AmerisourceBergen Corp. (NYSE:ABC)

Inventory Turnover

The inventory turnover ratio reveals an overall upward trend from late 2016 through mid-2019, increasing from around 12.97 to approximately 16.31. This indicates improved efficiency in managing inventory during that period. However, from late 2019 onward, the turnover ratio exhibits a slight decline, stabilizing in the range of approximately 13.91 to 14.58 by mid-2023, suggesting a moderation in inventory management pace in recent years.

Receivables Turnover

Receivables turnover shows some volatility with a peak near 15.35 in early 2017 and a general downtrend afterward, reaching values close to 12.23 by mid-2023. This downward shift implies a slower collection of receivables, potentially indicating extended credit terms or challenges in collections over time.

Payables Turnover

The payables turnover ratio remains relatively stable across the years, fluctuating moderately between approximately 5.43 and 6.22. This stability suggests consistent management of payables without significant acceleration or delays in payment cycles.

Working Capital Turnover

Data on working capital turnover is largely unavailable, precluding a reliable trend analysis or conclusions about changes in operational efficiency related to working capital over the observed periods.

Average Inventory Processing Period

The average inventory processing period decreased from 28–30 days in 2017 to around 22–25 days by mid-2019, reflecting faster inventory movement. Since then, the processing period stabilized near 25–28 days, indicating consistent inventory turnover times subsequently, without significant improvement or deterioration.

Average Receivable Collection Period

This period fluctuates with a slight increasing tendency from roughly 24 days in early 2017 up to about 30 days by mid-2023. The lengthening in collection times corresponds with the declining receivables turnover ratio, pointing towards slower collections or extended credit periods in recent years.

Operating Cycle

The operating cycle duration remains relatively steady around 48–56 days for most periods, with a noticeable increase to 60 days in early 2021 followed by a gradual return to near 54–55 days by 2023. The temporary lengthening indicates some short-term impacts on the overall cycle, possibly due to external factors influencing inventory and receivable management simultaneously.

Average Payables Payment Period

The average payables payment period shows minor fluctuations between 59 and 67 days throughout the timeline. The peak periods near 67 days suggest occasional stretching of payment terms, but generally, the company maintains a consistent payables turnover strategy without significant delays.

Cash Conversion Cycle

The cash conversion cycle remains negative throughout the observed periods, fluctuating between approximately -6 and -12 days. This indicates that the company consistently receives cash from operations before settling its payables, reflecting a positive liquidity management practice that supports operational cash flow. The cycle shows slight variability but no clear long-term trend toward either extension or shortening.

The analysis of the quarterly financial data reveals several notable trends in the cost of goods sold, inventories, and inventory turnover ratios over the observed periods.

Cost of Goods Sold (COGS)

The cost of goods sold shows a general upward trend throughout the periods. Beginning at approximately 37.1 billion US dollars at the end of 2016, it exhibits fluctuations but an overall increase, reaching about 64.7 billion by mid-2023. Notable peaks occur towards the later periods, particularly from late 2020 onwards, indicating rising costs associated with the goods sold by the company. This gradual rise could reflect increased sales volumes, inflationary pressures on procurement costs, or shifts in product mix.

Inventories

The inventory levels have fluctuated but demonstrate a moderate upward trajectory over time. Starting at roughly 11.4 billion US dollars at the end of 2016, inventories experienced declines during certain quarters, such as the drops observed around 2018 and early 2019, but subsequently increased steadily from late 2019 through to 2023, culminating around 16.9 billion. This increase in inventory may suggest preparation for increased sales demand or could reflect slower inventory turnover in specific periods.

Inventory Turnover Ratio

The inventory turnover ratio, calculated as the number of times the inventory is sold and replaced over a period, shows variability but overall maintains a relatively high ratio. From the available data starting in late 2017, the ratio oscillates between approximately 12.0 and 16.3. Higher turnover rates are noted around 2019 and 2020, with peaks close to 16.3, indicating more efficient inventory management or increased sales velocity in those periods. Post-2020, the ratio declines somewhat but remains above 13.0, suggesting sustained but slightly reduced efficiency in inventory utilization relative to earlier peaks.

The financial data reveals several notable trends and insights over the analyzed periods. Revenue exhibits a general upward trend, increasing from approximately 38.2 billion USD in December 2016 to around 66.9 billion USD by June 2023. This growth is not entirely linear; there are periods of both decline and acceleration, with a noticeable boost beginning around the fourth quarter of 2019, continuing through 2021, where revenue peaks consistently above 50 billion USD, reaching its highest values towards the end of the period.

Accounts receivable, less allowances for returns and credit losses, also demonstrate an overall increase. Starting from approximately 9.7 billion USD in December 2016, the figure rises to nearly 20.8 billion USD by June 2023. This increase corresponds with the revenue growth but appears to be somewhat more volatile, showing fluctuations quarter to quarter. The receivables balance rises sharply from early 2020, with significant increases continuing into 2023, suggesting that the company may have extended more credit to customers or experienced delays in collections during this time frame.

The receivables turnover ratio data is somewhat limited, with values only available from June 2017 onward. Initially, this ratio fluctuates between approximately 13.9 and 15.4, indicating relatively stable efficiency in collecting receivables. However, from 2019 onwards, there is a declining trend, with the ratio falling from around 14.5 to approximately 12.2 by June 2023. This decrease in turnover ratio suggests a slowdown in the collection process or increased credit terms extended to customers, aligning with the increasing accounts receivable balance. The decline could be reflective of operational changes or external factors impacting collection efficiency.

In sum, the company's revenue growth over the period is accompanied by a disproportionate increase in accounts receivable, coupled with a declining receivables turnover ratio. These indicators imply that while the company is successfully expanding its sales, it may be facing challenges in managing its receivables efficiently, possibly extending credit more liberally or experiencing collection delays, which could impact cash flows and working capital management.

Revenue Trend

Consistent overall growth from 38.2 billion USD to 66.9 billion USD, with some fluctuations and a marked acceleration starting end of 2019.

Accounts Receivable Trend

Increasing from 9.7 billion USD to nearly 20.8 billion USD, with higher volatility and a noticeable rise from early 2020 onward.

Receivables Turnover Ratio

Initially stable around 14-15, declining gradually to approximately 12.2 by mid-2023, indicative of slower receivables collection efficiency.

Implications

The data suggests growing sales accompanied by lengthening credit terms or collection delays, which warrants attention to receivables management to maintain healthy liquidity.

The cost of goods sold (COGS) demonstrates a generally increasing trend over the period from December 31, 2016, to June 30, 2023. Starting at approximately 37.1 billion US dollars, it peaked multiple times with noticeable growth waves, reaching around 64.7 billion US dollars by the last reported quarter. There are occasional slight declines or plateaus, notably around the first half of 2020, which could be reflective of broader economic conditions or company-specific factors.

Accounts payable also shows an upward trend, rising from about 24.2 billion US dollars at the end of 2016 to around 43.8 billion US dollars by mid-2023. The growth is relatively steady, with occasional fluctuations that align broadly with the changes in COGS, indicating a consistent relationship between purchasing activities and liabilities management. Peaks and troughs in accounts payable correspond moderately with periods of increased or decreased cost of goods sold.

The payables turnover ratio, available from mid-2017 onward, generally fluctuates around a range of approximately 5.4 to 6.2 times per year. This ratio indicates how frequently the company pays off its suppliers within a given period. The ratio shows moderate variability but no strong, persistent upward or downward trend. It peaked near 6.22 in late 2020 but declined afterward, stabilizing around the mid-5.5 to 5.8 levels in the most recent quarters. This pattern suggests relative consistency in the company's payment practices to suppliers despite increases in payable amounts and cost of goods sold.

Cost of Goods Sold

Exhibits a steady increase over the analyzed timeframe with minor temporary declines, indicating growing operational scale or increased input costs.

Accounts Payable

Also increases steadily, reflecting the higher purchasing volume or extended credit terms, yet exhibits some short-term fluctuations possibly related to cash management strategies.

Payables Turnover Ratio

Maintains a relatively stable pattern with slight variations, suggesting consistent payment behavior to suppliers despite the growth in monetary values of payables and cost of goods sold.

Overall, the financial data reveal growth in purchasing and associated liabilities while maintaining relatively stable operational payment efficiency. The company appears to manage its accounts payable consistently relative to its cost of goods sold throughout the analyzed quarters.

The data exhibits several notable trends in key financial metrics over the period analyzed.

Working Capital

The working capital values are predominantly negative from the start until late 2020, indicating that current liabilities generally exceed current assets during this timeframe. The negative working capital remains substantial, fluctuating between approximately -2.5 billion and -1.4 billion USD through 2016 to 2020. However, a significant shift occurs starting in December 2020, where working capital turns positive to 2.47 billion USD in the first quarter of 2021, representing a marked improvement in liquidity. This positive trend is short-lived, as working capital returns to negative values afterward and continues to decline sharply by 2023, reaching nearly -5.8 billion USD by the middle of 2023. This progression indicates increasing operational funding needs or changes in current liabilities relative to current assets in recent years.

Revenue

Revenue shows an overall upward trend throughout the entire period. Beginning around 38 billion USD in late 2016, revenue gradually increases with some quarter-to-quarter fluctuations. The upward trajectory continues steadily, with revenue surpassing 52 billion USD by the end of 2020 and reaching approximately 67 billion USD by mid-2023. This indicates consistent growth in top-line sales over the years despite some short-term variations.

Working Capital Turnover

Working capital turnover is reported only once in the data as 79.38, with no further values provided for comparison. The single observed value suggests high efficiency in using working capital to generate revenues during the respective period, but insufficient data limits analysis of trends or changes over time.

In summary, the company has experienced steady revenue growth from 2016 through mid-2023. However, the working capital profile suggests periodic liquidity pressure, with negative working capital dominating most periods except a brief positive occurrence around early 2021. The sharp deterioration in working capital in recent years alongside rising revenues may indicate changes in operational strategy, payment terms, or increased current liabilities that could warrant further investigation. The limited data on working capital turnover prevents a comprehensive assessment of short-term asset utilization efficiency.

Inventory Turnover

The inventory turnover ratio demonstrates an overall upward trend from 2016 to mid-2019, increasing from approximately 12.97 to a peak around 16.31. This indicates enhanced efficiency in managing inventory during this period. However, starting in late 2019 and through 2021, this ratio shows some volatility with a general decline to levels near 13.11 by late 2021. Following this decline, the ratio experiences a modest recovery towards 14.58 by mid-2023. The fluctuations suggest periods of both improved and reduced inventory management efficiency, with recent years showing stabilization at a somewhat lower level compared to the peak.

Average Inventory Processing Period

The average inventory processing period, expressed in days, displays an inverse relationship with inventory turnover as expected. Between 2016 and mid-2019, the number of days decreases steadily from about 28 days to a low of 22 days, indicative of faster inventory processing and turnover. From late 2019 onward, the period fluctuates between 24 and 28 days without a clear sustained trend, reflecting variability in how quickly inventory is processed. Notably, the period slightly increases from 22 days in mid-2019 to a range closer to 25-28 days in subsequent years, suggesting some easing in inventory processing speed.

Summary of Trend and Insight

The data reveals that inventory management was becoming increasingly efficient up to mid-2019, as evidenced by rising turnover ratios and decreasing processing periods. The subsequent period shows some deterioration or adjustment in inventory dynamics, with turnover ratios dipping and processing periods lengthening modestly. This may highlight changes in operational strategies, market conditions, or supply chain factors impacting inventory flow. More recently, the metrics suggest a period of relative stability, with inventory turnover and processing periods stabilizing around mid-range values compared to the earlier peak efficiency.

The financial ratios related to receivables management exhibit discernible trends over the analyzed periods. The receivables turnover ratio, which reflects the efficiency in collecting receivables, generally shows a declining pattern from the earlier periods to the most recent ones. Initially, values are around the mid-teens, peaking near 15.35 in early 2017, then experiencing fluctuations but with an overall downward trajectory, reaching approximately 12.23 by mid-2023. This suggests a gradual reduction in the frequency of receivables collection over time.

Correspondingly, the average receivable collection period, which indicates the average number of days required to collect receivables, displays a trend complementary to the turnover ratio. Starting at about 25 days in late 2016, the period remains relatively stable near this value through 2019. Post this period, variability increases with occasional rises to nearly 30 days, particularly from 2021 onward. This increase in days signals a lengthening in the time taken to collect receivables, consistent with the observed decrease in turnover rate.

Receivables Turnover

Initially robust with peaks above 15 in early 2017, the ratio shows a steady decline towards values around 12 by mid-2023, indicating slower collections.

Average Receivable Collection Period

Maintained a relatively stable average near 25 days until 2019, after which it extended to approximately 29-30 days in recent quarters, suggesting longer collection times.

Overall, these patterns signify a modest deterioration in receivables management efficiency over the period. The company appears to be experiencing slower conversion of receivables into cash, potentially affecting liquidity. Continuous monitoring and potential strategic adjustments could be warranted to address this trend.

The analysis of the quarterly financial time series reveals several key trends in the company's inventory, receivable, and operating cycle metrics over the period from late 2016 through mid-2023.

Average Inventory Processing Period

The inventory processing period shows some variability but overall a slight downward trend across the observed quarters. Starting at 28 days in December 2016, it fluctuated around this level initially, reaching a low point of 22 days in December 2019. During 2020 through mid-2023, the period mostly hovered between 24 and 28 days, ending at 25 days in June 2023. This suggests modest improvements in inventory turnover efficiency over time, with some stabilization in recent years.

Average Receivable Collection Period

The receivable collection period exhibits more fluctuation and a modest increasing trend in recent years. Initially around 25 days in late 2016 to early 2017, it remained relatively stable but then increased to around 28 days by the end of 2020. Subsequently, it rose further, peaking at 32 days in September 2021 before slightly declining and stabilizing near 29-30 days by mid-2023. This pattern may indicate some lengthening in the time taken to collect receivables, which could impact cash flow.

Operating Cycle

The operating cycle, representing the combined duration of inventory and receivable processes, shows a fluctuating but generally upward trend. Beginning at 53 days in December 2016, it decreased to around 48-49 days from mid-2018 through 2019. However, from 2020 onward, a gradual increase is observed, reaching approximately 55 days by mid-2023. The peak of 60 days occurred in March 2021. This increase suggests a longer cash conversion cycle, potentially reflecting slower asset turnover and collection periods combined.

The payables turnover ratio demonstrates a relatively stable pattern over the examined periods, with values generally fluctuating within a narrow range between approximately 5.4 and 6.2. Initial data points starting from late 2016 are absent, but from early 2017 onward, the ratio modestly increases through 2018, reaching peaks around 6.19 in late 2018 and early 2019. Following this, there is some variability with a slight decline during 2020, hitting a low near 5.43 in mid-2021, before recovering somewhat toward the end of 2022 and early 2023, where it stabilizes around 5.6. This indicates that the company's efficiency in managing its payables remained consistent, with minor fluctuations but no significant long-term trends of improvement or deterioration.

Regarding the average payables payment period, the number of days generally oscillates between 59 and 67 days throughout the observed timeline. The earliest available value in early 2017 is about 62 days, which then slightly decreases to around 59-60 days during late 2017 and 2018, signaling a quicker payment cycle. However, beginning in 2020, there is a noticeable increase in the payment period, with peaks reaching 65 to 67 days during 2020 and 2021. This suggests that the company allowed longer durations to settle payables during this period. In recent quarters of 2022 and 2023, the payment period remains relatively stable around 64 to 65 days, indicating a maintained longer payment cycle compared to the prior years.

Overall, the data reflects a trend where the company maintained fairly steady payables turnover over time, while the average payables payment period shows modest lengthening during and after 2020. This could imply a strategic decision or operational adjustment to manage cash outflows more conservatively, potentially influenced by external factors affecting the business environment during that timeframe.

Payables turnover ratio

Stable with minor fluctuations between approximately 5.4 to 6.2 across the periods; slight dip around 2020-2021 but generally consistent.

Average payables payment period (days)

Varied between 59 and 67 days; shorter payment periods in 2017-2018 (~59-60 days), increasing during 2020-2021 (~65-67 days), stabilizing thereafter.

Interpretation

The company’s payables management remains steady in turnover terms, while it allowed longer timeframes for payments starting around 2020, potentially as a cash flow management strategy.

Average Inventory Processing Period

The average inventory processing period demonstrates a generally decreasing trend from late 2016 through mid-2019, moving from approximately 28 days down to 23 days. This reduction indicates an improvement in inventory turnover and efficiency in managing stock. From late 2019 to mid-2020, the period remains relatively stable around 22 to 25 days. Entering 2021 and onward, there is a slight increase followed by stabilization around 25 to 28 days, suggesting a modest slowdown in inventory processing efficiency but maintaining consistency without significant deterioration.

Average Receivable Collection Period

The average receivable collection period remains mostly stable around 24 to 26 days from 2016 through early 2019. There is an observable uptick starting in mid-2019, with days increasing to around 28 to 30 by 2023. This indicates a lengthening in the time taken to collect receivables, implying potential challenges in accounts receivable management or customers taking longer to pay over the recent periods.

Average Payables Payment Period

The payables payment period exhibits relative stability around 59 to 62 days from 2016 through early 2020. Thereafter, the period fluctuates somewhat more, rising to a peak of approximately 67 days in late 2021. In the following years, the period remains elevated near 63 to 65 days. The extension of payment terms suggests the company may be strategically managing cash outflows by prolonging payment to suppliers or possibly facing extended supplier terms.

Cash Conversion Cycle

The cash conversion cycle is consistently negative across all periods, ranging roughly from -6 to -12 days. This negative cycle implies that the company collects cash from customers faster than it pays its suppliers and manages its inventory efficiently. From late 2016 through 2018, it hovers near -9 to -11 days. There is a slight strengthening of this negative cycle in late 2019 and 2020, reaching a cycle as low as -12 days, which may indicate improved liquidity management during this period. Subsequently, from 2021 to the latest data in 2023, the cycle remains stable around -9 to -11 days, showing continuous effective cash flow conversion despite variations in inventory, receivables, and payables periods.