Procter & Gamble Co. (NYSE:PG)

Inventory Turnover

The inventory turnover ratio shows a generally declining trend over the analyzed periods, starting at 6.25 and decreasing to 5.30 by the last period. Although there are intervals of minor increases and stability, overall the ratio reflects a gradual slow-down in inventory movement. This suggests a reduced frequency in converting inventory into sales, which may indicate inventory accumulation or slower sales velocity.

Receivables Turnover

The receivables turnover ratio fluctuates moderately, ranging from a high of 16.11 down to approximately 13.09 in the most recent period. The ratio experiences some volatility but tends to trend downward over time. This pattern points to a lengthening period required to collect receivables, implying a slight deterioration in the efficiency of credit management or customer payment behavior.

Payables Turnover

The payables turnover ratio remains relatively stable, fluctuating narrowly between 2.66 and 3.11. There is no clear directional trend, suggesting consistent management of payables and payment cycles throughout the timeframe.

Average Inventory Processing Period

This metric generally increases from 58 days to 69 days by the end of the period, indicating that the company takes longer on average to process or sell its inventory. This increasing trend supports the observed reduction in inventory turnover, flagging potential issues related to inventory management or demand variability.

Average Receivable Collection Period

The average collection period for receivables demonstrates a mild upward trend, starting at 25 days and rising slightly to 28 days. This steady lengthening aligns with the decreasing receivables turnover ratio, reinforcing the indication of slower receivables collection.

Operating Cycle

The operating cycle lengthens from 83 to 97 days overall. This reflects the combined effect of a longer inventory processing period and an extended receivables collection period. The longer operating cycle signals that the full process from acquiring inventory to collecting cash from sales is taking more time, which can impact working capital efficiency.

Average Payables Payment Period

The average payment period to suppliers varies more widely, oscillating between 117 and 137 days. While there is some inconsistency, the period does not show a significant directional change, indicating relatively stable payment habits to vendors despite fluctuations.

Cash Conversion Cycle

The cash conversion cycle remains negative throughout but shows variability from -53 days to about -28 days. The negative values imply that payables are paid after receivables are collected and inventory is sold, which typically benefits cash flow management. The fluctuations suggest periods of both improving and weakening cash conversion efficiency, but there is a moderate tendency toward less negative values in the middle periods before returning toward a more negative position later on.

Cost of Products Sold

The cost of products sold shows a fluctuating pattern over the periods analyzed. Initially, there was a gradual increase from 9,142 million USD in late 2020 to a peak of 10,897 million USD in December 2022. Following this peak, a general downward trend is observed until March 2025, where the cost decreases to 9,694 million USD in September 2025. However, some short-term rebounds occur, particularly towards the end of the series, where costs rise again reaching 10,887 million USD in the last recorded quarter. This indicates variability in production or procurement costs, possibly influenced by market conditions or internal efficiency changes.

Inventories

The inventory levels demonstrate a steady overall increase throughout the periods. Starting at 5,707 million USD in September 2020, inventories rose continuously, with minor fluctuations, peaking at 7,848 million USD by September 2025. This upward trend suggests an accumulation of stock, which could be due to increased production, anticipation of future demand, or potential changes in inventory management strategy. Despite slight decreases during some quarters, the general direction is one of growing inventory holdings.

Inventory Turnover Ratio

The inventory turnover ratio exhibits a declining trend from an initial value of 6.25 in September 2020 to 5.30 by September 2025. This decline indicates that the frequency with which inventory is sold and replaced has decreased over time. The ratio fluctuates somewhat in the intermediate periods but maintains a generally downward direction, signaling potentially slower movement of goods or increased inventory holding periods. This could reflect changes in sales pace, market demand, or operational efficiency related to inventory management.

The analysis of the quarterly financial data reveals several notable trends pertinent to the company's sales performance, accounts receivable position, and efficiency in receivables management over the examined periods.

Net Sales

Net sales demonstrate a generally fluctuating pattern with intermittent increases and decreases over multiple quarters. Starting from approximately $19.3 billion in the third quarter of 2020, sales displayed upward movements, peaking near $21.9 billion in the third quarter of 2023. However, within this broader upward tendency, some quarters evidenced declines, such as from December 2023 to March 2024. The higher spikes in more recent periods suggest a resurgence in demand or successful strategic initiatives but are interspersed with temporary downturns, indicating volatility in sales trends.

Accounts Receivable

The accounts receivable figures show a steady upward trend throughout the period analyzed. Beginning at roughly $5.0 billion in September 2020, there has been a progressive increase exceeding $6.4 billion by the third quarter of 2025. This rise indicates that the company has been accumulating more outstanding customer balances over time, which could reflect higher sales on credit or delayed collection efforts. The continuous growth in receivables warrants monitoring for potential impacts on cash flow and credit risk management.

Receivables Turnover Ratio

The receivables turnover ratio illustrates the efficiency with which the company collects its receivables. Initially recorded at approximately 14.37, the ratio fluctuates moderately but exhibits a downward drift overall, eventually reaching about 13.09 in the third quarter of 2025. This decline suggests that the company is collecting its receivables more slowly over time. A lower turnover ratio may signal greater risks related to cash conversion cycles and could necessitate improvements in credit policies or collection practices.

In summary, while net sales exhibit a growth trajectory punctuated by fluctuations, the steady increase in accounts receivable accompanied by a declining turnover ratio highlights emerging concerns regarding receivables management and working capital efficiency. These trends suggest that the company's ability to convert sales into cash is weakening, potentially affecting liquidity if not addressed.

The analysis of the quarterly financial data reveals several trends related to cost of products sold, accounts payable, and payables turnover over the observed periods.

Cost of Products Sold

The cost of products sold demonstrates some fluctuation but overall remains within a relatively stable range between approximately 9,000 million US dollars to around 10,800 million US dollars. Starting from 9,142 million in late 2020, it experienced an upward trend peaking near 10,897 million in late 2022, followed by a mild decline and some variability in subsequent quarters. The cost dipped below 9,700 million in mid-2025 but slightly increased again towards late 2025. This pattern indicates cyclical cost behavior, possibly influenced by seasonality, production adjustments, or market conditions.

Accounts Payable

Accounts payable shows a generally increasing trend throughout the period. Beginning at 11,935 million in the third quarter of 2020, the value rose steadily, surpassing 15,000 million by mid-2024 and continuing an upward trajectory to reach approximately 15,609 million by the third quarter of 2025. Despite some minor fluctuations, this steady increment suggests a growing level of outstanding liabilities towards suppliers, which may relate to increased purchasing activity, extended payment terms, or inventory management strategies.

Payables Turnover Ratio

The payables turnover ratio fluctuates moderately around an average level between roughly 2.6 and 3.1. Early observations around 3.0 indicate a relatively brisk rate of paying suppliers. However, during mid-2021 and mid-2024, the ratio declined to as low as approximately 2.66, suggesting slower payment to suppliers during these periods. The ratio shows intermittent recoveries but maintains a pattern of oscillation without a definitive long-term directional trend. This indicates variable payment practices or changes in the timing of recognizing payables relative to cost of sales.

Integrated Insights

The juxtaposition of increasing accounts payable with relatively stable or slightly fluctuating payables turnover ratios suggests that while the company’s liability balances are rising, the efficiency or pace of its payments to suppliers remains fairly consistent with minor fluctuations. The stability in the cost of products sold amid a rising accounts payable balance might imply that the company is managing its working capital to support ongoing purchasing needs without significant disruptions to cost structures. The variability in payables turnover ratio might reflect adjustments in credit terms, supplier negotiations, or liquidity management efforts responding to operational needs or market conditions.

Working Capital

The working capital demonstrates a consistently negative balance throughout the observed periods, indicating that current liabilities exceed current assets. Starting at -3,982 million USD in September 2020, the negative working capital deepens, reaching a peak deficit of -16,880 million USD in December 2022. This is followed by a gradual improvement, decreasing in magnitude and stabilizing around -8,000 to -12,000 million USD through the later periods up to September 2025. The pattern suggests fluctuating liquidity pressures, with a significant strain around late 2022, partially alleviated in more recent quarters.

Net Sales

Net sales exhibit a generally upward trend with some quarterly fluctuations. From 19,318 million USD in September 2020, sales rise, peaking at 21,871 million USD in September 2023. Thereafter, the figures show some volatility with minor declines and recoveries, ranging mostly between 20,000 and 22,000 million USD, and reaching 22,386 million USD in September 2025. These fluctuations are generally moderate, reflecting resilience and growth in revenue generation over the period.

Working Capital Turnover

The working capital turnover ratio is not available in this data set, precluding direct analysis of operational efficiency from this metric. Despite this, the negative and varying working capital suggests challenges that may influence turnover and operational liquidity.

Overall Financial Trends and Insights

The persistent negative working capital illustrates a structural characteristic of the company's short-term financial management, potentially related to industry norms or operational strategy focusing on minimizing current assets in relation to liabilities. The deepening deficit until late 2022 corresponds to an expansion phase or possibly increased short-term obligations, followed by signs of stabilization and partial recovery.

Net sales growth over the examined periods indicates sustained demand and effective market presence, which, despite some quarter-to-quarter variability, points to positive revenue momentum. The divergence between improving net sales and persistently negative working capital may imply efficient use of suppliers' credit or other mechanisms sustaining liquidity despite the net working capital deficits.

The absence of working capital turnover data limits a complete analysis of the relationship between working capital management and sales efficiency; however, the available data hint at a complex interplay between sales growth and working capital constraints.

The analysis of the inventory turnover and average inventory processing period over the examined quarters reveals several noteworthy trends. Inventory turnover demonstrates a general declining pattern, decreasing from 6.25 in September 2020 to 5.3 by September 2025. This indicates a gradual reduction in the frequency with which the company sells and replaces its inventory, suggesting a slowdown in inventory movement over time.

Correspondingly, the average inventory processing period, expressed in days, exhibits an upward trend. It starts at 58 days in September 2020 and extends to 69 days by September 2025. This increase aligns with the observed decrease in inventory turnover, reflecting longer holding periods for inventory before sale.

Inventory Turnover

The ratio consistently declines over the period, with minor fluctuations. Initial values around 6.25 in 2020 steadily reduce to slightly above 5.3 by the end of the period. This trend points to potentially slower sales or higher inventory levels which could impact working capital efficiency.

Average Inventory Processing Period

The processing period shows variation within a narrow band initially but steadily extends from approximately 58 days towards 69 days. The increasing number of days indicates inventory remains in stock longer, which may result in increased holding costs or could signal challenges in inventory management or sales pace.

Overall, the inverse relationship between these two metrics is apparent and consistent with standard inventory management principles. The declining turnover rate coupled with a rising processing period suggests a need for attention to inventory optimization strategies to maintain operational efficiency and cost control.

The analysis of the financial ratios related to receivables management reveals notable fluctuations and trends over the periods assessed. Two key metrics, receivables turnover and average receivable collection period, provide insight into how efficiently the company manages the collection of its accounts receivable.

Receivables Turnover

The receivables turnover ratio exhibits variability but trends toward a modest decline over the entire time frame. Initially, the ratio shows a rising pattern from 14.37 to a peak of about 16.11, indicating an improvement in the frequency of collections relative to outstanding receivables. However, after reaching this peak around mid-2021, the ratio generally decreases and stabilizes between approximately 13 and 14 in the later periods, suggesting a slight reduction in collection efficiency.

Average Receivable Collection Period

Conversely, the average receivable collection period, which measures the typical number of days to collect receivables, tends to move in the opposite direction relative to the turnover ratio. Starting around 25 days, the period shortens to 23 days in several intervals, implying quicker collections at those points. Nonetheless, after mid-2021, the number of days gradually increases and consistently remains near 27 to 28 days through the latest periods. This lengthening indicates a slowdown in receivable collections over time.

In summary, the company experienced enhanced collection efficiency in the initial quarters, as reflected by increased turnover and reduced collection days. However, the trend reversed somewhat in subsequent periods, with turnover declining and collection days extending, possibly signaling a softer credit control environment or changes in customer payment behavior. It is advisable to monitor these trends closely to manage working capital effectively and ensure timely cash inflows.

The analysis of the quarterly periods reveals distinct trends in the company's inventory management, receivables collection, and overall operating cycle from late 2020 through 2025.

Average Inventory Processing Period

The average number of days inventory remains before processing shows variability with a general upward trend over the observed timeline. Initial values around 58-61 days in 2020 and early 2021 gradually increased, peaking notably at 69 days by September 2025. This indicates a lengthening period during which inventory is held, suggesting potential challenges in turnover efficiency or changes in inventory strategy.

Average Receivable Collection Period

Receivable collection days exhibit relative stability throughout the periods, fluctuating mostly between 23 and 28 days. Slight increases occur in some intervals (notably around late 2023 to 2025), moving from an average in the mid-20s to the upper 20s by the end of the series. The modest upward movement indicates a marginal slowing in the collection of receivables over time but remains relatively consistent overall.

Operating Cycle

The operating cycle, defined as the sum of inventory processing and receivable collection periods, also demonstrates a generally increasing pattern. Starting near 83 days in late 2020, the cycle rises gradually with some fluctuations, reaching a high of 97 days by June 2025. This elongation reflects the combined effect of longer inventory turnover and slightly slower receivables collection, thus indicating a lengthier duration to convert resources into cash inflows.

Overall, the data points to a trend of increasing operational cycle duration primarily driven by the extended inventory processing period, while receivable collection remains fairly steady with only slight increases. This could suggest a need to assess inventory management practices to improve turnover efficiency and mitigate potential cash flow impacts from prolonged asset conversion timelines.

The payables turnover ratio demonstrates moderate fluctuations over the observed periods, indicating variability in the company’s efficiency in paying its suppliers. Initially, this ratio hovers around 2.99 to 3.00 from September 2020 to December 2020, then exhibits a decline to about 2.70 in mid-2021. Subsequently, it recovers somewhat, reaching above 3.00 in December 2022 and March 2023, before stabilizing near 2.93 in the following quarters. A downward trend is visible again approaching mid-2024 and persists toward the end of the series, with values around 2.66 to 2.67. This pattern suggests intermittent changes in payment efficiency that might be influenced by operational or market conditions.

Concurrently, the average payables payment period, expressed in the number of days, inversely mirrors the payables turnover trends, reflecting the time taken to settle payables. It starts consistently at 122 days during late 2020, extending to 135 days by mid-2021, signaling a lengthening in payment terms. A gradual reduction occurs afterward, reaching a minimum of 117 days at the end of 2022, which aligns with the period of higher payables turnover. However, payment duration increases again from early 2024 onward, peaking at 137 days and maintaining this higher level through mid to late 2025. This trend implies a strategic elongation in payment cycles or changes in supplier agreements during the later periods.

Overall, the data indicates cycles of tightening and loosening in accounts payable management, with periods of faster turnover and shorter payment periods followed by phases of extended payment terms. This cyclical behavior could reflect responses to cash flow management needs, supplier relations, or varying business conditions influencing the company’s payment practices.

Payables Turnover Ratio

Generally fluctuates between 2.67 and 3.11, with notable dips around mid-2021 and mid-2024, and peaks around late 2022 and early 2023.

Average Payables Payment Period

Varies between 117 and 137 days, increasing significantly in mid-2021 and again from mid-2024 onwards, with the shortest payment period occurring at the end of 2022.

Average Inventory Processing Period

The average inventory processing period exhibits a generally increasing trend over the observed quarters. It begins around 58 days and shows fluctuations with a gradual rise, reaching approximately 69 days by the end of the period. Some temporary decreases occur, notably around mid-2023, but the overall pattern indicates a lengthening of inventory processing time.

Average Receivable Collection Period

The receivable collection period remains relatively stable, mostly ranging between 23 to 28 days. Minor fluctuations are observed, with occasional increases to 27 or 28 days, but there is no substantial upward or downward trend. This suggests consistent efficiency in collecting receivables throughout the periods.

Average Payables Payment Period

The payables payment period shows variability across the reported quarters. It remains around 120 to 130 days initially, then sees an increase to approximately 135 days at several points, particularly in mid-2021 and again towards the later periods ending in 2025. Such an increase implies a strategic extension in payment terms to suppliers in some quarters, likely to optimize cash flow.

Cash Conversion Cycle

The cash conversion cycle is consistently negative across all periods, starting near -39 days and fluctuating between approximately -53 and -28 days. There is a tendency towards less negative values around late 2022 and early 2023, indicating a shorter cash conversion cycle temporarily, followed by a return to more negative values. The persistently negative cycle reflects an efficient working capital management system, where the company converts its investments in inventory and receivables into cash rapidly relative to its payment schedules.

General Insights

The overall pattern reveals that the company maintains a strong control over receivables and a strategic approach in managing payables to optimize liquidity. The lengthening inventory processing time could suggest changes in inventory management practices or shifts in supply chain dynamics. The consistently negative cash conversion cycle demonstrates effective cash management, which is beneficial for operational liquidity and financial flexibility.