Sherwin-Williams Co. (NYSE:SHW)

Inventory Turnover

The inventory turnover ratio exhibited a fluctuating pattern over the observed periods. It started relatively high at 5.39, peaked at 5.99, then declined steadily to a low near 4.7 before rebounding slightly toward the end of the timeline. This indicates periods of both increased and decreased efficiency in managing inventory, with a general trend toward moderate improvement in later periods.

Receivables Turnover

Receivables turnover showed variability but remained within a narrower range compared to inventory turnover. It generally hovered between 7.3 and 9.7, with some notable peaks in December 2023 and December 2024. This suggests fluctuating effectiveness in collecting receivables, with occasional improvements in collection efficiency.

Payables Turnover

Payables turnover demonstrated a gradual upward trend from around 4.5 to values exceeding 5.2, particularly during the end of some years. This indicates the company has increasingly been paying its suppliers more frequently over time, though some slight declines are visible toward the latest periods.

Working Capital Turnover

Data for working capital turnover is largely missing, but two isolated large figures appear (1022.67 and 1996.6), which may not be comparable with other values due to inconsistency or representational anomalies. Therefore, no definitive trend or conclusion can be reliably drawn.

Average Inventory Processing Period

The average number of days inventory is held increased from approximately 61-68 days in early 2021 to around 70-78 days in later periods. This upward trend points to longer inventory holding times, potentially indicating slower inventory movement or changes in sales patterns.

Average Receivable Collection Period

The collection period for receivables fluctuated between 38 and 52 days, showing no clear directional trend but implying variability in how quickly the company collects payments from customers. Some improvement is noted in specific quarters, with collection periods dropping to under 40 days.

Operating Cycle

The operating cycle, representing the total days from inventory acquisition to cash collection, mostly ranged from about 105 to 126 days. Although somewhat stable, it showed mild increases concurrent with longer inventory holding and receivable collection periods, indicating temporary extensions in the business cycle.

Average Payables Payment Period

The average period for paying suppliers generally moved between roughly 69 and 90 days, with some quarters exhibiting shorter payment cycles. This variability might reflect negotiation changes or cash flow management strategies impacting supplier payment timing.

Cash Conversion Cycle

The cash conversion cycle, measuring the net time the company’s cash is tied up in operations, increased notably from a low of around 19 days to peaks exceeding 53 days in some quarters. The rising trend in this metric suggests the company’s cash is increasingly engaged in working capital, potentially signaling liquidity pressures or strategic investment in operational resources.

The analysis of the quarterly financial data reveals notable fluctuations and trends in the cost of goods sold, inventories, and inventory turnover over the observed periods.

Cost of Goods Sold (COGS)

The cost of goods sold exhibits a cyclical pattern, with several peaks and troughs across quarters. From early 2021 through the end of 2021, it generally increased, reaching a high in the third quarter of 2021. The COGS then experienced a decline by the end of 2021, followed by another rise during the middle quarters of 2022. The first quarter of 2023 shows a slight increase, with fluctuations continuing through 2024 and into early 2025. The values suggest responsiveness to seasonal demand or operational factors affecting production costs. Overall, there is no consistent linear trend, but rather a repeating cycle with periods of growth and contraction.

Inventories

Inventories start at approximately 1.85 billion and show a gradual increase through 2021 and into mid-2022, peaking around the fourth quarter of 2022. After this peak, inventories generally decline through 2023 and early 2024, with minor fluctuations, before stabilizing somewhat in mid to late 2024 and early 2025. The inventory levels appear to correlate inversely with the cost of goods sold in certain quarters, indicating active inventory management attempts to optimize stock against production and sales. The pattern suggests strategic adjustments to inventory holdings, potentially in response to market demand or supply chain considerations.

Inventory Turnover Ratio

The inventory turnover ratio shows a decreasing trend from early 2021 through the end of 2022, dropping from about 5.39 to below 5.0. This decline indicates a slower turnover rate and potentially reduced sales velocity or increased inventory levels relative to COGS. However, starting in 2023, the turnover ratio improves notably, climbing back above 5.0 with fluctuations continuing into 2025. This rebound suggests improved efficiency in inventory management or stronger sales performance, leading to faster inventory cycling. The ratio’s fluctuations imply ongoing adjustments and responsiveness to operational conditions.

In summary, the data indicates a dynamic operating environment with periodic fluctuations in cost of goods sold and inventories that influence inventory turnover rates. The company appears to manage inventory actively in response to market conditions, aiming to optimize turnover and balance stock levels against production costs. The recovery in inventory turnover ratio after 2022 reflects efforts to enhance operational efficiency or sales progress, while the recurring patterns in COGS and inventories suggest seasonal or cyclical influences on the business.

The financial data reveals several notable trends in key operational metrics over the observed periods.

Net Sales

Net sales exhibit a consistent seasonal pattern with peaks typically occurring in the second and third quarters each year. From the first quarter of 2021 through the third quarter of 2025, sales generally rise from the first quarter to mid-year, then taper off in the fourth quarter before rising again in the following year. There is a gradual overall increase across the years, highlighted by higher peak sales in mid-2024 and 2025 compared to earlier periods. The lowest sales points consistently occur in the fourth quarter, indicating a seasonal dip in demand.

Accounts Receivable, Net

The accounts receivable balance follows a somewhat parallel pattern to net sales, with elevated values in the mid-year quarters and declines in the fourth quarter. However, the receivables amounts appear more volatile with noticeable increases in certain periods, such as mid-2021 and mid-2023, followed by downward corrections in subsequent quarters. Over the long term, receivables show a tendency to increase, reflecting possibly higher sales volume or changes in credit policy. The correlation between rising sales and concurrent increases in receivables is evident but not perfectly linear.

Receivables Turnover Ratio

The receivables turnover ratio fluctuates between roughly 6.9 and 9.7 across the quarters, indicating variations in how efficiently accounts receivable are being collected. Generally, the turnover ratio declines in quarters with higher receivables balances and rises when the balances decrease, revealing an inverse relationship. Peaks in turnover ratio occur frequently in the fourth quarters, coinciding with the periods when receivables balances are lower. A gradual improvement in turnover efficiency is notable in some recent quarters, particularly around late 2023 and 2024, where the ratio reaches higher values, suggesting a temporary enhancement in collection processes or credit terms.

Overall, the data suggests a strong seasonal business cycle with increased activity during mid-year quarters for both sales and receivables. The accounts receivable management appears to generally keep pace with changes in sales volume, although some fluctuations in turnover efficiency warrant attention. The steady increase in sales and corresponding receivables points toward growth, while the maintainance of a stable receivables turnover ratio within the observed range reflects consistent credit and collection performance over time.

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

Cost of Goods Sold (COGS)

The cost of goods sold demonstrates an overall fluctuating pattern. It initially increased from approximately 2,544,000 thousand US dollars to a peak around the third quarter of 2021, nearing 3,008,000 thousand USD. This was followed by a moderate decline in the last quarter of 2021. Throughout 2022 and into 2023, COGS remained volatile, exhibiting alternating rises and falls. A notable dip occurs near the end of 2023 and the first quarter of 2024 with values dropping close to 2,703,000 thousand USD. The values rise again later in 2024 and remain relatively elevated into 2025, peaking near 3,232,700 thousand USD in the third quarter of 2025. Overall, the data suggests periodic fluctuations possibly influenced by external market factors or company operational adjustments.

Accounts Payable

Accounts payable follows a pattern that partially correlates with the COGS trend but with less pronounced volatility. Initial values in 2021 begin around 2,217,000 thousand USD and rise steadily into mid-2022, peaking near 2,993,000 thousand USD. This is succeeded by a gradual decline and stabilization around the 2,300,000 to 2,500,000 thousand USD range through 2023 and 2024. Slight increases are observable in the early quarters of 2024, with a fluctuating but relatively stable trend continuing into mid-2025. The payable balances suggest effective management of liabilities with moderate adjustments aligning to COGS changes.

Payables Turnover Ratio

The payables turnover ratio shows variability with a range approximately between 4.07 and 5.31 across the periods. Early in the data history, the ratio declines from 4.5 to about 4.07 in the third quarter of 2021, indicating a slower turnover of payables. The ratio thereafter increases notably, peaking at 5.31 in the fourth quarter of 2023, suggesting faster payments relative to payables during that period. Subsequent quarters indicate slight decreases but maintain relatively higher turnover ratios compared to earlier periods, fluctuating around the mid 4.6 to 5 range. These movements imply dynamic changes in the firm's payment practices, possibly reflecting efforts to optimize supplier relations or cash flow management.

Overall Insights

The interplay between cost of goods sold and accounts payable reflects the operational dynamics and procurement cycles of the company. While COGS experiences marked fluctuations likely driven by demand, pricing, or supply chain factors, accounts payable adjustments appear more measured, indicating disciplined credit management. The increasing and then stabilizing trend in payables turnover ratio suggests shifting payment strategies aimed at balancing liquidity with supplier obligations. Together, these patterns suggest a responsive financial management approach adapting to market and internal conditions over the assessed periods.

The financial data reveals several key trends in the company’s working capital, net sales, and working capital turnover over the observed periods.

Working Capital

The working capital figures demonstrate significant variability and a predominantly negative position throughout the periods. Starting at approximately -542 million, it declined further to nearly -1.1 billion by September 2021. Subsequently, the working capital saw considerable fluctuations, with notable improvements to positive territory around September 2022, reaching a positive 21.2 million, though this was followed by a return to negative levels in the subsequent quarters. From 2023 onwards, the working capital remained largely negative, with values oscillating between about -1.6 billion and -1.1 billion, worsening further to a low of approximately -1.8 billion by mid-2025. This persistent negative working capital suggests ongoing challenges in managing short-term assets and liabilities efficiently.

Net Sales

Net sales exhibit a relatively strong and generally upward trend, despite some quarter-to-quarter volatility. Beginning near 4.66 billion in the first quarter of 2021, sales increased to over 6.0 billion in multiple quarters within 2022 and 2023, peaking near 6.3 billion in the latter part of 2024 and early 2025. Seasonal variations appear, with some quarters traditionally showing weaker sales (e.g., December quarters) followed by rebounds. The trend suggests the company experienced growth in revenue generation capabilities over the analyzed timeframe.

Working Capital Turnover

The working capital turnover ratio is mostly unavailable except for two isolated data points. In September 2022, the ratio was extremely high at approximately 1023, and in March 2023 it surged even higher to nearly 1997. Such elevated figures typically imply that the company generated a very large amount of sales from a relatively low or negative working capital base, which is consistent with the observed negative working capital trend. However, due to the scarcity of data points, it is difficult to draw comprehensive conclusions regarding this efficiency metric over the entire period.

Overall, the company’s net sales performance was strong and growing, but the working capital management displays a persistent deficit that could indicate liquidity pressures or operational challenges in balancing current assets against current liabilities. The recorded anomalies in working capital turnover suggest high efficiency in utilizing working capital relative to sales but are insufficient to fully assess trend stability.

The analysis of the inventory turnover ratio and the average inventory processing period over the observed periods reveals notable fluctuations and trends that reflect changes in inventory management efficiency.

Inventory Turnover Ratio

The inventory turnover ratio exhibited a generally declining trend from early 2021 through the end of 2022, starting at 5.39 in March 2021 and decreasing to 4.88 by December 2022. This decline suggests a reduction in the frequency at which inventory was sold and replaced within that period. Notably, the ratio improved in 2023, peaking at 5.61 in September before a slight decrease at the end of that year. Through 2024, the turnover remained relatively stable around the low 5s, with a minor dip observed in mid-2025 to 4.7, followed by a recovery to 5.23 by September 2025. These fluctuations might indicate varying levels of operational efficiency and inventory demand responsiveness over the quarters.

Average Inventory Processing Period

The average inventory processing period exhibited an inverse relationship to the inventory turnover ratio, as expected. The number of days increased from 68 days in March 2021 to a peak of 77-78 days in early 2025, indicating that inventory was held for longer durations before being sold. The processing period reached its highest point at 78 days in June 2025. There were temporary improvements in reducing days, notably in mid-2023 when the period dropped back to the mid-60s range. However, the overall trend indicates that inventory was increasingly slower to convert into sales over the span, especially in the latter half of the timeline.

In summary, the data suggest that the efficiency of inventory management declined from 2021 through 2022, with inventory turnover decreasing and processing periods lengthening. While there was some recovery in turnover rates and reduction in processing period mid-cycle, the later periods indicate a resurgence in slower inventory movement and longer holding times. These patterns could signal challenges in demand forecasting, supply chain dynamics, or strategic shifts in inventory policy requiring ongoing attention.

The receivables turnover ratio and the average receivable collection period demonstrate distinct patterns over the observed quarters. The receivables turnover ratio fluctuates between approximately 6.97 and 9.67, illustrating variable efficiency in collecting receivables across periods. The highest turnover values are observed in the fourth quarters of 2021, 2023, and 2024, with figures reaching upwards of 8.64 to 9.67, indicating faster collection cycles during these times. Conversely, lower turnover ratios around 6.97 to 7.48 occur mostly in the mid-year quarters, suggesting slower turnover during these months.

Correspondingly, the average receivable collection period ranges between 38 and 52 days. Periods with higher receivables turnover are associated with shorter collection periods, particularly notable in the fourth quarters where collection days decrease to values close to 38 to 42 days. In contrast, the first and second quarters often experience longer collection periods, peaking at 52 days. This inverse relationship aligns with expectations that higher turnover corresponds to fewer days sales outstanding.

Overall, the data shows a recurring seasonal trend in receivables management, with collection efficiency improving in the latter part of each year. The company appears to expedite collections as the year closes, potentially to optimize cash flow or meet fiscal targets. The fluctuations suggest that while the company maintains a generally stable receivables process, certain quarters experience slower collection, possibly due to operational or market factors influencing customer payment behavior.

Receivables Turnover Ratio

Varies between approximately 6.97 and 9.67, with peaks in the fourth quarters indicating more efficient receivables collection.

Lower turnover is common in mid-year quarters, suggesting slower collection cycles during these periods.

Average Receivable Collection Period

Ranges from 38 to 52 days, showing shorter collection times typically at year-end and longer times in early to mid-year quarters.

The inverse correlation with turnover ratio is consistent, confirming that higher turnover aligns with shorter collection periods.

Seasonal Trends and Observations

Recurring seasonal pattern of improved receivables efficiency in the fourth quarter of each year.

Potential strategic efforts or external factors influencing collection practices towards year-end.

The analysis of the quarterly financial data reveals several key trends in the company's operational efficiency, particularly concerning inventory management, receivable collections, and the overall operating cycle across the examined periods.

Average Inventory Processing Period

The inventory processing period demonstrates a generally fluctuating trend with a noticeable increase starting from the first quarter of 2022 through to the first quarter of 2023. Initially, this period hovered around the low 60s in days, with a minimum of 61 days noted in the third quarter of 2021. However, beginning in early 2022, it increased steadily, peaking at 77 days in the first quarter of 2023. Following this peak, there was a subsequent moderate decline in the middle of 2023, though the period remained elevated relative to earlier years, stabilizing around 70 days for most of 2024 and into 2025. This pattern suggests some increased challenges or strategic changes in inventory turnover that may have led to longer holding periods during certain intervals.

Average Receivable Collection Period

The receivable collection period displays less volatility but still presents notable variations. Starting near 47 days, the period experienced a slight increase through 2021, reaching a high of 52 days in the second quarter of 2022, before decreasing sharply in the fourth quarter of 2022 to 39 days. This reduction indicates an improvement in collection efficiency during that time. However, through 2023 and 2024, the collection period increased again, varying mostly between 45 and 49 days, showing periodic oscillations but no clear long-term improvement or deterioration. The stability around the mid-40s to high 40s range suggests consistent receivables management with minor fluctuations.

Operating Cycle

The operating cycle, which integrates inventory processing and receivable collection periods, demonstrates a largely cyclical yet broadly increasing trend. The cycle was relatively stable in 2021, averaging around 110 days. Starting in early 2022, it lengthened significantly reaching 124 days by mid-2022, largely driven by the increased inventory processing period. After peaking, the cycle saw a moderate decline toward the end of 2023 but remained elevated compared to the early periods. Into 2024 and early 2025, the operating cycle fluctuated between 108 and 126 days without a decisive trend towards improvement. These variations mirror the underlying movements in inventory and receivables data, pointing to operational factors influencing working capital management.

Overall, the data suggest pressures on working capital efficiency especially around inventory management, with periods of heightened processing time influencing the overall operating cycle. Receivables collection times have been relatively more stable, although with some transient improvement in late 2022. Monitoring these trends will be important for optimizing cash flow and operational effectiveness going forward.

Payables Turnover Ratio

The payables turnover ratio exhibits moderate fluctuations across the observed periods. Initially, the ratio declined from 4.5 to a low of 4.07 between March and September 2021, indicating a slower rate of paying off payables. Subsequently, there was an upward trend reaching a peak of 5.31 in December 2023, suggesting an improvement in payables payment efficiency during that time. However, after this peak, the ratio generally decreased again, ending at 4.87 by September 2025. This pattern suggests periods of both tightening and loosening in payment cycles over the years.

Average Payables Payment Period

The average payables payment period, expressed in number of days, inversely mirrors the payables turnover trends. It started at 81 days in March 2021, increased to a high of 90 days in September 2021, indicating a longer payment duration. Afterward, it decreased substantially to 69 days by December 2021, reflecting quicker payments. This lower payment period persisted for some intervals, including 69 days again in December 2023. In later periods, the average payables period saw slight increases, fluctuating around the mid-70s, and ended at 75 days in September 2025. This shows some variability but a general tendency towards maintaining mid-range payment durations.

Overall Insights

The inverse relationship between payables turnover and average payment period aligns with expectations: as the turnover ratio improves, the payment period shortens, and vice versa. The data suggests that the company managed to improve its payables processing and payment efficiency notably during 2022 and 2023, as indicated by the higher turnover ratios and reduced payment days. However, towards the end of the observed timeline, there is a slight softening in this efficiency, hinted by a decrease in turnover ratio and increase in payment days. This could imply changes in payment policy, supplier negotiations, or liquidity management strategies that warrant further investigation.

The financial data reveals several notable trends regarding the company's working capital management over the analyzed periods.

Average Inventory Processing Period

The inventory processing period shows a gradual increase from 68 days in early 2021 to a peak of 78 days in mid-2025. While there are fluctuations, the overall trend indicates a lengthening time to process inventory. This could suggest slower inventory turnover or increased stock levels towards the end of the period.

Average Receivable Collection Period

Receivables collection remains relatively stable, fluctuating mostly between 38 and 52 days. A slight downward trend is observable from the latter part of 2023 onwards, indicating improved efficiency in collecting payments from customers. However, intermittent increases suggest some variability in collection effectiveness.

Average Payables Payment Period

The payables payment period exhibits considerable fluctuation across the periods, ranging between 69 and 90 days. Early 2021 shows a longer payment duration, which decreases toward the end of 2021 and remains somewhat lower through 2023. The period then increases again approaching mid-2025. This indicates varying payment strategies or negotiations with suppliers impacting cash outflows.

Cash Conversion Cycle (CCC)

The cash conversion cycle demonstrates an overall increasing pattern from 19 days in late 2021 to a high of 53 days in early 2023, followed by stabilization in the 39 to 47-day range through 2024 and mid-2025. The increase in CCC suggests the company ties up cash in operations for a longer duration, potentially due to extended inventory processing and receivable collection periods relative to payables.

In summary, the company appears to have experienced some challenges in managing inventory efficiently, reflected in a longer inventory processing period over time. Receivables collection has generally improved slightly in more recent periods, while payables payment timelines have varied, indicating shifts in cash management strategies. The resulting cash conversion cycle underscores increased working capital investment, which may have implications for liquidity and operational funding.