Analysis of Short-term (Operating) Activity Ratios
Quarterly Data
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)
Allergan Inc., short-term (operating) activity ratios (quarterly data)
Based on: 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31), 10-K (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-Q (reporting date: 2011-03-31).
The analysis of the quarterly financial ratios reveals distinct patterns and shifts over the examined periods.
- Inventory Turnover
- The inventory turnover ratio exhibited a gradual decline from approximately 3.07 to a low near 2.7 between early 2011 and early 2014, followed by a slight recovery towards the end of 2014. This suggests a moderate slowing in the rate at which inventory is sold and replaced over the period, indicating potential changes in inventory management or sales velocity.
- Receivables Turnover
- The receivables turnover ratio displayed some fluctuation, initially decreasing from around 7.4 to the mid-6 range by mid-2012, then showing a modest upward trend, reaching nearly 7.8 by the end of 2014. This pattern points to variability in the company's efficiency in collecting its receivables, with improvements in later periods indicating enhanced credit management or faster collections.
- Payables Turnover
- The payables turnover ratio decreased steadily over the timeline, falling from approximately 3.67 to below 3.0 by early 2014, and stabilizing thereafter. This trend implies a lengthening of the payment period to suppliers, which could be a strategic move to optimize cash flow but might also reflect changing supplier terms.
- Working Capital Turnover
- The working capital turnover ratio showed a declining trend from around 1.9 in early 2011 to approximately 1.34 by the end of 2014, with some minor fluctuations. This decline suggests diminishing efficiency in generating sales from working capital, potentially signifying increased investment in current assets or slower sales growth relative to working capital employed.
- Average Inventory Processing Period
- The average inventory processing period lengthened over time, increasing from about 119 days in early 2011 to a peak around 135 days in early 2014, before decreasing slightly towards the end of 2014. This increase aligns with the observed decline in inventory turnover, reflecting slower inventory movement.
- Average Receivable Collection Period
- The average collection period for receivables extended from near 49 days to peaks above 57 days during 2012 and fluctuated around mid-50 days thereafter, ending near 47 days at the close of 2014. These variations suggest periods of slower collections, followed by improved receivables management and faster cash inflow in the final quarter.
- Operating Cycle
- The operating cycle, combining inventory and receivables periods, expanded from roughly 168 days to over 190 days during 2013 and early 2014, before a slight contraction. This indicates a lengthening in the total time taken to convert inventory purchases into cash collections, reflective of trends in inventory and receivables management.
- Average Payables Payment Period
- The average time taken to pay suppliers increased steadily from about 100 days to a high of 144 days by early 2014, then decreased slightly toward the end of the period. This lengthened payment period reinforces the trend noted in the payables turnover ratio, highlighting a deliberate extension of accounts payable durations.
- Cash Conversion Cycle
- The cash conversion cycle displayed an overall reduction from approximately 68 days in early 2011 to near 50 days by late 2014, with intermediate fluctuations. This decline is mainly driven by shorter cash tied up in operations despite the longer operating cycle, largely attributable to extended payment periods to suppliers, thereby improving liquidity efficiency.
In summary, the company experienced slower inventory turnover and extended collection and payment periods over the years analyzed. While some operating efficiency metrics worsened, such as working capital turnover and operating cycle length, the extension of payables payment period contributed to a shorter cash conversion cycle, enhancing cash flow management. These trends reflect a strategic balancing between operational efficiency and liquidity optimization.
Turnover Ratios
Average No. Days
Inventory Turnover
Allergan Inc., inventory turnover calculation (quarterly data)
| Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | Mar 31, 2011 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||
| Cost of sales, excludes amortization of intangible assets | 209,100) | 206,600) | 222,200) | 204,500) | 204,600) | 192,200) | 199,100) | 199,900) | 189,200) | 188,800) | 201,700) | 195,800) | 182,000) | 188,100) | 195,300) | 183,300) | |||||
| Inventories | 296,000) | 297,700) | 299,900) | 296,600) | 285,300) | 280,000) | 274,400) | 269,200) | 282,900) | 265,100) | 259,700) | 261,900) | 249,700) | 242,100) | 242,400) | 239,200) | |||||
| Short-term Activity Ratio | |||||||||||||||||||||
| Inventory turnover1 | 2.85 | 2.81 | 2.75 | 2.70 | 2.79 | 2.79 | 2.83 | 2.90 | 2.74 | 2.90 | 2.96 | 2.91 | 3.00 | 3.10 | 3.05 | 3.07 | |||||
| Benchmarks | |||||||||||||||||||||
| Inventory Turnover, Competitors2 | |||||||||||||||||||||
| AbbVie Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Amgen Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Bristol-Myers Squibb Co. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Danaher Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Eli Lilly & Co. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Gilead Sciences Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Johnson & Johnson | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Merck & Co. Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Pfizer Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Thermo Fisher Scientific Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31), 10-K (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-Q (reporting date: 2011-03-31).
1 Q4 2014 Calculation
Inventory turnover
= (Cost of sales, excludes amortization of intangible assetsQ4 2014
+ Cost of sales, excludes amortization of intangible assetsQ3 2014
+ Cost of sales, excludes amortization of intangible assetsQ2 2014
+ Cost of sales, excludes amortization of intangible assetsQ1 2014)
÷ Inventories
= (209,100 + 206,600 + 222,200 + 204,500)
÷ 296,000 = 2.85
2 Click competitor name to see calculations.
The financial data reveals several notable trends regarding cost of sales, inventories, and inventory turnover over the analyzed periods.
- Cost of Sales
- The cost of sales, excluding amortization of intangible assets, exhibited fluctuations throughout the periods. Initially, it increased from approximately 183.3 million to around 195.8 million in the early quarters of 2011 and 2012. Following this, the values showed some variability but generally maintained an upward trajectory, reaching a peak around late 2013 with values exceeding 204 million. Subsequently, the cost remained relatively elevated in 2014, with slight decreases and increases quarter to quarter but staying above the initial 2011 levels. This pattern suggests a consistent increase in production or acquisition expenses over the four-year span.
- Inventories
- Inventories grew steadily during the examined timeframe. Starting at approximately 239.2 million in early 2011, inventory levels demonstrated a gradual increase, reaching nearly 283 million by the end of 2012. The upward trend persisted through 2013 and 2014, peaking close to 299.9 million in mid-2014 before a minor decrease towards the end of 2014. This steady rise indicates an accumulation of stock, which could reflect either increased demand anticipation, changes in supply chain processes, or shifts in production strategies.
- Inventory Turnover
- Inventory turnover ratios display a subtle declining trend over the reviewed quarters. Beginning with a turnover slightly above 3.0 in early 2011, the ratio decreased gradually to about 2.7 by early 2014. Slight fluctuations occurred quarterly, but the general direction was downward, pointing to slower inventory movement relative to sales. The reduced turnover rate may imply increasing inventory holding periods, possibly due to stock buildup or variations in sales velocity.
In summary, the data indicates growing costs of sales and inventory levels over the four-year span, accompanied by a diminishing inventory turnover ratio. This combination suggests that while production or purchase expenses and inventory volumes are rising, the efficiency in converting inventory into sales is decreasing.
Receivables Turnover
Allergan Inc., receivables turnover calculation (quarterly data)
| Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | Mar 31, 2011 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||
| Product net sales | 1,889,000) | 1,790,700) | 1,827,300) | 1,619,100) | 1,659,600) | 1,528,400) | 1,577,000) | 1,432,500) | 1,484,600) | 1,391,100) | 1,467,400) | 1,365,700) | 1,382,800) | 1,311,100) | 1,400,400) | 1,252,800) | |||||
| Trade receivables, net | 914,500) | 967,400) | 1,055,000) | 990,400) | 883,300) | 908,200) | 917,200) | 887,900) | 764,200) | 872,600) | 867,900) | 855,700) | 730,600) | 710,900) | 744,200) | 671,600) | |||||
| Short-term Activity Ratio | |||||||||||||||||||||
| Receivables turnover1 | 7.79 | 7.13 | 6.29 | 6.45 | 7.02 | 6.63 | 6.42 | 6.50 | 7.47 | 6.43 | 6.37 | 6.38 | 7.32 | 7.39 | 6.90 | 7.40 | |||||
| Benchmarks | |||||||||||||||||||||
| Receivables Turnover, Competitors2 | |||||||||||||||||||||
| AbbVie Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Amgen Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Danaher Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Eli Lilly & Co. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Gilead Sciences Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Johnson & Johnson | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Merck & Co. Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Pfizer Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Thermo Fisher Scientific Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31), 10-K (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-Q (reporting date: 2011-03-31).
1 Q4 2014 Calculation
Receivables turnover
= (Product net salesQ4 2014
+ Product net salesQ3 2014
+ Product net salesQ2 2014
+ Product net salesQ1 2014)
÷ Trade receivables, net
= (1,889,000 + 1,790,700 + 1,827,300 + 1,619,100)
÷ 914,500 = 7.79
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals notable trends across product net sales, trade receivables, and receivables turnover for the periods examined.
- Product Net Sales
- Product net sales demonstrate a general upward trajectory over the span of the data. Starting at approximately 1.25 billion USD in the first quarter of 2011, sales exhibit fluctuations but consistently trend higher, culminating in nearly 1.89 billion USD by the end of 2014. Seasonal or quarterly variations are evident; however, each year concludes with higher sales compared to the corresponding quarter in the previous year. The most significant increases appear in the latter quarters of 2013 and 2014, suggesting strengthening demand or successful sales initiatives during these periods.
- Trade Receivables, Net
- Trade receivables show a parallel upward pattern in line with product sales growth, beginning around 672 million USD at the Q1 2011 mark and rising to approximately 914 million USD by Q4 2014. The increase is not entirely smooth, with some quarters, particularly Q4 2012 and Q3 2014, reflecting declines or stabilization in receivables. The peak in receivables occurs in mid-2014, indicating a possible extension of credit terms or slower collections during that specific period, which could warrant further investigation. Overall, the growth of receivables supports the expanding sales base.
- Receivables Turnover Ratio
- The receivables turnover ratio exhibits variability throughout the periods analyzed, moving between approximately 6.29 and 7.79. Notably, there is a dip in turnover during 2012, with values below 6.5 for half the year, which may indicate slower collections or more lenient credit policies that year. Following this, turnover improves in the subsequent years, reaching a peak in Q4 2014 at 7.79, the highest in the dataset. This improvement suggests enhanced efficiency in managing and collecting receivables contemporaneous with rising sales and balances. Maintaining a high turnover ratio while increasing sales is indicative of effective credit and collection practices.
In summary, the data portrays a company experiencing steady sales growth accompanied by increasing trade receivables. The receivables turnover ratio suggests fluctuating but ultimately improving efficiency in collections, particularly in later periods. These trends collectively point toward a growing business with generally effective receivables management, though occasional periods of slower collections or higher receivables warrant attention to maintain optimal cash flow.
Payables Turnover
Allergan Inc., payables turnover calculation (quarterly data)
| Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | Mar 31, 2011 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||
| Cost of sales, excludes amortization of intangible assets | 209,100) | 206,600) | 222,200) | 204,500) | 204,600) | 192,200) | 199,100) | 199,900) | 189,200) | 188,800) | 201,700) | 195,800) | 182,000) | 188,100) | 195,300) | 183,300) | |||||
| Accounts payable | 287,400) | 283,200) | 300,000) | 316,500) | 283,200) | 267,800) | 237,000) | 218,500) | 233,100) | 210,600) | 200,600) | 203,000) | 200,400) | 190,100) | 200,300) | 200,500) | |||||
| Short-term Activity Ratio | |||||||||||||||||||||
| Payables turnover1 | 2.93 | 2.96 | 2.75 | 2.53 | 2.81 | 2.91 | 3.28 | 3.57 | 3.33 | 3.65 | 3.83 | 3.75 | 3.74 | 3.94 | 3.69 | 3.67 | |||||
| Benchmarks | |||||||||||||||||||||
| Payables Turnover, Competitors2 | |||||||||||||||||||||
| Amgen Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Bristol-Myers Squibb Co. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Danaher Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Eli Lilly & Co. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Gilead Sciences Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Johnson & Johnson | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Merck & Co. Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Pfizer Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Thermo Fisher Scientific Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31), 10-K (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-Q (reporting date: 2011-03-31).
1 Q4 2014 Calculation
Payables turnover
= (Cost of sales, excludes amortization of intangible assetsQ4 2014
+ Cost of sales, excludes amortization of intangible assetsQ3 2014
+ Cost of sales, excludes amortization of intangible assetsQ2 2014
+ Cost of sales, excludes amortization of intangible assetsQ1 2014)
÷ Accounts payable
= (209,100 + 206,600 + 222,200 + 204,500)
÷ 287,400 = 2.93
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals several notable trends in the cost of sales, accounts payable, and payables turnover for the period spanning from March 2011 through December 2014.
- Cost of Sales (Excluding Amortization of Intangible Assets)
- The cost of sales exhibits fluctuations over the observed quarters, with values generally ranging between approximately 182 million USD and 222 million USD. Starting at around 183 million USD in the first quarter of 2011, this figure rises gradually, peaking at around 222 million USD in the second quarter of 2014. There are periodic decreases and increases within individual years, indicating some seasonality or operational variations. Notably, the cost of sales rises toward the last quarters of most years, suggesting possibly increased production or procurement activity during those periods.
- Accounts Payable
- Accounts payable show a gradual increase across the timeframe, beginning near 200 million USD in early 2011 and reaching over 316 million USD by the first quarter of 2014. Following this peak, there is a decline toward the end of 2014, settling around 287 million USD. The steady upward trajectory for the majority of the period indicates an accumulation of outstanding obligations, which might be associated with increased purchasing or extended payment terms. The peak and subsequent decrease toward late 2014 could reflect a strategic pay-down of liabilities or changes in supplier relationships.
- Payables Turnover
- The payables turnover ratio starts at a relatively higher level of approximately 3.67 in early 2011, with some fluctuation observed up to the end of 2011. From 2012 onward, the ratio generally declines, reaching a low near 2.53 in the first quarter of 2014 before slightly rebounding to approximately 2.93 by the end of 2014. This downward trend in payables turnover suggests that the company is taking longer to settle its payable obligations on average, which could be indicative of either stretched payment terms with suppliers or changes in payment policies aiming to manage cash flows more conservatively.
In summary, the data portray a scenario where the company’s cost of sales and accounts payable largely increase over the period, with accounts payable exhibiting a more pronounced rise. Concurrently, the decreasing payables turnover ratio points to an elongation of the payment cycle to creditors. Together, these patterns may imply strategic adjustments in working capital management or responses to operational demands and supplier negotiations.
Working Capital Turnover
Allergan Inc., working capital turnover calculation (quarterly data)
| Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | Mar 31, 2011 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||
| Current assets | 6,871,200) | 6,103,800) | 5,702,900) | 5,458,700) | 5,319,700) | 4,932,400) | 4,482,200) | 4,069,500) | 4,458,800) | 4,535,800) | 4,259,600) | 4,238,600) | 4,048,300) | 3,682,600) | 3,592,600) | 4,084,400) | |||||
| Less: Current liabilities | 1,557,300) | 1,567,000) | 1,406,400) | 1,248,100) | 1,244,300) | 1,199,700) | 1,097,900) | 1,061,500) | 1,095,200) | 1,054,900) | 963,800) | 968,800) | 955,000) | 923,700) | 921,500) | 1,475,600) | |||||
| Working capital | 5,313,900) | 4,536,800) | 4,296,500) | 4,210,600) | 4,075,400) | 3,732,700) | 3,384,300) | 3,008,000) | 3,363,600) | 3,480,900) | 3,295,800) | 3,269,800) | 3,093,300) | 2,758,900) | 2,671,100) | 2,608,800) | |||||
| Product net sales | 1,889,000) | 1,790,700) | 1,827,300) | 1,619,100) | 1,659,600) | 1,528,400) | 1,577,000) | 1,432,500) | 1,484,600) | 1,391,100) | 1,467,400) | 1,365,700) | 1,382,800) | 1,311,100) | 1,400,400) | 1,252,800) | |||||
| Short-term Activity Ratio | |||||||||||||||||||||
| Working capital turnover1 | 1.34 | 1.52 | 1.54 | 1.52 | 1.52 | 1.61 | 1.74 | 1.92 | 1.70 | 1.61 | 1.68 | 1.67 | 1.73 | 1.90 | 1.92 | 1.90 | |||||
| Benchmarks | |||||||||||||||||||||
| Working Capital Turnover, Competitors2 | |||||||||||||||||||||
| AbbVie Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Amgen Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Bristol-Myers Squibb Co. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Danaher Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Eli Lilly & Co. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Gilead Sciences Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Johnson & Johnson | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Merck & Co. Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Pfizer Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Thermo Fisher Scientific Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31), 10-K (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-Q (reporting date: 2011-03-31).
1 Q4 2014 Calculation
Working capital turnover
= (Product net salesQ4 2014
+ Product net salesQ3 2014
+ Product net salesQ2 2014
+ Product net salesQ1 2014)
÷ Working capital
= (1,889,000 + 1,790,700 + 1,827,300 + 1,619,100)
÷ 5,313,900 = 1.34
2 Click competitor name to see calculations.
- Working Capital
- The working capital exhibits a generally increasing trend from March 2011 through December 2014. Starting at approximately $2.61 billion, it peaks intermittently across various quarters, most notably rising from around $3.0 billion in early 2013 to over $5.3 billion by the end of 2014. Despite minor fluctuations, the overall trajectory indicates substantial growth in available short-term assets over this period.
- Product Net Sales
- Product net sales demonstrate steady growth throughout the observed timeframe. Beginning at approximately $1.25 billion in March 2011, sales increase consistently each year, reaching close to $1.89 billion by December 2014. Seasonal variations are visible, with second and fourth quarters typically showing higher sales compared to others, but the underlying pattern reflects sustained revenue expansion.
- Working Capital Turnover Ratio
- The working capital turnover ratio shows a declining trend over the period analyzed. Initially around 1.9 in early 2011, the ratio fluctuates but generally decreases to about 1.34 by the end of 2014. This decline suggests that while working capital has increased significantly, the rate at which the company generates product net sales relative to working capital has slowed, indicating potentially less efficient utilization of working capital in later years.
- Summary of Observed Trends
- The data indicates that the company has increased its working capital and product net sales substantially over nearly four years. However, the diminishing working capital turnover ratio suggests that the efficiency of converting working capital into sales is decreasing. This trend may warrant further investigation to assess whether the increase in working capital aligns with operational needs or if it reflects an accumulation of excess current assets. The growth in net sales remains positive, though the pace of sales growth relative to working capital investment seems to decline in the latter part of the period.
Average Inventory Processing Period
Allergan Inc., average inventory processing period calculation (quarterly data)
| Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | Mar 31, 2011 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||
| Inventory turnover | 2.85 | 2.81 | 2.75 | 2.70 | 2.79 | 2.79 | 2.83 | 2.90 | 2.74 | 2.90 | 2.96 | 2.91 | 3.00 | 3.10 | 3.05 | 3.07 | |||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||
| Average inventory processing period1 | 128 | 130 | 133 | 135 | 131 | 131 | 129 | 126 | 133 | 126 | 123 | 126 | 122 | 118 | 120 | 119 | |||||
| Benchmarks (no. days) | |||||||||||||||||||||
| Average Inventory Processing Period, Competitors2 | |||||||||||||||||||||
| AbbVie Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Amgen Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Bristol-Myers Squibb Co. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Danaher Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Eli Lilly & Co. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Gilead Sciences Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Johnson & Johnson | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Merck & Co. Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Pfizer Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Thermo Fisher Scientific Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31), 10-K (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-Q (reporting date: 2011-03-31).
1 Q4 2014 Calculation
Average inventory processing period = 365 ÷ Inventory turnover
= 365 ÷ 2.85 = 128
2 Click competitor name to see calculations.
- Inventory Turnover
- The inventory turnover ratio exhibits a gradual decline over the observed periods from March 2011 through December 2014. Starting at 3.07 in the first quarter of 2011, it experiences small fluctuations but generally trends downward to a low of 2.74 by the end of 2012. Subsequently, there is a slight recovery, with the ratio increasing to 2.85 by the last quarter of 2014. This pattern suggests a moderate reduction in the frequency with which inventory is sold and replaced during this timeframe, followed by a partial improvement toward the end.
- Average Inventory Processing Period
- The average inventory processing period, measured in days, reveals an inverse relationship to the inventory turnover ratio. Beginning at 119 days in March 2011, the period lengthens steadily, peaking at 135 days in the first quarter of 2014. Post peak, there is a slight decrease, bringing the processing period down to 128 days by December 2014. This trend indicates that inventory remained in stock for longer durations over time, which aligns with the lower turnover rates observed, implying increased holding times before sale or use.
- Overall Insights
- The analyzed indicators collectively suggest that the company experienced a period of slower inventory movement from 2011 through early 2014, likely reflecting changes in sales velocity, supply chain dynamics, or inventory management strategies. The modest reversal in late 2014 could point to operational adjustments aimed at improving inventory efficiency. Monitoring these metrics is crucial for optimizing working capital and improving operational performance.
Average Receivable Collection Period
Allergan Inc., average receivable collection period calculation (quarterly data)
| Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | Mar 31, 2011 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||
| Receivables turnover | 7.79 | 7.13 | 6.29 | 6.45 | 7.02 | 6.63 | 6.42 | 6.50 | 7.47 | 6.43 | 6.37 | 6.38 | 7.32 | 7.39 | 6.90 | 7.40 | |||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||
| Average receivable collection period1 | 47 | 51 | 58 | 57 | 52 | 55 | 57 | 56 | 49 | 57 | 57 | 57 | 50 | 49 | 53 | 49 | |||||
| Benchmarks (no. days) | |||||||||||||||||||||
| Average Receivable Collection Period, Competitors2 | |||||||||||||||||||||
| AbbVie Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Amgen Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Danaher Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Eli Lilly & Co. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Gilead Sciences Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Johnson & Johnson | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Merck & Co. Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Pfizer Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Thermo Fisher Scientific Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31), 10-K (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-Q (reporting date: 2011-03-31).
1 Q4 2014 Calculation
Average receivable collection period = 365 ÷ Receivables turnover
= 365 ÷ 7.79 = 47
2 Click competitor name to see calculations.
The receivables turnover ratio exhibits moderate fluctuations across the observed periods. Initially, the ratio decreases from 7.4 in March 2011 to around 6.37–6.43 during the mid-2012 quarters, indicating a reduction in the frequency of collecting receivables. This decrease suggests a slight weakening in collection efficiency or potentially extended credit terms during this time frame. However, by the end of 2012, the turnover ratio improves markedly to 7.47, reflecting an enhanced collection process.
Following this improvement, the turnover ratio again experiences slight decreases and increases, remaining generally within the range of 6.29 to 7.79 through 2013 and 2014. The highest turnover ratio of 7.79 is recorded in the final quarter of 2014, showing the strongest collection efficiency in the period reviewed.
In parallel, the average receivable collection period, measured in days, demonstrates a pattern inversely related to the receivables turnover ratio. Early in 2011, the collection period ranges from 49 to 53 days. This period extends to approximately 57 days through mid-2012, indicating customers take longer to settle invoices during this phase, consistent with the lower turnover ratios observed.
By the end of 2012, the average collection days decrease to 49, corresponding with the rise in turnover ratio. Throughout 2013, collection days fluctuate between 52 and 57 days, reflecting moderate variability in collection speed. Toward 2014, there is a visible improvement with the collection period dropping from 58 days in mid-2014 to 47 days by the end of the year, which aligns with the peak in receivables turnover.
Overall, the data indicates periods of both weakened and strengthened receivables management. The mid-2012 period shows slower collections and lower turnover ratios, while late 2012 through 2014 reflect gradual improvements in collection efficiency, culminating in the most favorable results at the end of 2014. This trend suggests an organizational focus on optimizing receivables recovery processes and credit management strategies during the latter part of the period under review.
Operating Cycle
Allergan Inc., operating cycle calculation (quarterly data)
No. days
| Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | Mar 31, 2011 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||
| Average inventory processing period | 128 | 130 | 133 | 135 | 131 | 131 | 129 | 126 | 133 | 126 | 123 | 126 | 122 | 118 | 120 | 119 | |||||
| Average receivable collection period | 47 | 51 | 58 | 57 | 52 | 55 | 57 | 56 | 49 | 57 | 57 | 57 | 50 | 49 | 53 | 49 | |||||
| Short-term Activity Ratio | |||||||||||||||||||||
| Operating cycle1 | 175 | 181 | 191 | 192 | 183 | 186 | 186 | 182 | 182 | 183 | 180 | 183 | 172 | 167 | 173 | 168 | |||||
| Benchmarks | |||||||||||||||||||||
| Operating Cycle, Competitors2 | |||||||||||||||||||||
| AbbVie Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Amgen Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Danaher Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Eli Lilly & Co. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Gilead Sciences Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Johnson & Johnson | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Merck & Co. Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Pfizer Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Thermo Fisher Scientific Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31), 10-K (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-Q (reporting date: 2011-03-31).
1 Q4 2014 Calculation
Operating cycle = Average inventory processing period + Average receivable collection period
= 128 + 47 = 175
2 Click competitor name to see calculations.
- Inventory Processing Period
-
The average inventory processing period exhibits a generally increasing trend over the analyzed quarters. Starting at 119 days in the first quarter of 2011, it shows minor fluctuations but gradually rises to a peak of 135 days by the first quarter of 2014. Following this peak, it slightly decreases to 128 days in the last quarter of 2014. This suggests that the company experienced lengthening inventory holding times over the period, potentially indicating slower inventory turnover or changes in inventory management practices.
- Receivable Collection Period
-
The average receivable collection period fluctuates moderately throughout the timeline. Beginning at 49 days in the first quarter of 2011, it increases and stabilizes around 57 days during much of 2012 and parts of 2013 and 2014, with some periodic dips to the low 50s and even down to 47 days by the last quarter of 2014. Despite these fluctuations, the general pattern indicates a lengthening collection period compared to the early quarters, which may reflect extended credit terms or slower customer payments in certain periods.
- Operating Cycle
-
The operating cycle, representing the total time to convert inventory and receivables into cash, follows a consistent upward trend from 168 days in the first quarter of 2011 to a high of 192 days around the first quarter of 2014. Subsequently, it slightly retraces to 175 days by the last quarter of 2014. This rising trajectory aligns with the increases observed in both inventory processing and receivable collection periods, indicating a lengthening working capital cycle. The extended operating cycle may suggest increased capital tied up in operations, which could impact liquidity and cash flow management.
Average Payables Payment Period
Allergan Inc., average payables payment period calculation (quarterly data)
| Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | Mar 31, 2011 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||
| Payables turnover | 2.93 | 2.96 | 2.75 | 2.53 | 2.81 | 2.91 | 3.28 | 3.57 | 3.33 | 3.65 | 3.83 | 3.75 | 3.74 | 3.94 | 3.69 | 3.67 | |||||
| Short-term Activity Ratio (no. days) | |||||||||||||||||||||
| Average payables payment period1 | 125 | 123 | 133 | 144 | 130 | 125 | 111 | 102 | 110 | 100 | 95 | 97 | 98 | 93 | 99 | 100 | |||||
| Benchmarks (no. days) | |||||||||||||||||||||
| Average Payables Payment Period, Competitors2 | |||||||||||||||||||||
| Amgen Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Bristol-Myers Squibb Co. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Danaher Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Eli Lilly & Co. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Gilead Sciences Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Johnson & Johnson | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Merck & Co. Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Pfizer Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Thermo Fisher Scientific Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31), 10-K (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-Q (reporting date: 2011-03-31).
1 Q4 2014 Calculation
Average payables payment period = 365 ÷ Payables turnover
= 365 ÷ 2.93 = 125
2 Click competitor name to see calculations.
- Payables Turnover Ratio
- The payables turnover ratio exhibited a declining trend over the analyzed quarters spanning from March 31, 2011, to December 31, 2014. Starting at 3.67 in the first quarter of 2011, the ratio increased slightly during the year, peaking near 3.94 in September 2011. However, from early 2012 onward, the ratio gradually decreased, with notable declines in 2013 and stabilizing around the 2.9 to 3.0 range by the end of 2014. This decrease suggests a slowing in the frequency of payables payments relative to purchases or expenses over the period.
- Average Payables Payment Period (Number of Days)
- The average payables payment period showed an inverse pattern to the payables turnover ratio, indicating longer payment periods over time. Initially, in early 2011, the payment period hovered around 100 days, reaching a low of 93 days in September 2011. From 2012 onward, the trend shifted upward, increasing to above 110 days in mid-2013, and reaching values as high as 144 days in the first quarter of 2014. Towards the end of 2014, the period slightly decreased but remained notably higher than in earlier years.
- Overall Insights
- The observed trends indicate a move toward extended payment terms with suppliers over the course of the four-year period. The decrease in payables turnover ratio coupled with the increasing days payable outstanding reflects an elongated cash conversion cycle in terms of payables management. This trend could imply strategic efforts to manage cash flow by slowing disbursements or potentially longer negotiation periods with vendors. It may also suggest changes in supplier relationships or company policies regarding payment timing.
Cash Conversion Cycle
Allergan Inc., cash conversion cycle calculation (quarterly data)
No. days
| Dec 31, 2014 | Sep 30, 2014 | Jun 30, 2014 | Mar 31, 2014 | Dec 31, 2013 | Sep 30, 2013 | Jun 30, 2013 | Mar 31, 2013 | Dec 31, 2012 | Sep 30, 2012 | Jun 30, 2012 | Mar 31, 2012 | Dec 31, 2011 | Sep 30, 2011 | Jun 30, 2011 | Mar 31, 2011 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data | |||||||||||||||||||||
| Average inventory processing period | 128 | 130 | 133 | 135 | 131 | 131 | 129 | 126 | 133 | 126 | 123 | 126 | 122 | 118 | 120 | 119 | |||||
| Average receivable collection period | 47 | 51 | 58 | 57 | 52 | 55 | 57 | 56 | 49 | 57 | 57 | 57 | 50 | 49 | 53 | 49 | |||||
| Average payables payment period | 125 | 123 | 133 | 144 | 130 | 125 | 111 | 102 | 110 | 100 | 95 | 97 | 98 | 93 | 99 | 100 | |||||
| Short-term Activity Ratio | |||||||||||||||||||||
| Cash conversion cycle1 | 50 | 58 | 58 | 48 | 53 | 61 | 75 | 80 | 72 | 83 | 85 | 86 | 74 | 74 | 74 | 68 | |||||
| Benchmarks | |||||||||||||||||||||
| Cash Conversion Cycle, Competitors2 | |||||||||||||||||||||
| Amgen Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Danaher Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Eli Lilly & Co. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Gilead Sciences Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Johnson & Johnson | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Merck & Co. Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Pfizer Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Regeneron Pharmaceuticals Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Thermo Fisher Scientific Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
| Vertex Pharmaceuticals Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||
Based on: 10-K (reporting date: 2014-12-31), 10-Q (reporting date: 2014-09-30), 10-Q (reporting date: 2014-06-30), 10-Q (reporting date: 2014-03-31), 10-K (reporting date: 2013-12-31), 10-Q (reporting date: 2013-09-30), 10-Q (reporting date: 2013-06-30), 10-Q (reporting date: 2013-03-31), 10-K (reporting date: 2012-12-31), 10-Q (reporting date: 2012-09-30), 10-Q (reporting date: 2012-06-30), 10-Q (reporting date: 2012-03-31), 10-K (reporting date: 2011-12-31), 10-Q (reporting date: 2011-09-30), 10-Q (reporting date: 2011-06-30), 10-Q (reporting date: 2011-03-31).
1 Q4 2014 Calculation
Cash conversion cycle = Average inventory processing period + Average receivable collection period – Average payables payment period
= 128 + 47 – 125 = 50
2 Click competitor name to see calculations.
- Inventory Processing Period
- The average inventory processing period exhibited a generally increasing trend over the observed timeframe. Starting at 119 days in the first quarter of 2011, this metric rose gradually to a peak of 135 days by the first quarter of 2014, before declining slightly to 128 days in the last quarter of 2014. This pattern suggests a lengthening duration of inventory turnover, indicating potential changes in inventory management or product demand dynamics.
- Receivable Collection Period
- The average receivable collection period showed notable fluctuations within the period under review. Initially around 49-53 days in 2011, it increased to highs of 57-58 days during mid-2012 and mid-2014, with a brief decrease to 47 days in the last quarter of 2014. This variability signifies fluctuating efficiency in collecting receivables, which might impact short-term cash inflows.
- Payables Payment Period
- The average payables payment period trended upward over the years. Starting near 100 days in early 2011, it rose significantly to reach 144 days by the first quarter of 2014, with minor declines afterward but remaining elevated around 125 days at year-end 2014. This increase indicates an extended duration in settling payables, which may reflect negotiating longer payment terms or cash management strategies to optimize liquidity.
- Cash Conversion Cycle
- The cash conversion cycle experienced a general decrease from an initial range of 68-74 days in 2011 to a low of 48 days in the first quarter of 2014, before slightly increasing and stabilizing around 50-58 days towards the end of 2014. This reduction implies an improvement in the efficiency of converting investments in inventory and receivables into cash, possibly as a result of operational improvements or changes in working capital management practices.