Freeport-McMoRan Inc. (NYSE:FCX)

The financial data reveals several key trends in operational efficiency and working capital management over the analyzed periods.

Inventory Turnover

The inventory turnover ratio initially improved from 2.84 to a peak of 3.25 in the early periods, indicating faster inventory movement. However, from late 2021 onward, there was a steady decline to approximately 2.48 by mid-2025, suggesting slower inventory turnover and potential challenges in inventory management or slower sales cycles.

Receivables Turnover

Receivables turnover demonstrated significant volatility. It increased overall from 13.02 in early 2021 to a high of 44.04 in June 2025, indicating quicker collection of receivables. Periods of sharp increases were interspersed with declines, notably a dip after late 2022, reflecting fluctuations in credit policies or collection effectiveness. The recent upward trend implies enhanced efficiency in receivables management.

Working Capital Turnover

The working capital turnover ratio showed moderate fluctuations, starting at 2.6 in early 2021 and reaching a higher level of 3.26 in June 2025. The general upward trend indicates an improving ability to generate sales from working capital, reflecting enhanced overall operational efficiency and utilization of assets.

Average Inventory Processing Period

The number of days inventory remains on hand initially decreased from 129 days to a low of 112 days in late 2021, consistent with the increased inventory turnover. However, this period lengthened steadily thereafter, reaching 147 days by June 2025. This lengthening indicates slower inventory processing and potential buildup of stock, which may increase holding costs.

Average Receivable Collection Period

This metric experienced a notable decline from 28 days in early 2021 to a low of 8 days in mid-2025, reflecting a substantial improvement in collecting payments. Some fluctuations occurred, but the overall trend points to more effective credit and collection policies, reducing the time outstanding receivables remain uncollected.

Operating Cycle

The operating cycle, combining inventory processing and receivable collection periods, showed variability across the analyzed quarters. Starting at 157 days in early 2021, it decreased to a low of 128 days in September 2021, then fluctuated around mid-150s days later on, reaching 158 days in mid-2025. Despite improvements in receivable collection, the elongation of inventory processing offset these gains, resulting in a fairly stable operating cycle length over the longer term.

In summary, while the company improved receivables management significantly, reducing the collection period and increasing receivables turnover, inventory management has weakened, evidenced by slower turnover and increased inventory days. The working capital turnover has improved moderately, reflecting better overall asset utilization. The operating cycle remains relatively stable due to the offsetting effects of these trends.

Cost of Sales

The cost of sales exhibits a fluctuating upward trend over the examined periods. From early 2021 through 2025, the value generally increases with some quarter-to-quarter variability. Notably, cost of sales rose markedly from around 3206 million USD in the first quarter of 2021 to nearly 4950 million USD by mid-2025. This reflects growing expenses associated with production or procurement activities over time, with several peaks that suggest periods of intensified operational activity or increased input costs.

Inventories

Inventories display a consistent upward trajectory across the quarters. Starting at approximately 4145 million USD in early 2021, inventory holdings steadily expand, reaching nearly 6954 million USD by the first quarter of 2025. This growth indicates an accumulation of stock, which could imply expectations of increased demand or a strategic build-up of resources. There are slight fluctuations in some quarters, but the general pattern is clear growth in inventory levels.

Inventory Turnover

The inventory turnover ratio shows a gradual decline over the span of the data. Initially, the ratio hovers around 2.8 to 3.2 in 2021 and early 2022, indicating relatively higher turnover speed. From late 2022 onward, a downward trend emerges, with the ratio decreasing to a range near 2.4 to 2.7 by 2025. This decline in turnover suggests that inventories are being sold or used at a slower pace relative to their stock levels, which may reflect changes in sales velocity, inventory management efficiency, or market demand conditions.

Overall Insights

The combined analysis of these financial metrics highlights expanding operational scale as evidenced by rising cost of sales and increased inventories. However, the slowing inventory turnover ratio may signal potential inefficiencies or changes in market dynamics affecting how quickly products are moved through inventory. The trends suggest a need to monitor inventory management practices closely to ensure alignment with sales and production strategies, particularly given the sizable accumulation of inventories alongside rising costs.

Revenues Trend Analysis

Revenues demonstrated a general upward trajectory from early 2021 through 2025, albeit with some fluctuations. Starting at 4,850 million USD in the first quarter of 2021, revenues peaked in the first quarter of 2025 at 7,582 million USD. Notable increases were observed in early 2022 and again in the first three quarters of 2024. However, revenues showed some periodic dips, such as in the third quarter of 2022 and notably in the fourth quarter of 2024, suggesting some seasonality or varying external factors influencing earnings. Overall, the trend reflects an expansion in sales or pricing power over the observed period.

Trade Accounts Receivable Trend

Trade accounts receivable levels fluctuated significantly across the analyzed quarters. Starting at 1,248 million USD in the first quarter of 2021, the amount generally showed a decline until mid-2023, reaching its lowest point at 578 million USD in the first quarter of 2025. This decline may suggest improved collections or a tightening credit policy towards customers over time. However, intermittent spikes, such as in the last quarter of 2022 and the first quarter of 2024, indicate temporary increases in outstanding customer balances. The trend overall points to a reduction in receivable balances relative to revenues in later periods.

Receivables Turnover Ratio Analysis

The receivables turnover ratio exhibited substantial volatility over the course of the timeline. Initial turnover of 13.02 in early 2021 improved significantly, reaching peaks above 27 and even 44 in some quarters, particularly in mid-2025. Higher turnover ratios imply more efficient collection processes or faster conversion of receivables into cash. Variations were pronounced, such as a decline to approximately 15-16 in early and mid-2022, followed by sharp improvements. The very high turnover rates in 2025 suggest a marked enhancement in working capital management or possibly adjustments in sales credit terms.

Interrelated Observations

The inverse pattern between trade accounts receivable and receivables turnover is consistent with expectations: periods with lower receivable balances typically aligned with higher turnover ratios, indicating quicker collections. Although revenues steadily increased overall, the company appears to have tightened credit or improved receivable management, as evidenced by decreasing receivables relative to sales and rising turnover ratios. Such trends could contribute positively to liquidity and cash flow.

Working Capital Trends

The working capital values demonstrate an overall increasing trend from early 2021 until mid-2022, peaking around June 2022. Thereafter, there is a gradual decline in working capital through the end of 2024, stabilizing somewhat in early 2025. Despite fluctuations, the working capital remains relatively elevated compared to the beginning of the period.

Revenue Patterns

Revenues exhibit variability over the quarters, with notable peaks and troughs. The highest revenue levels appear around late 2024 to early 2025. There are several periods of decline, specifically noticeable toward mid-2022 and again in late 2024, suggesting some cyclical or market-driven influences. The general trajectory toward 2025 indicates a recovery or upward growth in revenues.

Working Capital Turnover Analysis

The working capital turnover ratio reveals an initial moderate level close to 2.6 in early 2021, with some oscillation up to nearly 2.8 in early 2022. After that point, there is a steady and consistent increase in turnover ratio, reaching above 3.2 by mid-2025. This growth in turnover ratio suggests improved efficiency in using working capital to generate revenues over the period analyzed.

Relationship Between Metrics

While working capital fluctuated and saw a decline after mid-2022, revenues showed a somewhat inconsistent pattern with recent growth, and working capital turnover improved steadily. This indicates that the company enhanced its operational effectiveness, generating more revenue per unit of working capital despite the reduction in working capital levels in later periods.

Overall Insights

The data portrays a company improving its asset utilization efficiency over time, shown by the rising working capital turnover ratio. Revenues are subject to seasonality or external factors affecting performance but trend toward higher values at the end of the data series. The working capital management suggests a shift from accumulation to more optimized utilization, reflecting positively on operational management practices.

The analysis of inventory management metrics over the observed quarters reveals notable trends in the company's operational efficiency. The inventory turnover ratio and the average inventory processing period provide insights into how effectively inventory is managed relative to sales and usage.

Inventory Turnover Ratio

The inventory turnover ratio, measuring the frequency of inventory replacement, exhibited an upward trend from the first quarter of 2021 through late 2021, increasing from 2.84 to a peak of 3.25 in September 2021 and matching that level again in March 2022. This suggests that the company improved its inventory management efficiency during this period, likely reflecting stronger sales or optimized stock levels.

Following this peak, the ratio generally declined from late 2022 onwards, dropping to around 2.48 by March 2025. This downward trend indicates a slower turnover rate, implying inventory remains on hand longer before being sold or used, which could reflect either reduced sales velocity or accumulation of stock.

Average Inventory Processing Period

The average inventory processing period, representing the number of days inventory is held, moved inversely to the turnover ratio, reinforcing the insights on inventory flow. Starting at 129 days in March 2021, it decreased steadily to 112 days by September 2021, consistent with quicker inventory turnover.

However, from late 2021 onward, the number of days gradually increased, reaching a high of 147 days in June 2025. This escalation suggests lengthening holding periods for inventory, which may indicate slower sales or less efficient inventory management in recent periods.

Overall, the data indicates that inventory management saw greater efficiency during 2021 and early 2022, with higher turnover and shorter holding periods. In contrast, from late 2022 through mid-2025, the company experienced a gradual decrease in turnover ratio and a lengthening of inventory processing periods, potentially signaling challenges in inventory movement that could impact working capital and operational costs.

Receivables Turnover Ratio

The receivables turnover ratio exhibits a cyclical pattern with significant fluctuations over the periods analyzed. Starting at 13.02 in March 2021, the ratio demonstrates an overall upward trend with peak values notably recorded in June 2023 (32.43) and December 2024 (44.04). These spikes indicate periods of improved efficiency in collecting receivables. However, there are intermittent declines, such as in December 2021 (19.56) and December 2023 (18.9), reflecting less efficient collection during those quarters. The wide range of the ratio values suggests variable collection performance across quarters.

Average Receivable Collection Period

The average receivable collection period, expressed in days, inversely mirrors the turnover ratio trend. It starts relatively high at 28 days in March 2021, then decreases to a low of 11 days in June 2023, aligning with the peak receivables turnover observed in the same period. Notably, the collection period lengthened again in December 2021 (19 days) and December 2023 (19 days), coinciding with the dips in turnover ratio during those quarters. The period shows considerable variability but generally trends toward shorter collection durations in the later periods, particularly from late 2023 onward.

Trend Analysis and Insights

The inverse relationship between receivables turnover and collection period confirms consistent operational dynamics where improvements in collection efficiency reduce the time accounts are outstanding. The fluctuations suggest that collection efficiency is influenced by seasonal or operational factors, causing irregularities quarter to quarter. The notable improvement in collection efficiency in mid-2023 and late 2024 may reflect enhanced credit management or more effective collection practices during those times. Despite these improvements, the recurring increases in collection days toward year-end quarters highlight potential challenges in maintaining consistent receivables management throughout the fiscal year.

Inventory Processing Period

The average inventory processing period exhibits fluctuations within the observed timeframe. Starting at 129 days in March 2021, the period generally decreased through the remainder of 2021, reaching a low of 112 days by September 2021. Throughout 2022, this metric remained relatively stable, averaging between 118 and 125 days, before increasing again during 2023, peaking at 141 days in December 2023. The first quarter of 2024 saw a decline to 132 days, but the period rose once more, fluctuating around 135 to 147 days through to mid-2025. Overall, the inventory processing period reflects cycles of tightening and lengthening durations that suggest varying inventory management efficiencies or demand fluctuations.

Receivable Collection Period

The average receivable collection period demonstrates a more variable and generally declining trend over time. Beginning at 28 days in March 2021, it dropped notably to a low of 13 days by September 2021. The period oscillated thereafter, with lower values mostly observed in the second half of each year, particularly in 2023 and 2024, where values reached as low as 8 days in June 2025. The fluctuations indicate attempts to maintain or improve cash collection efficiency, with the general trend suggesting improved receivable turnover over the observed periods.

Operating Cycle

The operating cycle shows variability that broadly mirrors the combined behaviors of the inventory processing and receivable collection periods. Initially at 157 days in March 2021, it declined to a low of 128 days in September 2021. A rebound is apparent in subsequent periods, with the cycle extending to as high as 160 days in December 2023. The cycle remains elevated but stable in 2024 and into the first half of 2025, oscillating between 148 and 158 days. This pattern indicates that while improvements in receivable collections occurred, increases in inventory processing duration influenced the overall operating cycle, resulting in a net effect of cyclical variations rather than consistent shortening.