EMC Corp. (NYSE:EMC)

The financial metrics demonstrate varying trends across the analyzed periods, highlighting shifts in operational efficiency and cash management practices.

Inventory Turnover

The inventory turnover ratio experienced a decline from 7.76 in 2011 to 6.56 in 2013, indicating slower inventory movement. However, it improved subsequently to 7.8 by 2015, reflecting enhanced inventory management or increased sales capacity toward the end of the period.

Receivables Turnover

Receivables turnover showed a gradual decrease from 6.81 in 2011 to a low of 5.54 in 2014, suggesting a lengthening in the collection of receivables. A partial recovery to 6.21 in 2015 implies some improvement in collection efficiency during the final year.

Payables Turnover

The payables turnover ratio initially increased from 7.12 in 2011 to 7.76 in 2012, then declined steadily to 5.91 by 2015. This decline signals lengthening payment periods to suppliers, which might reflect a strategic delay in payments or cash flow constraints.

Working Capital Turnover

This ratio exhibited notable volatility, starting at a high of 16.58 in 2011, plummeting sharply to 4.24 in 2013, before recovering to 11.34 by 2015. The initial decline suggests reduced efficiency in utilizing working capital, with the subsequent rise indicating operational improvements.

Average Inventory Processing Period

The average inventory processing period increased from 47 days in 2011 to a peak of 56 days in 2013, implying slower turnover of stock, but reverted back to 47 days by 2015. This pattern aligns with the inventory turnover ratio movements and suggests fluctuations in inventory management effectiveness.

Average Receivable Collection Period

The collection period lengthened from 54 days in 2011 to 66 days in 2014, denoting slower receivables recovery, before decreasing to 59 days in 2015. This aligns with the trend in receivables turnover, hinting at challenges in credit management followed by some recovery.

Operating Cycle

The operating cycle, representing the total time from inventory acquisition to cash collection, extended from 101 days in 2011 to 117 days by 2013 and 2014, then decreased to 106 days in 2015. This reflects initial operational delays and later improvements in overall business cycle efficiency.

Average Payables Payment Period

The payment period to suppliers decreased from 51 days in 2011 to 47 days in 2012, then lengthened significantly to 67 days in 2014, before slightly contracting to 62 days in 2015. The longer payment periods during 2013-2015 may indicate negotiated payment terms or cash flow management strategies.

Cash Conversion Cycle

The cash conversion cycle increased from 50 days in 2011 to a peak of 65 days in 2012, then generally declined to 44 days by 2015. This reduction in the latter years suggests improved liquidity and more efficient cash flow operations.

The financial data indicates several trends related to cost of revenues, inventories, and inventory turnover over the five-year period ending December 31, 2015.

Cost of Revenues

The cost of revenues has steadily increased each year from 2011 through 2015. It started at 7,839 million US dollars in 2011 and rose consistently to reach 9,713 million US dollars by 2015. This reflects a cumulative increase of approximately 24 percent over the period, suggesting growing expenses associated with product manufacturing or service delivery.

Inventories

Inventories increased from 1,010 million US dollars in 2011 to a peak of 1,334 million US dollars in 2013. After 2013, inventories declined slightly to 1,276 million in 2014 and further to 1,245 million US dollars by the end of 2015. The initial rise in inventory levels could indicate accumulation due to demand forecasts or production scaling, followed by a modest reduction possibly reflecting improved inventory management or changes in operational strategy.

Inventory Turnover

The inventory turnover ratio, which measures how efficiently inventories are sold and replaced, showed a declining trend from 7.76 in 2011 to 6.56 in 2013, indicating a slowing turnover rate during this period. However, this trend reversed after 2013, with turnover rising to 7.2 in 2014 and further to 7.8 in 2015. This recovery suggests enhancements in inventory efficiency or improved sales performance during the later years.

The financial data reveals several notable trends over the five-year period ending in 2015. Revenues exhibit a consistent upward trajectory, increasing steadily year over year from $20,008 million in 2011 to $24,704 million in 2015. This growth indicates sustained expansion in the company's sales or service activities.

Accounts and notes receivable, net of doubtful accounts, also rise during this period, climbing from $2,937 million in 2011 to a peak of $4,413 million in 2014 before slightly decreasing to $3,977 million in 2015. The increase in receivables generally aligns with the growing revenue base, reflecting higher credit extended to customers; however, the dip in 2015 suggests a possible improvement in collections or a change in credit policy.

The receivables turnover ratio, which measures the efficiency in collecting receivables, declines steadily from 6.81 in 2011 to a low of 5.54 in 2014, indicating a slowdown in collections relative to sales during those years. In 2015, this ratio improves to 6.21, suggesting enhanced efficiency in receivables management or faster cash collection processes.

Revenue Trend

Consistent growth each year, demonstrating business expansion from 2011 to 2015.

Receivables Movement

General increase paralleling revenue growth, with a peak in 2014 and a slight decline in 2015, possibly reflecting improved credit control.

Receivables Turnover Ratio

Declined through 2014, indicating slower collections relative to sales, but improved in 2015, suggesting better collection efficiency.

Cost of Revenues

Over the five-year period, the cost of revenues shows a consistent upward trend, increasing from $7,839 million in 2011 to $9,713 million in 2015. This steady rise indicates a growth in the scale of operations or in the expense related to generating revenue.

Accounts Payable

Accounts payable fluctuates over the period, initially decreasing from $1,102 million in 2011 to $1,041 million in 2012, then significantly increasing to a peak of $1,696 million in 2014 before slightly declining to $1,644 million in 2015. The increase from 2012 to 2014 suggests longer payment terms or higher purchase volumes, followed by a moderate reduction in the final year.

Payables Turnover Ratio

The payables turnover ratio declines overall from 7.12 in 2011 to 5.91 in 2015, with a temporary increase to 7.76 in 2012. The downward trend from 2012 onwards suggests that the company is taking longer to pay its suppliers or that accounts payable are growing faster than cost of revenues, which is corroborated by the increase in accounts payable during the same period.

The analysis of the financial metrics over the five-year period reveals notable trends in the company's operational efficiency and revenue generation.

Working Capital

The working capital exhibited significant fluctuations, starting at $1,206 million in 2011 before increasing sharply to $5,479 million in 2013. Following this peak, there was a decline to $2,178 million by the end of 2015. This volatility suggests periods of aggressive asset and liability management that could reflect strategic shifts or fluctuations in short-term liquidity positions.

Revenues

Revenues demonstrated a consistent upward trajectory throughout the period, growing from $20,008 million in 2011 to $24,704 million in 2015. The steady increase, albeit at a decelerating pace, indicates ongoing business growth and market expansion, contributing positively to the company's top-line performance.

Working Capital Turnover Ratio

The working capital turnover ratio, calculated as revenues divided by working capital, declined markedly from 16.58 in 2011 to a low of 4.24 in 2013, corresponding with the sharp rise in working capital. This indicates a reduced efficiency in utilizing working capital to generate sales during that year. After 2013, the ratio improved, reaching 11.34 by 2015, implying better management of working capital or improved operational efficiency, although it did not return to the initial high levels observed in 2011.

Overall, the data suggest that while the company's revenue base steadily expanded, working capital management experienced periods of significant change which impacted its turnover ratio. The lower turnover ratio in mid-period years corresponds with elevated working capital, potentially indicating increased investment in current assets or fluctuations in short-term liabilities. Toward the later years, the working capital turnover ratio’s recovery points to improved efficiency or rebalancing of working capital relative to revenue growth.

The analysis of the inventory-related financial metrics over the five-year period reveals notable trends in the company's operational efficiency.

Inventory Turnover Ratio

The inventory turnover ratio started at 7.76 in 2011, declined gradually over the next two years to 6.72 in 2012 and 6.56 in 2013, indicating a slower rate at which inventory was sold or used during that period. However, from 2014 onwards, the ratio improved, rising to 7.2 in 2014 and further to 7.8 in 2015. This suggests an enhancement in inventory management and a quicker conversion of inventory into sales or production by the end of the period.

Average Inventory Processing Period

The average inventory processing period, expressed in days, demonstrated an inverse pattern to the turnover ratio. It increased from 47 days in 2011 to a peak of 56 days in 2013, reflecting a lengthening of the time inventory remained in stock. Following this peak, the period shortened to 51 days in 2014 and returned to 47 days in 2015, aligning with the improvement seen in the turnover ratio and suggesting increased efficiency in inventory handling by the latter years.

Overall, the data indicate that after a period of reduced efficiency in inventory utilization between 2011 and 2013, the company made operational improvements that led to a more favorable inventory turnover and faster processing period by the end of 2015.

Receivables Turnover

The receivables turnover ratio demonstrated a declining trend from 6.81 in 2011 to a low of 5.54 in 2014, indicating a gradual slowdown in the frequency of collections within the year. However, in 2015, this ratio experienced a partial recovery, increasing to 6.21. Overall, the pattern suggests a period of weakening efficiency in receivables management with some improvement towards the end of the period analyzed.

Average Receivable Collection Period

Complementing the turnover ratio, the average receivable collection period increased steadily from 54 days in 2011 to a peak of 66 days in 2014. This increase indicates that it generally took longer for the company to collect its receivables during these years. In 2015, the collection period decreased notably to 59 days, evidencing a more efficient collection process relative to the previous year. The inverse movement between the receivables turnover and the collection period ratios is consistent with typical financial relationships.

Summary of Receivables Management

Across the five-year span, the company experienced a deterioration in receivables management efficiency until 2014, as reflected by a declining turnover ratio and increasing days outstanding. The improvement seen in 2015 suggests either better credit control or collection practices. Monitoring these metrics further will be essential to confirm whether the 2015 improvements represent a sustained trend or an isolated adjustment.

Average Inventory Processing Period

The average inventory processing period increased from 47 days in 2011 to a peak of 56 days in 2013, indicating a slower turnover of inventory during that period. Subsequently, it declined back to 47 days by 2015, returning to the initial level observed in 2011.

Average Receivable Collection Period

The average receivable collection period showed an upward trend from 54 days in 2011 to 66 days in 2014, reflecting an increasing duration for collecting receivables. However, in 2015, this period reduced to 59 days, suggesting an improvement in collection efficiency compared to the previous year but still higher than the initial value in 2011.

Operating Cycle

The operating cycle expanded steadily from 101 days in 2011 to a high of 117 days in both 2013 and 2014, demonstrating a lengthening of the overall operating process combining inventory holding and receivables collection. In 2015, the cycle shortened to 106 days, indicating an improvement but remaining above the 2011 baseline.

The analysis of the payables turnover ratio and the average payables payment period over the five-year span reveals noteworthy trends in the company's management of its payables.

Payables Turnover Ratio

The payables turnover ratio shows a general decline from 7.12 in 2011 to 5.91 in 2015. It peaked at 7.76 in 2012, indicating faster payment to suppliers that year. However, subsequent years depict a downward trend with a notable drop to 6.1 in 2013 and a further decline to 5.42 in 2014. The slight recovery to 5.91 in 2015 suggests a modest improvement in payment velocity, yet the overall reduction across this period points to slower payment cycles compared to the initial year.

Average Payables Payment Period

Correspondingly, the average payables payment period in days reveals an inverse pattern, increasing from 51 days in 2011 to a peak of 67 days in 2014 before slightly decreasing to 62 days in 2015. This indicates that, on average, the company took longer to settle its payables over the period, with the longest duration recorded in 2014. The increase from 47 days in 2012 to 60 days in 2013 marks a significant elongation in payment terms.

Overall Insights

The inverse relationship between the payables turnover ratio and the average payment period is consistent with expectations, as a lower turnover ratio corresponds to longer payment duration. The data suggests that the company gradually extended its payment terms or delayed payments within the supplier management cycle, especially noticeable from 2012 onward. This shift may have implications for supplier relationships, cash flow management, or working capital strategy.

The financial data reveals several notable trends regarding the company's operational efficiency and working capital management over the five-year period ending in 2015.

Average Inventory Processing Period

The inventory processing period initially increased from 47 days in 2011 to a peak of 56 days in 2013, indicating a slower turnover of inventory during that timeframe. However, this period then improved, returning to 47 days by 2015, which matches the initial value and suggests enhanced inventory management or sales acceleration in the later years.

Average Receivable Collection Period

There is a clear upward trend in receivable collection time from 54 days in 2011 to a high of 66 days in 2014, implying customers took longer to settle their accounts over time. A partial reversal occurred in 2015 when the period decreased to 59 days, though it remained above the starting level, indicating some improvement but still a relatively extended collection period.

Average Payables Payment Period

The payment period to suppliers fluctuated significantly. It decreased from 51 days in 2011 to 47 days in 2012, suggesting quicker payments. However, it then extended sharply to 67 days by 2014, indicating more prolonged payment terms or delayed payments to suppliers. A slight reduction to 62 days followed in 2015, still reflecting a delay relative to the initial years.

Cash Conversion Cycle

The cash conversion cycle, which reflects the net time between cash outflows and inflows, increased from 50 days in 2011 to a peak of 65 days in 2012, indicating a longer cash tied-up period early on. Subsequent years saw improvement with a decline to 44 days by 2015, suggesting more efficient cash management and a reduction in the operating cycle's length.

Overall, the data indicates that while receivables and payables periods extended over the majority of the period analyzed, inventory management and the cash conversion cycle demonstrated improvement towards the end. This pattern may suggest efforts to optimize working capital and enhance liquidity despite challenges in the collection and payment timings during certain years.