Freeport-McMoRan Inc. (NYSE:FCX)

Inventory Turnover

The inventory turnover ratio shows a general decline over the observed periods. Starting around 2.99 in March 2021, it peaks slightly at 3.25 in December 2020 and June 2022, but subsequently trends downward, falling to 2.48 by March 2025. This indicates a gradual slowdown in the frequency with which inventory is sold and replaced over time.

Receivables Turnover

The receivables turnover ratio exhibits high volatility throughout the periods, with values fluctuating between 13.02 and 44.04. After an initial dip in mid-2021, it peaks sharply at 44.04 in September 2024 before declining again. These large swings suggest variable efficiency in collecting accounts receivable, with some quarters indicating much faster collections than others.

Working Capital Turnover

Working capital turnover demonstrates a generally increasing trend from about 2.41 in March 2021 to a peak of 3.26 in March 2025. Despite minor fluctuations, this ratio's upward movement suggests improving efficiency in utilizing working capital to generate sales.

Average Inventory Processing Period

The average inventory processing period (in days) shows a tendency to lengthen over time. Beginning at 122 days in March 2021, it fluctuates mildly but largely increases, reaching 147 days by March 2025. This trend supports the observation of declining inventory turnover, indicating inventory remains in stock for longer durations on average.

Average Receivable Collection Period

The average receivable collection period fluctuates notably with no clear linear trend. It varies between lows of 8 days in September 2024 and highs around 28 days in mid-2020. Periodic decreases suggest improvements in receivables collection efficiency, whereas spikes point to slower collections in certain quarters.

Operating Cycle

The operating cycle, which combines inventory processing and receivable collection, shifts moderately over the periods. Starting around 145 days in March 2021, it reaches highs of about 160 days in multiple quarters of 2023 and 2024, reflecting longer combined periods for inventory turnover and receivables collection. This implies an extension in the time between cash outflow and inflow in the operating process.

Cost of Sales

The cost of sales displays a generally increasing trend over the observed periods. Starting from 3,108 million USD in the first quarter of 2020, it declined slightly in the second quarter but recovered in subsequent quarters, reaching a peak of 4,677 million USD in the third quarter of 2024. The data shows some quarterly fluctuations; however, the overall pattern indicates a steady rise in cost of sales over the five-year span, with occasional dips in certain quarters such as the fourth quarter of 2024 and the first quarter of 2025.

Inventories

Inventories have steadily increased from 3,854 million USD at the end of the first quarter of 2020 to 7,074 million USD by the first quarter of 2025. This growth appears consistent, with inventories rising each quarter without notable declines, reflecting accumulation or increased holdings over time. The increase is substantial, almost doubling over the timeframe, suggesting strategic inventory buildup or adjustments in supply chain and stock management.

Inventory Turnover Ratio

The inventory turnover ratio shows some variability but an overall downward trend from about 3.25 in early 2021 to 2.48 by the first quarter of 2025. Although in some quarters there were minor recoveries in the ratio, this sustained reduction suggests that the rate at which inventory is sold and replaced has slowed. The combination of rising inventories with a declining turnover ratio may indicate slower inventory movement or increased stock levels relative to sales.

The quarterly financial data reveals notable fluctuations and overall trends in revenues, trade accounts receivable, and receivables turnover ratios over the observed periods.

Revenues

Over the span from the first quarter of 2020 to the first quarter of 2025, revenues generally exhibited an upward trend with some volatility. Beginning at $2,798 million in March 2020, revenues increased steadily to reach a peak of $6,790 million by September 2024. There is a visible dip in revenues after this peak, dropping to $5,720 million by March 2025. This pattern suggests periods of strong growth interspersed with occasional declines, possibly reflecting commodity price cycles or operational dynamics.

Trade Accounts Receivable

The trade accounts receivable figures showed significant variability across the quarters. Starting from $515 million in March 2020, the value rose substantially to $1,537 million by March 2022, signaling an increase in credit extended to customers or longer collection periods during that phase. Following this peak, the receivables fluctuated noticeably, declining to $578 million by March 2025. These changes may indicate adjustments in credit policies, customer payment behavior, or seasonal influences affecting working capital management.

Receivables Turnover Ratio

The receivables turnover ratio, available from March 2021 onwards, depicts the efficiency of collecting receivables. The ratio showed considerable fluctuation, moving from 15.92 in March 2021 to a higher peak of 44.04 in March 2025. This increasing trend, despite some oscillations, generally suggests improved collection efficiency and faster conversion of receivables into cash over time. High ratios such as those observed in late 2024 and early 2025 indicate strong credit control and effective receivables management during those quarters.

In summary, the data illustrates growth in revenues accompanied by variable trade receivables levels. The improvement in receivables turnover ratio over time reflects enhanced operational efficiency in managing credit and collections, although occasional revenue dips and receivables fluctuations warrant attention to the underlying causes. The company's financial health appears to benefit from strong revenue expansion, balanced by effective control over receivables turnover.

Working Capital

The working capital exhibited a general upward trend from March 2020 through June 2022, increasing from approximately 4.2 billion USD to over 10.2 billion USD. This indicates an improving short-term liquidity position over this period. However, beginning in the latter half of 2022 and into 2023 and 2024, working capital began to decline gradually, decreasing to around 7.8 billion USD by the end of the first quarter of 2025. This downward adjustment suggests a tightening in short-term liquidity or changes in current assets and liabilities management.

Revenues

Revenues showed a steady increase from March 2020, starting at 2.8 billion USD and reaching a peak of approximately 6.6 billion USD in March 2022. Following this peak, revenues fluctuated but demonstrated a generally volatile pattern, with decreases and partial recoveries observed through 2023 and early 2024. By March 2025, revenues were approximately 5.7 billion USD, indicating a slight downward movement from earlier highs. The volatility in revenue may be attributed to market conditions or operational factors affecting sales volume or pricing.

Working Capital Turnover

The working capital turnover ratio, available from September 2020 onwards, reveals a consistent upward trend. Starting at 2.41, the ratio increased steadily each quarter, reaching approximately 3.26 by March 2025. This implies that the company has been improving its efficiency in utilizing working capital to generate revenue over time. The increasing turnover ratio indicates enhanced operational efficiency despite the decreasing working capital observed in later periods.

Summary Insight

The data demonstrates that although the company's working capital decreased in the later periods after peaking in mid-2022, the revenue generation remained relatively strong, and the efficiency in using working capital improved as reflected in the rising turnover ratio. This suggests that the company might be managing its resources more effectively, optimizing working capital to support revenue, possibly by reducing excess current assets or managing payables more effectively. The fluctuations and partial decline in revenue towards the latest quarters warrant monitoring to understand underlying causes and maintain financial performance.

Inventory Turnover

Inventory turnover ratios were first recorded starting in March 2021, with an initial value of 2.99. The ratio experienced minor fluctuations throughout the periods, reaching a peak of 3.25 in December 2020 and June 2022. There was a general declining trend observed from March 2023 onward, falling from 2.91 to 2.48 by March 2025. This suggests a gradual decrease in the efficiency of inventory management over the latter periods.

Average Inventory Processing Period

The inventory processing period showed notable variability over time. Beginning at 122 days in March 2021, it initially decreased to 112 days by December 2020 and June 2022, indicating relatively quicker inventory turnover at those points. However, starting from early 2023, the period progressively lengthened, peaking at 147 days by March 2025. This increase corresponds inversely with the declining inventory turnover ratio, signaling slower inventory movement and potential buildup of stock.

Overall Trends and Insights

The data reveals a pattern where inventory efficiency improved slightly during the early observed periods but steadily declined later. The rising average processing period paired with a decreasing inventory turnover ratio suggests that inventory was held longer, possibly due to changes in demand, supply chain challenges, or strategic shifts in inventory policy. These trends may have implications for working capital management and operational efficiency moving forward.

The analysis of the receivables turnover ratio indicates notable fluctuations over the observed periods. Starting from a value of 15.92 in March 2020, the ratio declined to 13.02 in June 2020, followed by an increase to 17.22 by September 2020 and a further substantial rise to 22.75 in December 2020. The ratio then experienced some volatility, decreasing to 19.56 in March 2021 and 16 in June 2021 before rebounding sharply to reach 24.84 in September and peaking at 27.47 in December 2021.

In 2022, the receivables turnover ratio fell to 17.05 in March and increased slightly to 19.02 in June. The third quarter showed another significant rise to 32.43, followed by a decline to 28.67 by the end of the year. The year 2023 began with a turnover of 18.9 in the first quarter but again saw considerable increases and decreases, fluctuating between 15.92 and 26.19 during the mid-year quarters and peaking once more at 44.04 in the last quarter of that year.

In 2024, the ratio moderated, starting at 33.46 in March and subsequently declining to the mid-to-high twenties and teens in the following quarters, ending on a high note with 44.04 in the final quarter of 2024 and 33.46 in the first quarter of 2025. Overall, this pattern reflects a largely variable receivables turnover ratio, with periods of efficient collections interspersed with slower cycles.

The average receivable collection period inversely mirrors the turnover ratio trends, moving within a range from a high of 28 days in June 2020 down to a low of 8 days in December 2024, with intermediate fluctuations. Collection periods were relatively longer (around 23 to 28 days) in early 2020 and mid-2021, indicating slower receivable collections during these periods.

Subsequently, the collection period shortened markedly, reaching the minimum of 8 days in December 2024, suggesting improved efficiency in receivables management. However, some intermediate quarters exhibited moderate increases in days outstanding, such as 21 days in September 2023 and 23 days in June 2024, suggesting occasional slowdowns. The general trend, nonetheless, points to enhanced collection efficiency over the longer term, characterized by shorter average collection periods and higher receivable turnovers.

Average Inventory Processing Period

The average inventory processing period shows a generally increasing trend from March 2021 through March 2025. Initially, the period fluctuated slightly, starting at 122 days in March 2021, dipping to a low of 112 days in June 2021 and December 2021, and then rising steadily to reach 147 days by March 2025. This suggests that inventory is being held for longer periods over time, which could indicate slower inventory turnover or an accumulation of stock.

Average Receivable Collection Period

The average receivable collection period exhibits more variability with no clear sustained trend. It started at 23 days in March 2021, decreased to a low of 8 days in September 2024, and then showed some fluctuation thereafter. Periodic decreases in collection days suggest intermittent improvements in receivables management or customer payment speed, while occasional increases indicate periods of slower collections.

Operating Cycle

The operating cycle reflects the combined impact of inventory processing and receivables collection periods. It experienced some fluctuations but generally moved upward from 145 days in March 2021 to reach 158 days by December 2024 and March 2025. This trend implies an overall lengthening in the time required to convert inventory to cash, primarily influenced by the increasing inventory processing period despite variable receivables collection.

Summary

Overall, the data indicates a tendency toward longer inventory holding periods and a modest elongation of the operating cycle over the observed timeframe. The receivable collection period remains inconsistent, with periods of improvement that may have mitigated the operating cycle duration. The lengthening operating cycle may pose challenges related to working capital management and cash flow if not addressed.