Corning Inc. (NYSE:GLW)

The analysis of the quarterly financial ratios over the presented periods provides insight into the company's operational efficiency and working capital management.

Inventory Turnover

The inventory turnover ratio demonstrated a modest fluctuation over time, generally remaining in the range of approximately 3.1 to 3.6 times. It exhibited a slight decline from the beginning of the series towards the latest periods, suggesting a mild slowdown in the rate at which inventory is sold and replenished.

Receivables Turnover

This ratio showed an overall upward trend, increasing from just above 6 times to nearly 8 times over the four-year span. The improvement indicates enhanced efficiency in collecting receivables, with the company able to convert its receivables into cash more rapidly in recent periods.

Payables Turnover

The payables turnover ratio experienced a noticeable rise initially, reaching around 6.7 times before descending gradually to the mid-5 times range. This trend suggests an initial acceleration in paying off suppliers followed by a more measured payment pace in the later quarters.

Working Capital Turnover

A pronounced increase in working capital turnover emerged, starting near 2.6 and peaking above 6 times, before stabilizing around 4 to 4.5 times in the final quarters. This signifies an overall improvement in using working capital to generate sales, although some normalization occurred after the peak.

Average Inventory Processing Period

The average days inventory is held showed moderate variability, generally ranging between 100 and 120 days. Periods of slight lengthening and shortening were evident but no consistent long-term directional trend was apparent. The company maintains a relatively stable inventory holding period.

Average Receivable Collection Period

The average number of days to collect receivables decreased over time, dropping from near 70 days to the mid-40 days range. This significant improvement aligns with the upward trend observed in the receivables turnover ratio, reflecting enhanced credit and collection management.

Operating Cycle

The total operating cycle, representing the sum of inventory and receivables periods, tended to decline from around 195 days at its highest to approximately 150-165 days more recently. This reduction suggests improved operational efficiency in the overall cash flow cycle.

Average Payables Payment Period

Payables payment period showed variation, initially decreasing from near 80 days to below 55 days, then increasing progressively to around 65-75 days in later periods, before stabilizing near 60-64 days. The pattern indicates varying credit terms and payment strategies throughout the years.

Cash Conversion Cycle

The cash conversion cycle exhibited a generally declining trend from a high of nearly 140 days to about 85-100 days in recent quarters, reflecting an enhanced ability to convert investments in inventory and receivables back into cash. Some recent quarters showed slight rises, but the overall trend is downward.

In summary, the company's financial data reveal improvements in receivables management and a more efficient operating cycle, despite some fluctuation in inventory and payables periods. The reduction in the cash conversion cycle highlights a strengthening liquidity position, facilitating smoother operational funding. However, the slight reduction in inventory turnover and variations in payables turnover suggest ongoing adjustments in working capital policies.

The cost of sales exhibited notable fluctuations over the analyzed quarters. From March 2019 to December 2019, it showed a gradual increase from 1713 million to 1963 million US dollars. Subsequently, there was a decline observed in the first half of 2020, with values dropping to 1805 million US dollars in June 2020. This was followed by a rise peaking at 2491 million US dollars in December 2022. However, from this peak point onward until March 2024, the cost of sales consistently declined, reaching 1982 million US dollars by the end of the most recent period.

Inventories generally displayed an increasing trend over the time horizon, starting at 2190 million US dollars in March 2019 and reaching a maximum of 2951 million US dollars in September 2022. After this peak, inventories reduced slightly and fluctuated but remained relatively high, closing at 2713 million US dollars at the end of the reported period in March 2024.

The inventory turnover ratio, which measures how many times inventory is sold and replaced over a period, showed some variability but mostly remained within a narrow range. Initial data is missing for early periods; starting in March 2020, the ratio began around 3.22 and peaked to 3.64 in September 2021. After that peak, it gradually decreased to approximately 3.12 by the first quarter of 2024. This suggests a slight decline in the efficiency of inventory management or sales relative to inventory levels towards the end of the period, compared to the earlier quarters.

Summarizing the observed patterns, the cost of sales and inventories do not move strictly in tandem. The cost of sales rose sharply until late 2022 but then declined, while inventories generally increased over the entire period with some tapering off towards early 2024. The inventory turnover ratio indicates that despite high inventory levels, the turnover rate has slightly diminished in the recent quarters, signaling potential changes either in sales dynamics or inventory management efficiency.

The analysis of the quarterly financial data reveals several notable trends in net sales, trade accounts receivable, and receivables turnover ratios over the period presented.

Net Sales

Net sales exhibit fluctuations across the quarters, starting at approximately 2,812 million US dollars in the first quarter of 2019. There is an initial upward movement reaching about 3,350 million by the end of 2020. Subsequently, net sales peak around the fourth quarter of 2021 at 3,676 million and then begin a steady decline throughout 2022 and into 2024, reducing to approximately 2,975 million in the first quarter of 2024. This demonstrates a cyclical pattern with a peak in late 2021 followed by a gradual decrease.

Trade Accounts Receivable, Net of Doubtful Accounts

The trade receivables show a somewhat similar trend with beginning values around 1,974 million US dollars in early 2019, rising and peaking towards the end of 2020 at approximately 2,133 million. After this, a declining trend is observed, moving downwards to 1,621 million by the first quarter of 2024. This decline occurs broadly in line with the decrease in net sales, suggesting a possible correlation between sales volume and outstanding receivables.

Receivables Turnover Ratio

The receivables turnover ratio displays a more distinct upward trend over the period measured starting at 6.27 in the first full reporting quarter in 2019. It fluctuates mildly but generally increases sharply from 2020 onwards, reaching high points above 8.0 from late 2021 through early 2024, with a maximum of around 8.93 in late 2022. This indicates an improvement in the efficiency of receivables collection over time, reflecting a shorter duration between sales and cash collections despite the declining trend in sales volumes and trade receivables.

Overall, the data suggest that while net sales and trade receivables experienced a rise followed by a decline from late 2021, the company's efficiency in managing receivables has improved, as evidenced by the increasing receivables turnover ratio. This improvement could be indicative of enhanced credit policies, collection strategies, or changes in customer payment behavior during the analyzed quarters.

The analysis of the quarterly financial data reveals several key trends in the cost of sales, accounts payable, and payables turnover ratios over the observed periods.

Cost of Sales

The cost of sales exhibited a generally increasing trend from March 2019 through December 2022, starting at $1,713 million and peaking around $2,491 million. This increase indicates a consistent rise in the expenses directly associated with production or procurement over the long term. However, from the beginning of 2023, the cost of sales started to decline steadily to $1,982 million by March 2024, suggesting a possible improvement in cost management, reduction in production volume, or shifts in pricing strategies.

Accounts Payable

Accounts payable showed fluctuations over the period. Initially, from March 2019 to December 2019, accounts payable moderately increased, then they dipped sharply around March to June 2020, decreasing from $1,250 million to $1,109 million. Subsequently, a rising trend resumed, peaking at $1,934 million by June 2022 before gradually declining to $1,476 million by March 2024. This pattern suggests changes in credit terms, payment cycles, or supplier relationships that affected the company's outstanding obligations.

Payables Turnover Ratio

The payables turnover ratio, available from March 2020 onwards, began at 4.71, climbed to peaks above 6.7 in the latter part of 2020, indicating quicker payment to suppliers or reduced credit usage. Between 2021 and early 2022, the ratio declined to just below 5, suggesting that the company was stretching out payment periods or slowing down payment speeds. A subsequent increase occurred through the latter part of 2022 and into 2023, reaching values above 6 again, implying a return to faster payables turnover or more efficient payment processes. The latest quarters show a slight decline but still maintain a ratio above 5.7, indicating relatively strong management of payables.

Overall, the data depicts a company experiencing rising costs through 2022 with simultaneous fluctuations in payables management. The reduction in cost of sales and accounts payable in recent quarters, combined with a robust payables turnover ratio, could reflect strategic efforts to optimize working capital and control expenses effectively.

The financial data reveals several noteworthy trends related to working capital, net sales, and the working capital turnover ratio over the evaluated periods.

Working Capital

Working capital experienced fluctuations throughout the periods. Initially, from March 2019 to December 2019, there was some volatility with a notable increase in December 2019. Starting in the first quarter of 2020, working capital remained relatively stable with minor increases until December 2020. From March 2021 onwards, working capital saw a general declining trend with some brief recoveries, ending lower in March 2024 compared to the initial value in March 2019.

Net Sales

Net sales displayed a more variable pattern. The first half of 2019 showed growth, but sales declined notably in the first quarter of 2020. This was followed by a recovery trend from mid-2020 through late 2021, peaking around the fourth quarter of 2021. However, from early 2022, net sales saw a gradual decrease, with the lowest values recorded in the first quarters of 2023 and 2024, indicating a potential softening in demand or other market pressures in recent quarters.

Working Capital Turnover

The working capital turnover ratio was calculated starting in March 2020. It initially showed moderate values around 2.8 to 2.95 and then markedly increased from March 2021 onwards. The ratio peaked significantly between March 2021 and December 2022, reaching above 6 at times, implying improved efficiency in utilizing working capital to generate sales during that period. Toward the most recent quarters, the ratio moderately declined but remained at elevated levels compared to earlier periods, suggesting sustained, albeit reduced, operational efficiency.

Overall, the data suggests that while working capital has generally decreased in the more recent periods, net sales have also declined from their peak. The increase in working capital turnover ratio during 2021 and 2022 indicates that the company was able to enhance its efficiency in utilizing working capital despite some decreases in absolute working capital and net sales. However, the decline in both sales and working capital in the later quarters, combined with a reduction in turnover ratio, points to potential emerging challenges in maintaining sales momentum and capital management efficiency.

Inventory Turnover

The inventory turnover ratio is available starting from March 31, 2020. It initially shows a value of 3.22 and remains relatively stable around this range throughout the observed periods. The ratio peaks at 3.64 in March 31, 2022, indicating a period of relatively higher turnover efficiency. Following this peak, slight fluctuations occur but generally maintain values between approximately 3.1 and 3.5. The latest reported value on March 31, 2024, declines to 3.12, reflecting a modest reduction in the rate at which inventory is converted into sales.

Average Inventory Processing Period

The average inventory processing period, measured in number of days, inversely corresponds to the inventory turnover ratio and is reported beginning on March 31, 2020. Initially, this period is 113 days and shows a slight increase to 124 days by December 31, 2019 (data for exact initial periods is missing, but subsequent values show this trend). From early 2021 through early 2022, the processing period decreases gradually, hitting a low near 100 days, suggesting improved inventory management efficiency. However, after March 31, 2022, there is a gradual increase to 117 days by March 31, 2024, signaling a lengthening of the inventory cycle and a potential slowdown in inventory turnover, consistent with the observed decline in the turnover ratio during the same period.

General Trends and Insights

The data indicates a general pattern of stable inventory management performance with periods of improvement and slight decline. The peak inventory turnover in early 2022 coupled with the shortest average inventory processing duration suggests the company experienced a period of operational efficiency. The subsequent gradual decline in turnover coupled with lengthening of processing periods may necessitate closer monitoring to understand underlying causes, such as changes in demand, supply chain dynamics, or inventory policies.

The analysis of the receivables turnover and average receivable collection period over the observed quarters reveals distinct patterns and trends. Receivables turnover generally reflects how efficiently the company collects its receivables, while the average receivable collection period indicates the average number of days it takes to collect payments.

Receivables Turnover

Receivables turnover data starts from March 31, 2020, with an initial ratio of 6.27, followed by slight fluctuations through June and September 2020. The ratio declines to 5.13 by December 31, 2020, indicating a temporary slowdown in collections. However, starting in March 2021, the receivables turnover exhibits a consistent upward trend, reaching a peak of approximately 8.93 by September 2022. Thereafter, the turnover ratio remains relatively stable but shows a slight decline towards early 2024, ending around 7.64 by March 31, 2024.

Average Receivable Collection Period

The average collection period inversely mirrors the turnover trend. Initially around 58 days in March 2020, the collection period lengthens to 71 days by December 2020, reflecting slower payment collection. Subsequently, there is a steady improvement, with collection days decreasing to 41 by September 2022. Post that, the period moderately fluctuates between 44 to 48 days through early 2024. Despite these minor fluctuations, the overall collection period remains significantly shorter than the peak in late 2020.

Overall, the data indicates that the company experienced some collection challenges in late 2020, with payments taking longer to collect and turnover decreasing. Since early 2021, there has been a marked improvement in receivables management, as evidenced by increasing turnover ratios and decreasing collection periods. The stabilization of these metrics in recent quarters suggests the company has reached a more efficient and consistent level of receivables management.

Average inventory processing period

The average inventory processing period shows some variation across the quarters. Starting from 113 days in March 2020, it experienced a slight decrease to 109 days by September 2020 before rising to a peak of 124 days in December 2020. Following this peak, the period generally trended downward, reaching a low point of 100 days in March 2022. Subsequently, there was a moderate increase, fluctuating around 109 to 112 days in the latter half of 2022 and early 2023. In the most recent quarters, the period increased again, reaching 117 days by March 2024. This indicates some volatility in inventory turnover efficiency over the observed period, with no clear long-term improvement or deterioration.

Average receivable collection period

The average receivable collection period demonstrates a gradual improvement over time. Initially, it stood at 58 days in March 2020 and showed some slight fluctuation around this value through September 2020. A notable increase occurred in December 2020, peaking at 71 days, indicating slower collection during that quarter. From the beginning of 2021 onwards, the period generally declined, reaching a low of 41 days in September 2022. Following this improvement in collection efficiency, a minor upward adjustment occurred, with the period fluctuating between 44 and 48 days in the subsequent quarters through March 2024. Overall, this suggests enhanced effectiveness in managing receivables post-2020.

Operating cycle

The operating cycle follows a pattern that reflects the combined movements of inventory processing and receivable collection periods. Starting at 171 days in March 2020, it slightly decreased to 167 days by September 2020. Then, it spiked to 195 days in December 2020, corresponding with increases in both inventory processing and receivable collection periods during that quarter. Thereafter, a generally downward trend ensued, with the operating cycle reaching a low of 151 days in March 2022. The operating cycle then stabilized around the mid-150s range with small fluctuations through 2023. However, it increased again slightly to 165 days in March 2024. This pattern indicates some volatility in the overall working capital management but suggests incremental improvements in operating efficiency before reversing modestly near the end of the period.

The payables turnover ratio exhibits a fluctuating trend over the observed periods, starting from 4.71 and increasing to a peak of 6.78 in September 2020. Afterward, the ratio slightly declines and maintains relatively stable levels around the mid-5 to mid-6 range. Notably, there is a decrease from 6.27 at the end of 2021 to 5.02 in June 2022, followed by another gradual increase reaching 6.21 in September 2023, before mildly declining towards 5.73 by March 2024.

Conversely, the average payables payment period, measured in days, demonstrates an inverse relationship with the payables turnover. It decreases sharply from 78 days to 54 days between March 2020 and September 2020, indicating faster payments. Following this, the period extends again, peaking at 75 days in September 2022. Subsequently, it contracts once more to 59 days in September 2023, before a slight increase to 64 days as of March 2024.

Payables Turnover Ratio

Generally shows volatility with a notable rise in 2020, reaching its highest point in September 2020, followed by a period of relative stabilization between 5 and 6, with small fluctuations observed through 2022 and 2023.

Average Payables Payment Period

Exhibits an overall inverse pattern compared to payables turnover, with a significant decline in early 2020 indicating accelerated payments. This is followed by a gradual increase peaking in late 2022, and a moderate decline during 2023, suggesting variability in payment timing practices over time.

Interrelationship of Metrics

The inverse trends between these two metrics are consistent with typical financial behavior: as payables turnover increases, the payment period shortens, implying quicker settlement of obligations, and vice versa.

The analysis of the provided quarterly financial metrics reveals notable trends in the company's working capital management over the examined periods.

Average Inventory Processing Period

This metric shows an initial value in 2020 starting at 113 days, fluctuating moderately over the subsequent quarters. There is a peak observed in December 2020 at 124 days, indicating slower inventory turnover during that quarter. After this peak, the period generally trends downward, reaching a low near 100 days by December 2021, suggesting improved inventory management efficiency. However, from 2022 onwards, the period slightly increases again, ending at 117 days by the first quarter of 2024, which may point to a modest slowdown in inventory processing in the most recent periods.

Average Receivable Collection Period

This period starts at 58 days in the early quarters of 2020, with a peak of 71 days in December 2019, indicating a temporary extension in receivables collection. Subsequently, there is a clear downward trend from mid-2020 through mid-2022, declining steadily to about 41 days by the third quarter of 2022, showcasing an improvement in collecting receivables more quickly. After this improvement phase, the period remains relatively stable, fluctuating slightly around 44 to 48 days through to the first quarter of 2024.

Average Payables Payment Period

This metric exhibits a noteworthy contraction from 78 days in March 2020 to 54 days by September 2020, reflecting a more rapid settlement of payables. Subsequently, the payment period increases steadily to peak at 75 days in September 2022, signifying an extension in the time taken to pay suppliers which may be a strategic decision to optimize cash outflows. From late 2022 into 2024, the payables period declines gradually to about 62 to 64 days, indicating a trend toward moderately quicker payments more recently.

Cash Conversion Cycle (CCC)

The CCC illustrates the net number of days between cash outflow and inflow related to operating activities. This cycle lengthened from 93 days in March 2020 to a high of 139 days in December 2019, indicating increased cash tied up in working capital during that period. Following this peak, the CCC generally decreased, reaching a low point of 78 days in March 2022, demonstrating enhanced overall efficiency in working capital management. In the periods following early 2022, the CCC edges higher again, rising to 101 days by March 2024, suggesting a modest decline in the efficiency of converting resource inputs into cash flows.

In summary, the company experienced fluctuations in its working capital metrics with an initial deterioration around late 2019 and early 2020, followed by phases of improvement particularly in receivables collection and cash conversion cycles through mid-2022. More recently, there is evidence of slight reversals in these favorable trends, highlighted by increased inventory periods and cash conversion cycles towards early 2024. Strategic management of payables appears to have shifted from quicker payments to longer durations before settling suppliers, potentially as a cash management tactic. Overall, the data reflects dynamic working capital management responding to internal and possibly external influences over the reviewed timeframe.