Corning Inc. (NYSE:GLW)

The analysis of the financial turnover ratios and associated periods over the five-year span shows several notable trends and fluctuations.

Inventory Turnover

The inventory turnover ratio remained relatively stable, fluctuating slightly from 3.22 in 2019 to 3.25 in 2023. The highest point was observed in 2021 at 3.64, suggesting a temporary improvement in inventory management or sales efficiency during that year.

Receivables Turnover

This ratio demonstrates an overall upward trend, increasing from 6.27 in 2019 to a peak of 8.24 in 2022 before a slight dip to 8.01 in 2023. The improvement indicates enhanced efficiency in collecting receivables over the period.

Payables Turnover

The payables turnover ratio shows variability, rising sharply from 4.71 in 2019 to 6.62 in 2020, then declining and fluctuating around the mid-5 range in subsequent years. This suggests changes in payment policies or supplier credit terms during the period.

Working Capital Turnover

The working capital turnover ratio experienced significant variation, with a decrease from 2.92 in 2019 to 2.67 in 2020, followed by a notable surge to 6.23 in 2022, before settling at 4.35 in 2023. This indicates periods of improved efficiency in using working capital to generate sales, particularly in 2021 and 2022.

Average Inventory Processing Period

The average inventory processing period maintained relative consistency, hovering around 110 to 114 days, with a low of 100 days in 2021 coinciding with the highest inventory turnover ratio that year. This suggests faster inventory processing in 2021 compared to other years.

Average Receivable Collection Period

A clear downward trend is observed in the average receivable collection period, declining from 58 days in 2019 to 46 days in 2023, with the lowest value of 44 days in 2022. This reflects improved collection efficiency and possibly tighter credit policies.

Operating Cycle

The operating cycle decreased from 171 days in 2019 to 152 days in 2021, then slightly increased to 158 days by 2023. The shorter cycle in the middle years indicates improved overall operating efficiency, combining both inventory turnover and receivables collection improvements.

Average Payables Payment Period

The average payables payment period decreased significantly from 78 days in 2019 to 55 days in 2020, then increased again to around the mid-60s range by 2023. This fluctuation may reflect changes in payment strategies, balancing cash flow management and supplier relations.

Cash Conversion Cycle

The cash conversion cycle experienced volatility, increasing sharply from 93 days in 2019 to 128 days in 2020, followed by a substantial reduction to 85 days in 2022 and a slight rise to 96 days in 2023. The peak in 2020 indicates a period where cash was tied up longer in operations, whereas subsequent years show an improvement in cash flow efficiency.

Cost of Sales

The cost of sales exhibited an overall upward trend from 2019 through 2022, increasing from 7,468 million USD to 9,683 million USD. However, in 2023, there was a noticeable decline to 8,657 million USD, indicating a reduction in direct expenses associated with goods sold compared to the previous year.

Inventories

Inventories showed a gradual increase from 2,320 million USD in 2019 to a peak of 2,904 million USD in 2022. In 2023, inventories decreased to 2,666 million USD, suggesting a possible optimization in inventory management or changes in demand and supply chain conditions.

Inventory Turnover Ratio

The inventory turnover ratio remained relatively stable, fluctuating slightly between 3.19 and 3.64 over the period. It peaked in 2021 at 3.64, implying an efficient use of inventory during that year, before declining to 3.25 in 2023. This trend may reflect variations in sales velocity or inventory purchasing strategies.

Net Sales

Net sales exhibited a fluctuating trend over the five-year period. Starting at 11,503 million USD in 2019, sales experienced a slight decline to 11,303 million USD in 2020. This was followed by a significant increase to 14,082 million USD in 2021, with a marginal rise to 14,189 million USD in 2022. However, in 2023, net sales decreased to 12,588 million USD, indicating a downward correction after previous growth.

Trade Accounts Receivable, Net of Doubtful Accounts

The net trade accounts receivable demonstrated variability, initially rising from 1,836 million USD in 2019 to a peak of 2,133 million USD in 2020. Subsequently, a declining pattern emerged, with values dropping to 2,004 million USD in 2021, 1,721 million USD in 2022, and further reducing to 1,572 million USD in 2023. This decline suggests improved collection or tighter credit policies over the latter years.

Receivables Turnover

Receivables turnover exhibited a generally positive upward trend, indicating enhanced efficiency in collecting receivables. The ratio decreased from 6.27 in 2019 to 5.3 in 2020, implying slower collections initially. However, it increased significantly to 7.03 in 2021 and continued rising to 8.24 in 2022, before slightly declining to 8.01 in 2023. Overall, this ratio indicates that the company improved its ability to convert receivables to cash over the period.

Cost of Sales

The cost of sales shows an increasing trend from 2019 to 2022, rising from 7,468 million USD in 2019 to a peak of 9,683 million USD in 2022. However, there is a notable decrease in 2023 to 8,657 million USD, indicating a potential reduction in production costs or a change in sales volume or pricing strategies during the last reported year.

Accounts Payable

Accounts payable decreased significantly in 2020 to 1,174 million USD from 1,587 million USD in 2019, suggesting improved payment efficiency or changes in supplier terms. This was followed by a recovery and increase over the next two years, reaching 1,804 million USD in 2022. In 2023, accounts payable decreased again to 1,466 million USD, which could reflect either a decrease in purchases or more timely payments to suppliers.

Payables Turnover Ratio

The payables turnover ratio peaked in 2020 at 6.62, indicating the company paid its suppliers more quickly compared to other years. After that, the ratio declined to 5.59 in 2021 and 5.37 in 2022, suggesting slower payments relative to purchases during those years. In 2023, the ratio increased again to 5.91, implying an improvement in payment speed but not reaching the level observed in 2020.

The financial data reveals notable fluctuations in working capital, net sales, and working capital turnover over the five-year period from 2019 to 2023.

Working Capital

The working capital shows a mixed trend. Starting at 3942 million US dollars in 2019, it increased moderately to 4237 million in 2020. However, there was a significant decline in 2021 to 2853 million, which continued into 2022, reaching a low of 2278 million. In 2023, working capital saw a recovery, rising to 2893 million. This pattern indicates periods of tightening and loosening of the company's short-term financial resources, with a peak in 2020 followed by contraction and a modest rebound.

Net Sales

Net sales exhibited variability over the same period. Sales slightly decreased from 11503 million in 2019 to 11303 million in 2020, then experienced a robust increase in 2021 to 14082 million, and a slight additional increase in 2022 to 14189 million. In 2023, net sales declined to 12588 million, indicating some reduction in revenue generation after two years of growth. The peak sales values in 2021 and 2022 may reflect favorable market conditions or successful business operations during those years.

Working Capital Turnover

Working capital turnover, a measure of how efficiently working capital is used to generate sales, shows a notable upward trend with some variability. The ratio was 2.92 in 2019 and decreased slightly to 2.67 in 2020. From 2020 onwards, it increased sharply to 4.94 in 2021 and further to 6.23 in 2022, indicating improved efficiency in utilizing working capital to generate sales. However, in 2023, the ratio decreased to 4.35, suggesting a relative reduction in efficiency compared to the previous two years, though it remained above the levels observed in 2019 and 2020.

Overall, the company experienced a period of reduced liquidity between 2020 and 2022, as seen in the declining working capital. Despite this, net sales increased significantly in 2021 and 2022, supported by improved working capital efficiency. The decline in net sales and working capital turnover in 2023 alongside a partial rebound in working capital may indicate a cautious stance or changing market conditions after strong performance in preceding years.

The analysis of the provided financial ratios over the five-year period reveals notable fluctuations and trends in inventory management metrics.

Inventory Turnover

The inventory turnover ratio remained relatively stable, with slight variations. Starting at 3.22 in 2019, it decreased marginally to 3.19 in 2020. A noticeable increase to 3.64 occurred in 2021, indicating improved efficiency in inventory management during that year. However, the ratio then declined to 3.33 in 2022 and further to 3.25 in 2023, suggesting a moderate reduction in turnover pace compared to the 2021 peak. Overall, the ratio does not exhibit a consistent upward or downward trend but rather cyclical movements.

Average Inventory Processing Period

This metric complements the inventory turnover ratio by indicating the number of days inventory remains before being sold or used. The period increased slightly from 113 days in 2019 to 114 days in 2020, reflecting a minor slowdown. In 2021, a significant reduction to 100 days suggests enhanced inventory processing efficiency, mirroring the spike in the turnover ratio that year. However, the processing period extended again to 109 days in 2022 and 112 days in 2023, indicating a reversal towards longer holding durations. This pattern highlights variability in inventory handling, with the best performance in 2021 followed by a decline in efficiency.

In summary, inventory management showed a peak in operational efficiency during 2021, with the highest turnover and shortest processing period. Subsequent years experienced a gradual decline, approaching levels observed at the beginning of the period. This trend suggests potential challenges or strategic shifts affecting inventory turnover and holding periods in recent times.

Receivables Turnover

The receivables turnover ratio experienced some fluctuations over the observed period. It declined from 6.27 in 2019 to 5.3 in 2020, indicating a slower collection of receivables during that year. However, starting in 2021, the ratio showed a marked improvement, increasing to 7.03, further increasing to 8.24 in 2022 before slightly declining to 8.01 in 2023. Overall, the trend from 2020 onward suggests improved efficiency in collecting receivables.

Average Receivable Collection Period

The average collection period, expressed in number of days, reveals an inverse pattern compared to the receivables turnover ratio. It increased from 58 days in 2019 to 69 days in 2020, reflecting a lengthening of the time taken to collect receivables. Subsequently, this period steadily decreased to 52 days in 2021, 44 days in 2022, and slightly rose to 46 days in 2023. This indicates a trend toward quicker collection of receivables starting in 2021.

Overall Analysis

The data reveals a period of decreased efficiency in receivables management in 2020, followed by consistent improvements from 2021 through 2023. This is evidenced by a rebound and subsequent rise in the receivables turnover ratio and a corresponding reduction in the average collection period. The slight dip in the turnover ratio and minor increase in collection days in 2023 suggest a marginal slow down, but the overall trend remains positive.

Average Inventory Processing Period

The average inventory processing period initially remained stable from 2019 to 2020, with a slight increase from 113 to 114 days. In 2021, there was a notable decrease to 100 days, indicating improved inventory management or faster turnover. However, the period increased again in 2022 and 2023 to 109 and 112 days, respectively, moving closer to levels seen in 2019 and 2020. The overall trend suggests some fluctuations with a temporary improvement in 2021, followed by a partial reversal.

Average Receivable Collection Period

The average receivable collection period shows more variability. It increased significantly from 58 days in 2019 to 69 days in 2020, which may indicate slower collections or extended credit terms during that year. Following this peak, the period dropped sharply to 52 days in 2021 and further to 44 days in 2022, reflecting an improvement in collections or tighter credit policies. In 2023, there was a slight increase to 46 days but collection efficiency remained better than in the earlier years. This pattern suggests active management of receivables with a recovery after 2020.

Operating Cycle

The operating cycle, which combines the inventory processing and receivable collection periods, increased from 171 days in 2019 to 183 days in 2020, reflecting an extension in the overall working capital cycle. This was followed by a sharp decline to 152 days in 2021, indicating improved operational efficiency. The cycle then stabilized around 153 days in 2022 and slightly increased to 158 days in 2023. This indicates a partial return to a longer operating cycle, but still better than the levels in 2019 and 2020. Overall, the operating cycle exhibits initial elongation with subsequent improvement and moderate stabilization.

The analysis of the payables turnover ratio and the average payables payment period over the five-year span reveals notable fluctuations that suggest variations in the company's payment practices and supplier credit management.

Payables Turnover Ratio

The payables turnover ratio increased significantly from 4.71 in 2019 to a peak of 6.62 in 2020. This suggests that the company was accelerating its payments to suppliers during this period, potentially improving vendor relationships or capitalizing on early payment discounts. However, following 2020, the ratio decreased to 5.59 in 2021 and further to 5.37 in 2022, indicating a slower rate of paying off payables. The ratio then saw a moderate rebound to 5.91 in 2023.

Average Payables Payment Period

Inversely correlated with the turnover ratio, the average payment period shortened markedly from 78 days in 2019 to 55 days in 2020, aligning with the heightened payables turnover that year. Subsequently, the payment period extended to 65 days in 2021 and 68 days in 2022, indicating a trend toward taking longer to settle payables. The year 2023 showed a slight reduction to 62 days, signaling a tentative return to earlier payment practices but still above the 2020 level.

Overall, the data indicates a shift towards faster payment in 2020, followed by a gradual return to longer payment cycles in the succeeding years. These trends may reflect changing working capital management strategies, supplier negotiation dynamics, or broader economic conditions impacting the company's cash flow priorities.

Average Inventory Processing Period

The average inventory processing period remained relatively stable across the observed years, starting at 113 days in 2019. It experienced a slight increase to 114 days in 2020, followed by a decrease to 100 days in 2021. Subsequently, there was an increase to 109 days in 2022 and a marginal rise to 112 days in 2023. Overall, this metric shows moderate fluctuations but stays within a narrow range.

Average Receivable Collection Period

This period exhibited notable variability over the years. It increased from 58 days in 2019 to a peak of 69 days in 2020, indicating slower collections during that year. However, it improved significantly in the following years, dropping to 52 days in 2021, further declining to 44 days in 2022, and slightly increasing to 46 days in 2023. The improvement from 2020 to 2022 suggests enhanced efficiency in receivables collection.

Average Payables Payment Period

The payables payment period decreased sharply from 78 days in 2019 to 55 days in 2020, indicating quicker payment to suppliers during that year. It then increased to 65 days in 2021 and remained elevated with slight fluctuations at 68 days in 2022 and 62 days in 2023. This suggests a deliberate adjustment in payment terms or cash management practices following the reduction in 2020.

Cash Conversion Cycle

The cash conversion cycle showed considerable volatility. It increased significantly from 93 days in 2019 to 128 days in 2020, reflecting a longer duration to convert investments in inventory and receivables into cash. Subsequently, it improved notably, dropping to 87 days in 2021 and further to 85 days in 2022, indicating better operational efficiency. However, there was an increase again to 96 days in 2023, suggesting some easing in working capital management efficiency during the most recent period.