Twenty-First Century Fox Inc. (NASDAQ:FOX)

Inventory Turnover

The inventory turnover ratio exhibits fluctuations over the observed periods, starting around 6.28 in September 2013 and generally declining to a low near 4.74 by March 2016. After this point, it shows some recovery, reaching approximately 6.39 by September 2017, before declining again towards the end of 2018. This indicates periods of slower inventory movement interspersed with occasional improvements, suggesting variability in inventory management efficiency or demand.

Receivables Turnover

The receivables turnover ratio generally trends downward from a peak of about 5.15 in September 2014 to approximately 3.84 by the end of 2018. This decline implies an increasing duration for collecting receivables, potentially indicating deterioration in credit management or more lenient customer payment terms over time.

Working Capital Turnover

The working capital turnover ratio shows significant variability, with a notable peak of around 5.64 in December 2014, followed by a pronounced decline to just above 1.19 by the last period in December 2018. This suggests a progressive decrease in the effectiveness of working capital usage to generate sales, possibly reflecting inefficiencies or increasing capital requirements.

Average Inventory Processing Period

The average inventory processing period fluctuates between approximately 53 and 77 days. Beginning near 58 days in September 2013, it peaks around 77 days in March 2016, indicating slower inventory turnover during that time, before marginally decreasing but remaining elevated toward the end of the series. This pattern aligns with the inventory turnover ratio trends and indicates longer holding periods for inventory at certain points.

Average Receivable Collection Period

The average receivable collection period exhibits an increasing trend, moving from about 71 days in December 2013 to a peak of approximately 95 days by December 2018. This lengthening collection period corresponds with the decreasing receivables turnover ratio, further signaling potential challenges in collecting payments and possible impact on liquidity.

Operating Cycle

The operating cycle, representing the combined duration of inventory processing and receivables collection, generally increases over the analyzed timeframe. Starting near 130 days in September 2013, it reaches a high of about 169 days in March 2016 and remains elevated thereafter. This extension reflects changes in both inventory and receivables management, implying a longer time to convert resources into cash.

Operating Expenses

Operating expenses demonstrate significant variability across the reported periods. Initially, there is a noticeable increase from 3,515 million to 5,551 million US dollars between September 2012 and December 2013. Following this peak, expenses fluctuate without a clear trend, decreasing to as low as 3,673 million US dollars in September 2015, then rising again to 6,005 million US dollars in December 2018. This pattern suggests periods of elevated operational costs interspersed with reductions, indicating potentially variable operational activities or cost management efforts during the timeframe.

Inventories, net

Net inventories exhibit moderate fluctuations throughout the periods, with values ranging between approximately 2,749 million and 3,934 million US dollars. There are no strong increasing or decreasing trends, but inventory levels tend to oscillate within a relatively stable band, suggesting consistent inventory management practices. A slight upward drift is visible in the later periods, with net inventories rising from 3,645 million in September 2018 to 3,934 million in December 2018, indicating a possible build-up of inventory towards the end of the reporting horizon.

Inventory Turnover Ratio

The inventory turnover ratio shows intermittent fluctuations, mostly staying between 4.74 and 6.83. It reached a high point of approximately 6.83 in June 2014, suggesting quicker inventory movement during that quarter. Subsequently, the ratio declined to a low of about 4.74 in March 2016, implying slower inventory turnover. More recently, the ratio has stabilized around 5.1 to 6.39, with slight oscillations indicating steady but moderate inventory efficiency over the periods. Overall, the turnover ratio points to variability in inventory management effectiveness but does not indicate a definitive trend of improvement or deterioration.

Revenues Trend

Revenues exhibited fluctuations over the observed period, with values ranging from a low around 6,077 million US dollars to a high near 8,499 million US dollars. Notably, there were periodic declines followed by recoveries, suggesting cyclical variations in business performance. For instance, revenues peaked at 8,163 million in December 2013, dipped afterwards to approximately 6,205 million by June 2015, and subsequently increased again with peaks in later quarters, such as 8,037 million in December 2017 and 8,499 million in December 2018.

Receivables, Net Trend

The net receivables exhibited a general upward trend from about 5,459 million to over 8,000 million US dollars by the end of the series. Although the data showed some fluctuations, the underlying direction was an increase in receivables, implying potential growth in credit sales or extended collection periods. The gap between revenues and receivables demonstrates that while sales saw variability, receivables grew at a relatively steadier pace.

Receivables Turnover Ratio

The receivables turnover ratio showed a declining trend overall, moving from values around 5.07-5.15 in early 2013 to levels near 3.84 by the end of 2018. This decrease in turnover ratio indicates a slower collection process over time, possibly reflecting longer credit terms or challenges in collecting outstanding amounts. Lower turnover implies that receivables are being held longer before being converted into cash.

Insight on Working Capital and Collectability

The simultaneous increase in receivables coupled with a decline in turnover ratio suggests an expanding accounts receivable balance that is not being converted to cash as quickly as before. This pattern might affect liquidity, requiring the company to monitor its credit policies closely. Despite revenue fluctuations, the increasing receivables imply growing sales on credit that should be managed to avoid negative impacts on cash flow.

The financial data indicates several notable trends across the analyzed periods.

Working Capital

Working capital shows significant fluctuation over time. Initially, it declines from 12,222 million US dollars as of September 2012 to a low point around mid-2014, reaching values near 5,792 million US dollars. Subsequently, there is a marked recovery and even substantial growth, peaking at 26,082 million by December 2018. This suggests periods of both liquidity contraction and expansion, with a considerable increase in available short-term resources toward the end of the timeframe.

Revenues

Revenues display variability without a consistent upward or downward pattern. They started at approximately 6,003 million US dollars in September 2012, reached a high point near 8,424 million in the middle of 2014, but declined afterwards with fluctuations. There are intermittent recoveries, such as in late 2017 and late 2018, but overall the revenue trend is relatively flat to slightly downward when observed through the entire period.

Working Capital Turnover Ratio

The working capital turnover ratio, calculated only for certain periods, initially ranged between roughly 3.77 and 5.64, indicating efficient use of working capital relative to revenues. Starting in late 2014 and onward, the ratio demonstrates a consistent decline, reaching as low as 1.19 by the end of 2018. This decline suggests deteriorating efficiency in converting working capital into sales, potentially reflecting increased working capital or challenges in maintaining revenue growth relative to capital invested.

Overall, the data reflects a company experiencing phases of liquidity tightening followed by expansion, relatively stable but fluctuating revenues, and a declining trend in working capital turnover efficiency. The marked increase in working capital combined with stagnant revenues and decreasing turnover ratio may signal an accumulation of current assets or slower asset turnover that could impact operational efficiency.

Inventory Turnover Ratio

The inventory turnover ratio displays fluctuations throughout the observed periods beginning from September 30, 2012, where initial data is absent, and observable values start at 6.28 in June 30, 2013. The ratio generally maintains a range between approximately 4.74 and 6.83. There is a noticeable decline starting around December 31, 2014, dipping to a low of 4.74 by March 31, 2016. Subsequent quarters show some recovery and stabilization, with the ratio fluctuating between 5.0 and 6.4 toward the end of the period in December 31, 2018.

Average Inventory Processing Period (Days)

Reflecting an inverse relationship to inventory turnover, the average inventory processing period increases as turnover decreases. The days rise markedly from 58 days around June 30, 2013, reaching a peak of 77 days by March 31, 2016. Following this peak, there is a slight decline, though values remain elevated relative to earlier periods, predominantly staying above 60 days for most of the latter half of the timeline. By December 31, 2018, the average processing period is approximately 72 days.

Overall Trend and Insights

The data indicates a period of decreasing operational efficiency in inventory management from mid-2013 to early 2016, as evidenced by a declining turnover ratio and increasing inventory holding periods. After this period, there is some recovery but no return to the higher efficiency levels of mid-2013. The elevated average inventory processing period in the recent quarters suggests consistent challenges in inventory movement or potential strategic adjustments in inventory policy. This pattern might imply slower sales or increased stocking strategies requiring further detailed investigation to assess causes and implications for working capital management.

The data reveals fluctuations in both receivables turnover and the average receivable collection period for the company over a period extending from 2012 to 2018, although some initial quarters contain missing values. Starting from the first available figures in September 2012, the receivables turnover ratio begins around 5.07 and generally exhibits a declining trend through to 2018, reaching lows near 3.84 towards the end of the period.

Correspondingly, the average receivable collection period, which measures the number of days taken to collect receivables, displays an overall increasing trend. Initial values around 72 days increase gradually, peaking around 95 days by the final quarter in 2018. This suggests that the company is taking longer to collect receivables as time progresses.

The inverse nature of the two metrics is consistent throughout the available data: as receivables turnover decreases, indicating slower turnover, the collection period increases, reflecting longer durations to collect receivables. Notably, there are periods with minor fluctuations; for example, in late 2013 to early 2014, turnover experiences a small rise, paralleled by a slight reduction in collection days. However, these brief improvements are followed by renewed declines in turnover and increases in collection periods.

This trend may indicate challenges in credit management or collection efficiency, potentially impacting the company's liquidity and working capital management negatively if the pattern continues. Monitoring these metrics is advisable to gauge the effectiveness of credit policies and to identify opportunities for operational improvements in receivables management.

Receivables Turnover Ratio

Decreased gradually from about 5.07 in late 2012 to approximately 3.84 by the end of 2018, indicating slower turnover of receivables over time.

Average Receivable Collection Period

Increased from around 72 days in late 2012 to nearly 95 days by the end of 2018, suggesting that collection times lengthened over the analyzed period.

Relationship Between Metrics

An inverse correlation is evident; as turnover declined, collection days increased, reflecting deteriorating receivables efficiency.

Short-term Variations

Minor fluctuations occurred with temporary improvements, yet the overall long-term trend reflects declining collection efficiency.

Implications

Prolonged collection periods and reduced turnover may negatively impact cash flow, highlighting a potential need for strengthened credit control practices.

The analysis of the quarterly financial data reveals several important trends in the working capital management metrics over the observed periods.

Average Inventory Processing Period

The average inventory processing period shows initial values starting at 58 days, then fluctuating upward and downward throughout the quarters. Notably, this period increased to a peak of 77 days around March 2016, indicating a slower inventory turnover during that time. Following the peak, there is a gradual decline, falling to 57 days in December 2017, suggesting an improvement in inventory management. However, in the subsequent quarters, the period increased again, reaching approximately 70-72 days by the end of 2018. This pattern indicates some instability in inventory processing efficiency across the timeline.

Average Receivable Collection Period

This metric also displays variability across the quarters. Starting near 72 days, it experienced increases and decreases but demonstrated a general upward trend during the period from late 2014 through early 2017, peaking around 94 days in several quarters. A high receivable collection period usually suggests slower collection of payments from customers. Post-2017, the collection period again shows fluctuations between approximately 85 and 95 days, without a consistent downward trend, implying ongoing challenges in improving receivables turnover.

Operating Cycle

The operating cycle, which sums the inventory processing period and receivable collection period, exhibits a pattern similar to its individual components with a gradual increase over time. Starting around 130 days in late 2012, it peaks at around 169 days in the first half of 2016. This extended operating cycle reflects the combined effect of slower inventory turnover and extended receivables collection, pointing to a lengthening cash conversion cycle. After the peak, there was some reduction to about 140 days by the end of 2017, followed by a moderate increase again to approximately 157 days by the end of 2018, indicating some volatility but generally longer operating cycles in later periods compared to the start.

In conclusion, the data reveal periods of inefficiency in managing both inventory and receivables, contributing to an overall extension in the operating cycle during the analyzed timeframe. Efforts to optimize inventory turnover and accelerate receivables collection might be necessary to improve cash flow and operational efficiency.