Monsanto Co. (NYSE:MON)

Inventory Turnover

The inventory turnover ratio demonstrates fluctuations throughout the observed periods, with values oscillating primarily between approximately 1.6 and 2.5. There is no consistent trend of increase or decrease, though brief phases of decline and recovery are apparent. The turnover ratio suggests moderate variability in inventory management efficiency over time.

Receivables Turnover

The receivables turnover ratio displays notable volatility, ranging roughly from 3.6 to 9.2. Higher values indicate more efficient collection of receivables, which occur intermittently. Some quarters show sharp declines, followed by periods of recovery, suggestive of varying credit management or sales patterns affecting receivables.

Payables Turnover

The payables turnover ratio fluctuates between approximately 5.5 and 10.4. Several sharp decreases and increases are visible, with occasional peaks indicating quicker payment to suppliers and troughs indicating slower payment. The variability could reflect changes in payment policies or supplier terms over the timeframe.

Working Capital Turnover

The working capital turnover ratio exhibits substantial variation, ranging approximately from 1.6 up to 9.5. Periods of elevated turnover suggest effective utilization of working capital to generate sales, while lower values imply reduced efficiency. The highest spikes, notably above 7, reveal temporary significant improvements in working capital management.

Average Inventory Processing Period

The average inventory processing period shows considerable variability, mostly oscillating between 140 and 220 days. The presence of peaks above 210 days indicates times when inventory remains longer before sale, implying slower inventory turnover. Shorter periods, near 140 days, indicate improved inventory handling efficiency.

Average Receivable Collection Period

The average receivable collection period fluctuates notably from about 40 to 100 days. Longer collection periods point to slower cash inflows from customers, while shorter periods indicate improved cash receipt efficiency. This metric's fluctuations align with the variability observed in the receivables turnover ratio.

Operating Cycle

The operating cycle length varies between roughly 190 and 290 days, with periods of elongation and contraction. Higher values imply that the company takes longer to convert inventory and receivables into cash, which could increase working capital requirements. Shorter cycles reflect more efficient operation.

Average Payables Payment Period

The average payables payment period ranges between approximately 35 and 65 days. Periods with longer payment periods may indicate the company is extending supplier payments to optimize cash flow, whereas shorter periods suggest quicker settlement of obligations. This metric contributes inversely to the cash conversion cycle.

Cash Conversion Cycle

The cash conversion cycle remains highly volatile, fluctuating between about 140 and 250 days. The cycle timing indicates the net duration between cash outflow for purchases and cash inflow from sales. Extended durations indicate slower cash recovery from operations, whereas shorter cycles suggest more rapid cash turnover. Peaks often correspond with longer inventory and receivable periods and shorter payable periods.

The cost of goods sold (COGS) exhibits notable fluctuations over the reported periods. Starting at 1,343 million US dollars in November 2011, it peaks at 2,402 million US dollars in February 2013 before showing a general pattern of rises and falls across subsequent quarters. There is no consistent upward or downward trend but rather periodic increases followed by declines, with values oscillating between approximately 1,300 and 2,400 million US dollars.

Inventory, net, demonstrates a generally increasing trend over the timeframe considered. Beginning at 3,136 million US dollars in November 2011, it declines in some quarters but overall rises steadily to reach a high of around 4,033 million US dollars by February 2018. Despite some quarterly dips, the level of net inventory remains elevated relative to the initial value, reflecting possible accumulation or changes in inventory management practices.

Inventory turnover ratio data is available starting only in May 2012 and displays variability without a clear long-term trend. Values range roughly between 1.64 and 2.48 times, with periods of both strengthening and weakening turnover. The turnover ratio generally stays near the 2.0 mark but declines at certain points, suggesting fluctuating efficiency in inventory usage or sales over the quarters.

Cost of Goods Sold (COGS)

Fluctuates substantially, with peaks and troughs rather than a clear trend.

Highest observed in Feb 2013.

Ranges from around 1,300 to 2,400 million US dollars across periods.

Inventory, net

Shows an overall increasing trajectory despite some quarterly decreases.

Rises from just above 3,100 million US dollars to over 4,000 million US dollars by the end of the timeframe.

The increase may indicate accumulation or slower turnover.

Inventory Turnover Ratio

Measured since May 2012, varies between approximately 1.64 and 2.48.

Generally hovers near 2.0, reflecting moderate efficiency in inventory utilization.

Periods of decline suggest occasional decreases in inventory management effectiveness.

Overall, the data indicates the company experiences variability in production costs and sales cost, an increase in inventory holdings, and fluctuating efficiency in converting inventory to sales. The upward trend in net inventory combined with inconsistent inventory turnover implies attention may be needed on inventory management to optimize working capital and operational efficiency.

The financial data over the analyzed periods reveal several notable trends in net sales, trade receivables, and receivables turnover ratios.

Net Sales

Net sales exhibit a consistent seasonal pattern characterized by higher sales in the quarters ending in February and May, and lower sales in the quarters ending in August and November. This cyclical behavior suggests strong seasonality in the company's revenue generation. For instance, peaks in net sales are observed in February 2012 (US$ 4,748 million), February 2013 (US$ 5,472 million), and February 2014 (US$ 5,832 million). Following these peaks, sales decline significantly in the subsequent quarters before rising again in the beginning of the next year. Despite the evident seasonality, the overall level of net sales fluctuates moderately without a clear upward or downward long-term trend over the full range of data provided. The peak values remain within a similar range around US$ 5,000 million across years, indicating stability in revenue volumes with no strong expansion or contraction over the periods.

Trade Receivables, Net

Trade receivables also demonstrate seasonality that corresponds loosely with the pattern in net sales. Higher receivables are generally recorded in the quarters following strong sales periods. For example, trade receivables peak at US$ 4,229 million in May 2014 and US$ 3,998 million in May 2015, reflecting elevated collections linked to previous high sales quarters. There are pronounced fluctuations reflecting the collection cycle and timing of receivables, with lows typically appearing in August or November quarters. Overall, the magnitude of trade receivables remains in the range of approximately US$ 1,600 million to over US$ 4,200 million, suggesting consistent levels of outstanding customer credit over time. Variations in receivables magnitudes might also be influenced by changes in sales timing, sales mix, or credit policy adjustments.

Receivables Turnover Ratio

The receivables turnover ratio, which measures the efficiency of collecting receivables, shows considerable variation across quarters, reinforcing observations of seasonality and collection cycle fluctuations. The ratio oscillates between approximately 3.65 and 9.17 during the analyzed periods. Higher turnover ratios occur primarily in the quarters with lower trade receivables relative to sales, indicating faster collections—for example, in August 2013 (8.67) and August 2015 (9.17). Conversely, lower turnover ratios are observed in quarters where receivables accumulate or collections slow down, such as August 2012 (4.09) and August 2014 (3.65). The ratio data also suggest some cyclical weakness in collections in mid-year quarters across multiple years.

In summary, the data point to a company exhibiting marked seasonality in key working capital components. Net sales and trade receivables undergo pronounced quarterly fluctuations aligned with seasonal market dynamics. The receivables turnover ratio variability reflects changing collection efficiency correlated with these sales and receivable cycles. No definitive evidence emerges of a strong growth or declining trend in these metrics over the examined timeframe, indicating a stable but seasonally driven business environment.

The quarterly financial data reveals several notable trends in cost of goods sold, accounts payable, and payables turnover over the observed periods.

Cost of Goods Sold (COGS)

The COGS figures exhibit a clear seasonal pattern with notable peaks and troughs within each year. Typically, the values rise significantly in the first quarter, reaching maximum levels around February or May, followed by substantial decreases around August and November. For instance, COGS spiked to above $2,000 million in Q1 of both 2012 and 2013, but subsided below $1,300 million by August 2013. Though the seasonal fluctuation persists throughout the data, an overall stabilization is observable in the later years, particularly from 2014-2018, where the peaks are somewhat lower and troughs higher, indicating moderation in extremes compared to the earlier years.

Accounts Payable

The accounts payable balances also display variability across quarters, but the pattern is less consistent relative to COGS. There are several spikes in payable amounts, notably reaching highs in the third quarter of multiple years, such as August 2014 and November 2017. Despite the volatility, the general range fluctuates roughly between $600 million and $1,100 million. The data suggests occasional buildup of payables towards the latter part of some years, possibly reflecting inventory purchasing or supplier payment timing impacts. No strong upward or downward trend is apparent over the years, rather a relatively stable but variable position.

Payables Turnover Ratio

This ratio, representing the frequency of payment to suppliers, shows considerable variation without a clearly linear trend. The values oscillate between approximately 5.5 and 10.4 over the quarters. Peaks often correspond to periods following lower accounts payable balances, indicating quicker vendor payment. For example, the turnover ratio rose above 10 in mid-2015 and mid-2016, aligning with periods of lower payable balances. Conversely, lower turnover ratios coincide with higher payable balances, suggesting delayed payment cycles in those quarters. Overall, the turnover ratio reflects dynamic payment practices, with some tendency towards faster payment in the 2015-2016 period compared to 2017-2018 where ratios moderately declined.

In summary, the cost of goods sold demonstrates a strong seasonal trend moderated over time, accounts payable fluctuate without sustained directional movement but with episodic increases towards year-ends, and payables turnover indicates variable payment velocity, likely responding to changes in payable management and operational considerations.

The financial data for the periods from November 2011 through February 2018 reveals distinct trends in working capital, net sales, and working capital turnover.

Working Capital

Working capital demonstrates a fluctuating pattern over the analyzed quarters. Initially, there is a steady increase from 3,881 million US dollars in November 2011 to a peak of 7,327 million in May 2013. This rise suggests improved liquidity and operational efficiency during that interval.

However, following the peak, working capital sharply decreases to 4,563 million by August 2014, exhibiting a notable contraction. Subsequently, it shows intermittent increases and declines, with values oscillating between roughly 2,000 to 6,500 million US dollars in later periods. The lowest recorded value emerges in November 2015 at 1,966 million, indicating potential strain or strategic shifts affecting short-term asset and liability management.

Net Sales

Net sales present considerable volatility without a clear upward or downward trajectory. Sales ascend and descend irregularly, aligned with seasonal or market fluctuations. For instance, net sales jump from 2,439 million in November 2011 to 5,472 million in February 2013, then fluctuate between approximately 2,098 million and 5,832 million in subsequent quarters.

Periods such as November 2012 and November 2013 exhibit peaks of 2,939 million and 3,143 million, respectively, followed by substantial increases in early 2014 reaching 5,832 million. This pattern of spikes interspersed with declines recurs throughout the timeline, suggesting varied demand or business cycle impacts.

Working Capital Turnover

The working capital turnover ratio, available for later periods, suggests how efficiently working capital is used to generate sales. Ratios start near 2.48 in May 2012 and generally hover around 2.0 to 3.5 through early 2015, reflecting moderate efficiency levels.

From November 2015 onward, a sharp rise in turnover values is observable, reaching an exceptionally high 9.46 in November 2016. This spike could indicate significantly improved utilization of working capital or a decrease in working capital relative to sales volume. The ratio then moderates but remains elevated between approximately 4.7 and 6.5 until early 2018, maintaining higher efficiency compared to earlier periods.

Insight Summary

The working capital experienced considerable volatility, peaking in mid-2013 before substantial contractions and irregular fluctuations thereafter. Net sales exhibit non-linear behavior with multiple peaks and troughs, lacking steady growth but maintaining sizable volumes throughout the term. The working capital turnover ratio's marked increase in later years reveals enhanced efficiency or changing business dynamics in managing capital relative to sales.

Together, these patterns imply periods of both expansion and constraint, with potential operational adjustments made to balance liquidity and sales performance under changing market conditions.

Inventory Turnover Ratio

The inventory turnover ratio, observed from November 2012 onward, exhibits fluctuations with a general pattern of moderate variation. Initially, the ratio dropped to 1.86 in February 2013 from 2.28 in November 2012, indicating slower inventory turnover. This was followed by a recovery to 2.48 in August 2012, suggesting improved efficiency. Over the subsequent years, the ratio mostly stayed within the range of approximately 1.6 to 2.1, with occasional peaks above 2.0 that show periods of relatively better inventory management. However, no clear long-term upward or downward trend is evident, implying stability interspersed with short-term variability.

Average Inventory Processing Period (Days)

The average inventory processing period shows an inverse trend relative to the inventory turnover ratio, reflecting the typical relationship between these metrics. It ranges broadly from around 147 days to over 220 days. Notably, there were significant increases reaching approximately 219 and 221 days during late 2014 and early 2018, respectively, indicating slower processing times or accumulation of inventory in those quarters. Periods of lower processing days, such as around 147 days in mid-2012, correspond to higher turnover rates, reinforcing the inverse association. The data reflects cyclical variations, with occasional spikes, suggesting fluctuating inventory efficiency over the observed timeframe.

General Insights

The observed data points to a stock management approach experiencing regular cycles in inventory movement speeds. The inventory turnover ratio's oscillations correspond inversely with the processing period trends, illustrating consistency in the fundamental relationship between these two measures. Despite the fluctuations, the metrics stabilize around specific median values, indicating no pronounced positive or negative change in inventory handling efficiency over the full period. Sharp increases in the processing period at certain intervals may warrant further investigation to understand underlying operational or market factors contributing to slower inventory cycles during those times.

Receivables Turnover Ratio

The receivables turnover ratio demonstrates a fluctuating pattern throughout the observed periods. Initially, values start around 7.12, followed by a gradual decline to lows near 3.65 and 3.71 during specific quarters, indicating potential challenges in collection efficiency. This ratio rebounded several times, reaching peaks such as 9.17 and 8.67, suggesting periods of improved credit management and faster turnover of receivables. The oscillation between these high and low points throughout the timeline points to varying success in receivables management, with no consistent upward or downward trend. However, the presence of multiple troughs below 4.0 suggests intermittent difficulties in maintaining optimal turnover.

Average Receivable Collection Period

The average receivable collection period, expressed in days, exhibits an inverse correlation with the receivables turnover ratio, as expected. The collection period fluctuates notably, with values spanning from a low of 40 days up to a high around 100 days during certain quarters. These fluctuations indicate variability in how quickly the company collects outstanding receivables. Periods with extended collection durations coincide with the lowest turnover ratios, reinforcing the indications of slower collection activities. Conversely, shorter collection periods coincide with higher turnover ratios, reflecting improved efficiency. The recurring spikes in days outstanding suggest inconsistent collection performance, potentially arising from seasonal effects, changes in credit policies, or customer payment behaviors.

Overall Insights

The analysis of these financial metrics over the given quarterly periods reveals an overall pattern of volatility in receivables management. The lack of sustained improvement or deterioration suggests that the company faces ongoing operational or market factors affecting receivable collections. To enhance financial health, sustained efforts may be required to stabilize and improve collection processes to reduce the average collection period and increase the turnover ratio consistently.

The data reveals distinct fluctuations and general patterns in the company's operational efficiency metrics over the analyzed periods. Consideration is given to three key financial ratios: Average Inventory Processing Period, Average Receivable Collection Period, and Operating Cycle, all measured in number of days.

Average Inventory Processing Period

This metric shows variability with periods of both increase and decrease. Starting from 160 days, it peaks around 219 days in early 2015 before experiencing a gradual decline to approximately 172 days by mid-2017, followed by another increase toward 222 days by early 2018. These movements suggest fluctuating efficiency in inventory turnover, with some periods indicating slower processing and potential inventory holding issues.

Average Receivable Collection Period

The collection period demonstrates sporadic changes without a clear sustained trend. It begins near 51 days, experiences peaks around 89 to 100 days at various points (notably mid-2012 and 2014), and falls back to the low 40s at times. Toward the end of the series, it moves upwards again to above 60 days. This volatility indicates an inconsistent collection process, with some quarters reflecting delayed receivables and potential cash flow timing challenges.

Operating Cycle

The operating cycle, defined as the sum of inventory processing and receivable collection periods, follows a similar fluctuating pattern. After initial values around 211 days, it rises to the high 270s and even reaches 285 days towards early 2018. Despite short-term declines, the overall trend points to a lengthening operating cycle, implying an elongation in the cash conversion process, which might suggest increased working capital requirements and greater exposure to operational liquidity risks.

In summary, the company experienced notable variability in both inventory management and receivables collection over the analyzed timeframe, resulting in an operating cycle that generally trended upwards. This pattern highlights potential concerns related to inventory turnover efficiency and accounts receivable collection timing, both of which could impact the company's liquidity and operational performance without targeted management intervention.

The payables turnover ratio demonstrates fluctuations across the observed periods, with notable variability in its trend. Starting in November 2011 through February 2012, data is not available; however, from May 2012 onwards, the ratio generally oscillates between approximately 6.0 and 10.4. Peaks appear around mid-2015 and mid-2016, where the turnover reached values above 10, suggesting periods of quicker payables management. Conversely, several troughs occur, particularly near the end of 2016 and early 2018, with ratios dropping below 6.5, indicating slower turnover during those times.

In parallel, the average payables payment period provides a complementary perspective, measured in days. From May 2012 forward, the payment period embraces variations that inversely correspond to the turnover values. For example, lower payment periods (closer to 35 days) coincide with higher turnover rates, such as the periods around mid-2015 and mid-2016. Conversely, when the payment period exceeds 55 days, as seen in late 2016, early 2017, and early 2018, the payables turnover dips to the lower end of its range.

Payables Turnover Ratio

Displays a cyclical pattern with moderate volatility, peaking above 10 at several points and falling as low as around 5.5.

The general pattern suggests alternation between efficient payables processing and slower turnover intervals.

Average Payables Payment Period

Ranges generally between 35 and 65 days, with shorter periods corresponding to higher turnover ratios, reflecting quicker payments.

Periods with longer payment durations, occasionally surpassing 60 days, align with reduced payables turnover.

The inverse relationship observed between the payables turnover and the payment period is consistent with financial theory, where faster turnover corresponds with a shorter payment cycle. The data indicates periods of strategic variation, possibly reflecting changes in cash management policies, supplier negotiations, or operational shifts affecting payment timing. Overall, the company exhibits a dynamic approach to managing its payables, balancing between rapid turnover and extended payment periods over the examined timeline.

Average Inventory Processing Period

The average inventory processing period exhibits noticeable fluctuations over the reported quarters. Starting from a value of 160 days, it increases to a peak of 219 days in November 2014. This period is followed by a decline to 172 days in May 2017. However, a subsequent increase occurs, reaching 222 days by February 2018. The general trend indicates cyclicality with alternating rises and falls rather than a steady increase or decrease.

Average Receivable Collection Period

The receivable collection period shows considerable variability without a clear directional trend. It reaches several highs such as 100 days in August 2013 and 98 days in November 2017, alternating with lower values near 40-50 days in other periods. The data suggest intermittent delays in collection, with some quarters experiencing significantly extended collection periods.

Average Payables Payment Period

The payables payment period remains relatively stable with moderate fluctuations. Period values mostly range between 35 and 60 days, with occasional spikes reaching 65 days in February 2018. There is no consistent upward or downward pattern, indicating a relatively steady payment behavior with minor variations over time.

Cash Conversion Cycle

The cash conversion cycle demonstrates marked volatility, correlating with the trends in inventory and receivables periods. It fluctuates between lows around 141 days and highs exceeding 250 days, peaking at 252 days in August 2015. Despite these fluctuations, there is no distinct long-term trend, suggesting periods of both efficient and less efficient cash flow management.