventory management after a growth phase.

Inventory Turnover Ratio

Starting from circa 2.44 in late 2016, the inventory turnover ratio shows moderate variation but generally trends upward, moving from values around 2.5 to surpassing 3.0 by mid-2021. Notably, the ratio peaks at 3.28 in October 2021, indicating improved efficiency in converting inventory into sales. Some decline phases occurred, such as a dip to approximately 2.29 in mid-2020, which may align with inventory spikes, but overall the ratio's increase suggests enhanced operational efficiency or better inventory utilization over time.

In summary, the company experienced incremental growth in cost of revenue and inventory in the observed timeframe, accompanied by improving inventory turnover efficiency. While occasional fluctuations in costs and inventory levels suggest periods of operational adjustments, the rising inventory turnover ratio highlights effective management of stock relative to sales activity in recent periods. This may reflect strategic responses to market dynamics or internal process enhancements aimed at streamlining supply chain and production operations.

The analysis of the quarterly financial data reveals several observable trends over the examined periods with respect to revenue, accounts receivable, and receivables turnover ratios.

Revenue Trends

Revenue shows an overall increasing trend from April 2016 through October 2021, starting at 572 million USD and peaking at 1126 million USD in July 2021, followed by a slight decrease to 1108 million USD in October 2021. The growth is marked by fluctuations, including a notable dip in the middle of 2020 coinciding with the pandemic period where revenue fell to 633 million USD in June 2020 from 859 million USD in March 2020. Revenue rebounded sharply thereafter, reaching record highs in 2021.

Accounts Receivable, Net

Net accounts receivable exhibit variability without a consistent directional trend. Beginning at 403 million USD in April 2016, values fluctuate around the 400-500 million USD range, peaking at 604 million USD in October 2021. There was a significant increase in receivables toward the end of 2018, rising to 514 million USD in December 2018, followed by continued fluctuations through 2019 and into 2020. A decline is observed in the mid-2020 period consistent with the revenue dip, but receivables increase again substantially by late 2021.

Receivables Turnover Ratio

This ratio demonstrates moderate variability with values ranging mostly between approximately 6.2 and 8.7. Early data in 2016 are missing; however, from late 2016 onward, the ratio oscillates without a clear upward or downward trend. The highest turnover ratio is seen at 8.7 in June 2020, which coincides with the lowest revenue point in the pandemic period. This may indicate relatively faster collection cycles during that period. Generally, the ratio tends to indicate stable efficiency in converting receivables into cash over the observed timeframe, with occasional peaks and troughs.

In summary, the financial data indicate steady revenue growth with some volatility related to external factors such as the 2020 pandemic. Accounts receivable levels have shown corresponding fluctuations with some lag relative to revenue changes. The receivables turnover ratio reflects a generally stable but variable collection efficiency, with particular acceleration during periods of lower revenue. Together, these trends suggest the company managed to sustain growth and operational efficiency through the observed timeframe despite some disruptive events.

The data shows the financial metrics focusing on cost of revenue, accounts payable, and payables turnover ratios over a period from April 2016 to October 2021. Clear trends and variations can be identified for each of these items.

Cost of Revenue

The cost of revenue exhibits an overall increasing trend throughout the period. Starting at $175 million in April 2016, it experiences steady growth with minor fluctuations, reaching $338 million by October 2021. Notable increases occur during the periods ending December 2019 ($290 million) and April 2021 ($323 million), suggesting a rise in operational activity or production costs. There are short-term declines such as from March 2020 ($290 million) to June 2020 ($240 million), possibly reflecting external disruptions. Despite these variations, the long-term movement is upwards, indicating growing scale or input cost inflation.

Accounts Payable

Accounts payable values fluctuate more noticeably across the quarters. Early figures show some volatility, e.g., from $155 million in April 2016 to $251 million in July 2016, then dipping to $134 million by October 2016. Mid-period amounts remain relatively stable with moderate increases and decreases, maintaining a range generally between $130 million and $200 million. In the final quarters (2021), accounts payable rise substantially to $248 million, the highest in the dataset, which might reflect extended credit periods or increased procurement correlating with the higher cost of revenue.

Payables Turnover

The payables turnover ratio data begins from the quarter ending in October 2016 and reveals a downward trend overall. Initially, ratios fluctuate around mid-5s to mid-6s, with spikes reaching as high as 8.11 in March 2020, indicating a faster payment cycle during that quarter. However, after this peak, the ratio decreases steadily into 2021, falling to approximately 5.3 by October 2021. This decline suggests a slowing in the rate at which the company settles its payables, consistent with increased accounts payable balances and potentially reflecting changes in working capital management or supplier payment terms.

In summary, the company’s cost of revenue growth over time implies expansion or rising costs, while accounts payable fluctuations and the decreasing payables turnover ratio imply an extended payment period or shifting supplier credit relationships. These dynamics could impact cash flow management and warrant further review.

The financial data reveals several notable trends over the analyzed periods. Working capital demonstrates a general growth trajectory from early 2016 through the mid-2021 periods, starting at 1,593 million USD and increasing to a peak of 4,436 million USD by July 2021, before a sharp decline to 1,537 million USD in October 2021. This pattern indicates an initial strengthening of liquidity and short-term asset management, followed by a significant reduction at the end of the observed timeline.

Revenue exhibits a consistent upward trend with some fluctuations. Starting at 572 million USD in April 2016, revenue gradually increased, reaching above 1,000 million USD in the first half of 2021, peaking at 1,126 million USD in October 2021. Despite some dips, particularly in early 2020 where revenue dropped to 633 million USD in June 2020 from 952 million USD in December 2019, subsequent quarters show recovery and continued growth. This suggests resilient sales performance, with temporary setbacks potentially linked to external factors affecting market conditions.

The working capital turnover ratio, which measures how efficiently working capital is used to generate revenue, shows a declining trend over most periods analyzed until mid-2021. The ratio decreases from about 1.49 in December 2016 to approximately 0.79 in April 2021, indicating decreasing efficiency in converting working capital into revenue during that span. However, an abrupt increase to 2.78 in October 2021 deviates from this pattern, aligning with the significant drop in working capital and slightly decreased revenue in that quarter, implying a sudden change in operational or financial management effectiveness.

Working Capital

General increase over several years indicating improved liquidity, with a peak in mid-2021 followed by a sharp decline at the end of the period.

Revenue

Consistent growth trend with short-term fluctuations and a notable dip during early 2020, followed by recovery and continued revenue gains through late 2021.

Working Capital Turnover

Gradual decline in efficiency from 2016 to early 2021, followed by a marked spike in late 2021, suggesting significant changes in working capital management or revenue generation efficiency.

The data demonstrates a discernible trend in inventory management metrics over the analyzed periods. The inventory turnover ratio, which measures how many times inventory is sold and replaced over a period, shows an overall increasing trend from the initial recorded value of 2.44 to 3.28 by the end of the last period. This indicates improving efficiency in inventory usage.

Conversely, the average inventory processing period, expressed in days, reflects the time taken to process inventory on average. This metric generally decreases over time, moving from 150 days at one of the earlier recorded periods to 111 days at the end of the time frame, suggesting a reduction in the duration inventory is held before being sold or processed further.

Inventory Turnover

This ratio increased progressively with minor fluctuations, notably rising from approximately 2.44 to 3.28, indicative of a faster rate of inventory sales and replenishment. The upward movement implies strengthened operational efficiency and potentially a better alignment of stock levels with sales demand.

Average Inventory Processing Period

The period decreased generally from 150 days down to 111 days, showing that inventory is being turned over more quickly. While there were some periods of increase or plateau, the overall downward trajectory supports the conclusion of improved inventory management and possibly enhanced supply chain responsiveness.

In summary, the trends suggest that the company has increased its efficiency in managing inventory by reducing the holding time and speeding up turnover. These developments likely contribute to better capital utilization and could reflect improvements in sales performance or inventory planning practices.

The receivables turnover ratio exhibits a generally fluctuating upward trend from 2016 through 2021, with values ranging roughly between 6.18 and 8.7. Starting in early 2016, the turnover ratio begins at approximately 6.29, gradually increasing with some volatility and peaking at 8.7 around mid-2020. Following this peak, there is a decline observed, though the values remain elevated relative to earlier periods. The pattern suggests improvements in the efficiency of collecting receivables over time, with occasional periods of slight easing.

The average receivable collection period corresponds inversely with the receivables turnover ratio, exhibiting a downward trend with some variability. Initially close to 58 days in early 2016, the collection period decreases to around 42 days by mid-2020, indicating faster collection of receivables during this timeframe. There are intermittent increases where collection periods rise to the mid-50 day range, indicating some fluctuations in collection efficiency. Towards the end of the period analyzed, the average collection period stabilizes near the low 50s number of days.

Receivables Turnover Ratio

Shows an overall improvement in accounts receivable management, with turnover increasing from approximately 6.3 to a peak near 8.7, suggesting enhanced liquidity and efficient credit management.

Fluctuations imply periods of both tightening and easing in credit policies or changes in customer payment behaviors.

Average Receivable Collection Period

Displays a general decrease from near 58 days to approximately 42 days, indicating faster collection cycles and improved cash flow timings.

Variations in the shortened periods reflect possible operational factors such as customer payment patterns or changes in billing and collection processes.

Overall, these metrics suggest progressive improvements in receivables management efficiency, increasing the speed of cash conversion. However, the noted fluctuations indicate that the company periodically experiences varying collection dynamics, which may be influenced by market conditions, customer credit quality, or internal collection efforts.

The analysis of the quarterly financial data reveals discernible trends in the average inventory processing period, average receivable collection period, and the operating cycle over the observed timeframe.

Average Inventory Processing Period

The average inventory processing period shows a general pattern of fluctuation with some periods of decline and others of increase. Initially, the period decreased from 150 days to a low of 122 days by the end of 2019, indicating improved efficiency in inventory processing. However, starting from 2020, there is an observable increase, peaking at 160 days in September 2020, which suggests a slowdown or buildup in inventory handling during that period. Following this peak, the period steadily declines again, reaching 111 days by the third quarter of 2021, marking a significant improvement in inventory turnover relative to prior quarters.

Average Receivable Collection Period

The average receivable collection period exhibits a relatively stable trend with moderate fluctuations. Starting at 58 days, it declines and oscillates between 42 and 59 days throughout the periods. Notably, there is a reduction to 42 days in the June 2020 quarter, reflecting enhanced efficiency in receivables collection during that time. Post-mid 2020, a slight increase occurs, with the collection period settling around the low fifties, indicating some variability but overall consistent collection performance.

Operating Cycle

The operating cycle, combining both inventory processing and receivables collection periods, displays a decreasing trend from 208 days to a low of 161 days by the third quarter of 2021, despite intermittent rises. It initially decreases until late 2019, reflective of shorter processing and collection periods. While there is a modest increase in the cycle during 2020, peaking above 200 days, the overall trajectory is downward, suggesting an overall improvement in the operating efficiency of the company towards the latest quarters.

Overall, the data indicates improvements in operational efficiency over the long term, with notable gains in inventory processing and a relatively steady receivables collection period. The spikes observed during 2020 may reflect external factors impacting operational timings, but the subsequent recovery and continued downward trend in the operating cycle highlight effective management responses and stronger operational controls.

Payables Turnover Ratio

The payables turnover ratio demonstrates variability over the analyzed periods with a general upward trend until the end of 2019, followed by increased fluctuation. Starting from a level of approximately 5.31 in early 2017, the ratio gradually increased, reaching a peak around 8.11 by the first quarter of 2020. After this peak, a declining trend is observed, with the ratio decreasing to around 5.3 by late 2021. This suggests that the company initially improved its efficiency in managing payables but later experienced a reduction in turnover rate.

Average Payables Payment Period (days)

The average payables payment period shows an inverse pattern relative to the turnover ratio, with shorter payment periods correlating to higher turnover ratios. The payment period decreased from approximately 69 days in early 2017 to a low of about 45 days in mid-2020, reflecting quicker payments to suppliers. However, post mid-2020, the payment period increased again, reaching close to 69 days by late 2021. This indicates a strategic shift towards extending payment terms in the latter periods.

Overall Analysis

The data indicates that the company actively managed its payables over the time frame, initially reducing the payment period and increasing the payables turnover ratio, which typically improves supplier relationships and may enhance credit terms. The reversal of this trend starting around mid-2020 suggests a change in working capital management strategy, possibly due to external factors impacting cash flow or supplier negotiations. The oscillations in both metrics towards the end of the period under review highlight a period of adjustment or volatility in the company's payables management.

The analysis of the financial periods from mid-2016 through late 2021 reveals several notable trends in operational efficiency and working capital management.

Average Inventory Processing Period

This metric demonstrates a gradual decrease over the observed timeframe, indicating improved inventory turnover and possibly enhanced supply chain management. Starting around 150 days in early 2017, the period declined to approximately 111 days by the last reported quarter in 2021. There were minor fluctuations within this trend, including a peak near 160 days in late 2020, but the overall movement suggests a positive development in reducing the time inventory remains on hand.

Average Receivable Collection Period

The receivable collection period exhibits moderate volatility but maintains a general downward trajectory from the mid-50s range in early 2017 to values near 50 days towards the end of 2021. Shorter collection periods typically enhance cash flow, and fluctuations such as the rise to 59 days in late 2019 suggest temporary challenges in collections. However, the recovery and maintenance of lower days in the final periods imply effective credit and collection policies.

Average Payables Payment Period

This period shows variability without a clear, consistent trend. Values oscillate between highs of nearly 76 days in late 2016 and lows of about 45 days in mid-2020. The ability to manage payables timing strategically could reflect negotiation success with suppliers or adjustments to cash management priorities. An uptick back to nearly 69 days in late 2021 indicates a return to longer payment cycles, which might assist cash conservation but could affect supplier relations.

Cash Conversion Cycle

The cash conversion cycle (CCC) represents the net time between cash outflows and inflows related to operations. It consistently decreased from around 139 days in early 2017 to a notable low of 94 days by late 2021. Despite intermittent increases—such as rises near 150 days in 2019 and 2020—the overall decline demonstrates improved efficiency in converting inventory and receivables back into cash. This enhancement likely supports stronger liquidity and operational cash flow management.

In summary, the company has generally improved its operational efficiency regarding inventory turnover and receivable collections, contributing to a shortened cash conversion cycle. While payable periods fluctuate, the net effect yields more effective working capital utilization over the analyzed quarters.