Monsanto Co. (NYSE:MON)

Inventory Turnover

The inventory turnover ratio exhibits a fluctuating pattern from 2012 to 2017. It starts at 2.28 in 2012, rises to a peak of 2.45 in 2013, then declines to 1.95 in 2015 before slightly recovering to 2.01 by 2017. This suggests some variability in how efficiently inventory is being managed, with a general decline after 2013.

Receivables Turnover

The receivables turnover ratio increases from 7.12 in 2012 to a high of 9.17 in 2015, indicating improved efficiency in collecting receivables during this period. However, it declines to 6.77 in 2017, which may reflect a slowdown in collections or more lenient credit terms towards the later years.

Payables Turnover

A downward trend is observed in payables turnover, decreasing from 8.13 in 2012 to 6.28 in 2017 with some intermittent variability. This decline points to the company taking longer to pay its suppliers over time.

Working Capital Turnover

Working capital turnover demonstrates a significant increase in 2016, jumping sharply from 2.75 in 2015 to 9.46, then decreasing to 6.5 in 2017. This suggests a major improvement in the utilization of working capital during 2016, though this efficiency normalizes somewhat in the following year.

Average Inventory Processing Period

The average inventory processing period initially decreases from 160 days in 2012 to 149 days in 2013, but then progressively lengthens to 187 days by 2015, stabilizing around 182 days thereafter. This pattern indicates slower inventory turnover through the middle years, possibly reflecting challenges in inventory management or changes in product mix.

Average Receivable Collection Period

The average collection period shortens from 51 days in 2012 to 40 days in 2015, reflecting faster collection, but then elongates to 54 days by 2017, indicating slower collections in recent years, consistent with the decline in receivables turnover.

Operating Cycle

The operating cycle lengthens steadily from 211 days in 2012 to 236 days in 2017. This reflects an overall increase in the time taken to convert inventory and receivables into cash, potentially indicating less operational efficiency.

Average Payables Payment Period

The average payables payment period shows a rising trend, moving from 45 days in 2012 to 58 days in 2017, consistent with the decreasing payables turnover ratio. This implies extended payment terms or deliberate management of cash outflows by delaying supplier payments.

Cash Conversion Cycle

The cash conversion cycle decreased from 166 days in 2012 to 141 days in 2013, indicating enhanced liquidity and operational efficiency. However, it then increased gradually to 182 days by 2015 and remained elevated around 177 to 178 days through 2016 and 2017, suggesting a deterioration in the speed at which cash is recovered during these years.

Cost of Goods Sold

The cost of goods sold exhibited an overall increase from 2012 to 2014, rising from 6459 million US dollars to 7281 million US dollars. Following this peak in 2014, there was a declining trend until 2016, when the value dropped to 6485 million US dollars. In 2017, a slight uptick occurred, reaching 6703 million US dollars. This pattern indicates an initial growth phase in costs followed by a period of reduction and minor recovery.

Inventory, Net

Net inventory showed a steady increase over the period under review. Starting at 2839 million US dollars in 2012, it rose to a peak of 3597 million US dollars in 2014, then declined marginally until 2016. However, the value increased again in 2017 to 3340 million US dollars. This suggests some variability but generally an upward trend in inventory holdings.

Inventory Turnover Ratio

The inventory turnover ratio decreased from 2.28 in 2012 to a low of 1.95 in 2015. Post-2015, the ratio stabilized around 2.00 to 2.01 through 2017. This decline followed by stabilization may reflect slower movement of inventory during the mid-period, which later improved slightly but did not return to earlier levels.

Overall Analysis

The data indicates that the company experienced rising costs and inventory levels initially, paired with a reduction in inventory turnover efficiency until 2015. The subsequent years show attempts at optimization, with cost control and inventory management improving marginally. Despite fluctuations, the inventory turnover remains below the 2012 level, suggesting a need for continued focus on inventory efficiency.

The financial data reveals several notable trends in the company's operations over the six-year period ending August 31, 2017. Net sales exhibited fluctuations with a general upward movement initially, peaking in 2014 at approximately 15.9 billion US dollars, followed by a decline in 2016, then a rebound in 2017. This pattern suggests periods of varying market demand or operational adjustments.

Trade receivables, net, showed variability year over year without a consistent directional trend. After a decrease from 2012 to 2013, there was an increase in 2014, a subsequent dip in 2015, and then a notable rise in 2016 and continuing into 2017. The increase in trade receivables in later years could indicate more credit extended to customers or slower collection periods.

The receivables turnover ratio, which measures the efficiency of collections, varied inversely with the trade receivables. The ratio improved from 7.12 in 2012 to a peak of 9.17 in 2015, suggesting more efficient collection practices during that period. However, from 2016 onward, the ratio declined to 7.01 and then 6.77 in 2017, indicating a reduction in collection efficiency. This decline could be associated with the increased trade receivables during these years, possibly reflecting slower customer payments or changes in credit policy.

Net Sales

Increased from 13.5 billion in 2012 to a peak of 15.9 billion in 2014, then declined to 13.5 billion in 2016, followed by a partial recovery to 14.6 billion in 2017.

Trade Receivables, Net

Displayed fluctuating levels, with a significant increase after 2015, reaching 2.16 billion in 2017, up from 1.9 billion in 2012.

Receivables Turnover

Peaked at 9.17 in 2015, indicating efficient collection during that year, then decreased to 6.77 in 2017, suggesting declining collection efficiency.

Overall, the data indicates a period of sales volatility accompanied by changes in credit management and collection efficiency. The declining receivables turnover in conjunction with increased trade receivables in recent years could warrant further investigation into credit risk and liquidity management.

Cost of Goods Sold (COGS)

The cost of goods sold experienced a rise from 6459 million USD in 2012 to a peak of 7281 million USD in 2014, indicating an upward trend during this period. Subsequently, there was a decline to 6485 million USD in 2016, followed by a slight increase to 6703 million USD in 2017. This pattern suggests fluctuations in production costs or sales volume, with an initial growth phase followed by some contraction and mild recovery.

Accounts Payable

Accounts payable values showed an overall increasing trend with some variability. Starting at 794 million USD in 2012, the figure rose consistently to 1111 million USD in 2014. After a dip to 836 million USD in 2015, accounts payable increased again to reach 1068 million USD by 2017. The fluctuations could indicate changes in supplier credit terms, purchasing activity, or working capital management practices over the years.

Payables Turnover Ratio

The payables turnover ratio declined from 8.13 in 2012 to 6.55 in 2014, suggesting that the company was taking longer to pay its suppliers during this period. This ratio then increased notably to 8.16 in 2015, indicating accelerated payments, before declining again to 6.28 by 2017. The variation in this ratio reflects inconsistent payment patterns, possibly influenced by changes in cash flow management, supplier negotiations, or operational considerations.

Overall Observations

The data reveals that while the cost of goods sold and accounts payable both show an initial rise with subsequent fluctuations, the payables turnover ratio suggests variability in payment timing to suppliers. The decreasing turnover ratios in certain years might reflect extended payment terms or constrained liquidity, whereas higher turnover indicates prompt payment. These trends warrant monitoring as they impact cash conversion cycles and supplier relations.

Working Capital

The working capital exhibits fluctuations over the six-year period. It starts at 5,437 million USD in 2012, increases slightly to 5,741 million USD in 2013, then declines to 4,563 million USD in 2014. It recovers to 5,448 million USD in 2015 but experiences a significant drop in 2016 to 1,428 million USD, followed by a minor increase to 2,253 million USD in 2017. This indicates variability in short-term liquidity and operational efficiency.

Net Sales

Net sales show a generally stable to slightly declining trend with some variability. Sales increased from 13,504 million USD in 2012 to a peak of 15,855 million USD in 2014. However, sales declined to 15,001 million USD in 2015 and further down to 13,502 million USD in 2016. A partial recovery is observed in 2017 with sales reaching 14,640 million USD. Overall, the sales figures reflect periods of growth followed by contraction and a modest rebound.

Working Capital Turnover

The working capital turnover ratio displays notable volatility. It begins with moderate values of 2.48 in 2012 and 2.59 in 2013, then peaks at 3.47 in 2014. A decline to 2.75 occurs in 2015, which is followed by a sharp increase to 9.46 in 2016 and a decrease to 6.5 in 2017. The extraordinarily high turnover ratios in 2016 and 2017 suggest a significant reduction in working capital relative to sales, potentially indicating operational efficiency improvements or constraints in working capital availability.

Overall Analysis

The data reveals inconsistent trends in working capital and sales with significant variability in working capital turnover. The sharp decrease in working capital in 2016 coupled with a high turnover ratio reflects an unusual financial condition that may warrant further investigation. Meanwhile, net sales show resilience with recovery after a low point in 2016. These patterns suggest dynamic changes in operational management and possibly strategic adjustments affecting liquidity and sales performance during the reviewed period.

Inventory Turnover

The inventory turnover ratio shows a fluctuating trend over the six-year period. It initially increased from 2.28 in 2012 to 2.45 in 2013, indicating a higher frequency of inventory being sold and replaced within that year. However, after 2013, the ratio declined to 2.02 in 2014 and further decreased to 1.95 in 2015, suggesting a reduction in the efficiency of inventory management. A slight improvement occurred in 2016 and 2017, with ratios of 2.00 and 2.01 respectively, but these values remained below the earlier peak in 2013.

Average Inventory Processing Period

The average inventory processing period, expressed in number of days, generally indicates the length of time inventory remains before being sold. This metric decreased from 160 days in 2012 to 149 days in 2013, reflecting a faster turnover corresponding with the peak in inventory turnover during the same period. From 2014 onwards, there is a marked increase in the processing period, peaking at 187 days in 2015. Subsequently, the period moderately improved but remained elevated at 182 days for both 2016 and 2017. These longer periods align with the lower inventory turnover ratios observed during those years.

Overall Analysis

There is an inverse relationship observed between the inventory turnover ratio and the average inventory processing period, as expected. The data indicate a peak in inventory management efficiency around 2013, with faster inventory turnover and shorter processing periods. Post-2013, the efficiency appears to decline, as shown by lower turnover ratios and increased inventory holding periods, suggesting potential challenges in inventory management or changes in operational strategy that led to slower inventory movement. The stability in the last two years suggests that the company might have reached a new equilibrium in inventory processing duration and turnover frequency.

Receivables Turnover

The receivables turnover ratio exhibited fluctuations over the six-year period. Initially, the ratio increased from 7.12 in 2012 to a peak of 9.17 in 2015, indicating enhanced efficiency in collecting receivables during this span. However, after 2015, the ratio declined, reaching 6.77 by 2017, suggesting a deterioration in collection efficiency in the later years.

Average Receivable Collection Period

The average receivable collection period displayed an inverse trend in comparison to the receivables turnover ratio. The period initially decreased from 51 days in 2012 to 40 days in 2015, mirroring the improvement in turnover and reflecting a quicker collection cycle. Conversely, post-2015, the collection period extended again, rising to 54 days by 2017, which corresponds to the observed reduction in turnover ratio, indicating slower collections.

Overall Analysis

The analysis shows that the company experienced improved efficiency in receivables management up to 2015, as evidenced by higher turnover and shorter collection periods. After 2015, the trends reversed, implying challenges in maintaining collection efficiency. This could suggest changes in credit policies, customer payment behaviors, or other operational factors affecting receivables turnover and collection time.

Average Inventory Processing Period

The average inventory processing period exhibited some variation over the years, beginning at 160 days in 2012 and decreasing to 149 days in 2013. Subsequently, there was an increase in this period to 180 days in 2014, followed by a gradual rise to 187 days in 2015. The period slightly decreased to 182 days in both 2016 and 2017, indicating a stabilization in the time taken to process inventory during the latter years.

Average Receivable Collection Period

This metric showed fluctuations throughout the period under review. Starting at 51 days in 2012, it decreased to 42 days in 2013, suggesting improved efficiency in receivables collection. However, the period rose to 46 days in 2014, then decreased again to 40 days in 2015. In the last two years, 2016 and 2017, the collection period increased notably to 52 and 54 days, respectively, indicating a potential slowdown in the receipt of payments from customers.

Operating Cycle

The operating cycle, which combines inventory processing and receivables collection, generally trended upward during the period. From 211 days in 2012, it decreased to 191 days in 2013, reflecting operational improvements. However, from 2014 onward, the operating cycle lengthened consistently, rising to 226 days in 2014, 227 days in 2015, 234 days in 2016, and reaching 236 days in 2017. This trend suggests an overall increase in the time needed to convert inventory and receivables into cash, possibly impacting liquidity and working capital management efficiency.

The data reveals notable fluctuations in the company's payables management over the six-year period. Both the payables turnover ratio and the average payables payment period exhibit inverse trends, consistent with their financial relationship.

Payables Turnover Ratio

The payables turnover ratio started at 8.13 in 2012, indicating relatively frequent payment to suppliers. It declined steadily to 6.55 by 2014, suggesting slower payments or increased outstanding payables. A sharp rebound occurred in 2015, reaching 8.16, the highest value in the period, before declining again to 6.28 in 2017, the lowest point observed. The fluctuations imply periods of varying payment discipline or changes in procurement and payable practices.

Average Payables Payment Period

The average payables payment period moved inversely to the turnover ratio. It began at 45 days in 2012, increased steadily to 56 days by 2014, then sharply decreased back to 45 days in 2015. Thereafter, it increased again, reaching 58 days by 2017, indicating the company generally took longer to settle its payables towards the end of the observed period. The peak payment delays correspond with the lowest turnover ratios, indicating a lengthening of payment cycles.

Overall, the data suggests the company experienced varying cash management policies or supplier credit terms during these years. The initial and final years show relatively longer payables cycles, while a brief improvement in 2015 reflects a temporary tightening in payables payment. These shifts could imply strategic adjustments in working capital management or responses to external market conditions impacting payment capabilities.

The data reveals trends in the company's working capital management over the period from 2012 to 2017. Key metrics analyzed include inventory processing period, receivable collection period, payables payment period, and the overall cash conversion cycle.

Average Inventory Processing Period

The average inventory processing period showed considerable fluctuation. Starting at 160 days in 2012, it decreased somewhat in 2013 to 149 days but then increased significantly to a peak of 187 days in 2015. In the final two years, 2016 and 2017, the period slightly declined and stabilized at 182 days. This suggests challenges in inventory turnover with an overall trend toward longer holding periods except for the brief dip in 2013.

Average Receivable Collection Period

The receivable collection period demonstrated variability without a clear directional trend. It started at 51 days in 2012, decreased to the lowest point of 40 days in 2015, indicating improved collection efficiency that year, but increased thereafter to 54 days in 2017, the highest observed in the period. This increase toward the end could imply a relaxation in credit policies or slower customer payments in recent years.

Average Payables Payment Period

The payables payment period exhibited an overall upward trend, beginning at 45 days in 2012 and rising steadily to 58 days by 2017, with some minor fluctuations. This indicates the company has been extending its payment terms to suppliers, potentially improving cash flow but possibly affecting supplier relationships.

Cash Conversion Cycle

The cash conversion cycle closely mirrors the trends seen in the inventory processing and receivables collection periods. It started at 166 days in 2012, decreased to 141 days in 2013, then increased again to reach 182 days by 2015. It remained relatively stable but elevated around 177 to 178 days through 2016 and 2017. This extended cash conversion cycle suggests slower overall cash turnover, indicating that cash is tied up in operations for an increasing number of days over the majority of the analyzed period.

In summary, the company has experienced increasing durations in inventory holding and payables payment, while the receivables collection period varied but ultimately increased toward the end of the period. Together, these factors contributed to a lengthening cash conversion cycle, which could have implications for liquidity management and operational efficiency going forward.