Sysco Corp. (NYSE:SYY)

Inventory Turnover

The inventory turnover ratio shows a declining trend from 15.14 in mid-2019 to a low of 11.35 in mid-2021, indicating slower inventory movement during this period. However, it recovered somewhat in subsequent years, reaching 13.73 by mid-2024, suggesting improved efficiency in managing inventory after 2021 but not returning fully to 2019 levels.

Receivables Turnover

The receivables turnover ratio experienced fluctuations, peaking at 18.28 in 2020, which implies faster collection of receivables during that year. Following this peak, the ratio declined and stabilized in the range of approximately 13.5 to 15, ending at 14.81 in 2024. This pattern indicates some volatility but overall modest variation in how quickly receivables are collected.

Payables Turnover

The payables turnover ratio rose from 11.29 in 2019 to 12.47 in 2020, signaling faster payment to suppliers during that year. Thereafter, it dropped sharply to 8.59 in 2021 and then recovered to around 10.2 by 2024. This suggests a shift to slower payments in 2021, possibly reflecting cash management strategies or supplier negotiations, followed by a moderate increase in payment speed.

Working Capital Turnover

This ratio showed significant variability with an initial sharp decline from 29.49 in 2019 to 9.39 in 2020, indicating a substantial reduction in efficiency in using working capital to generate sales. It improved notably in subsequent years, reaching a high of 43.75 in 2024, which suggests a marked enhancement in working capital utilization and operational efficiency by the latest period.

Average Inventory Processing Period

The number of days to process inventory increased from 24 days in 2019 to a peak of 32 days in 2021, reflecting slower turnover. Afterward, it decreased to about 26-27 days in the last two years, indicating a return to faster inventory management closer to initial levels.

Average Receivable Collection Period

The days required to collect receivables declined sharply from 25 days in 2019 to 20 days in 2020, demonstrating improved collection efficiency during that year. However, this was followed by an increase to 27 days in 2021 and stabilization near 24-25 days through 2024, showing some variability but a relatively consistent collection period in the later years.

Operating Cycle

The operating cycle shortened from 49 days in 2019 to 46 days in 2020, then extended notably to 59 days in 2021, before gradually decreasing to around 50-52 days by 2023-2024. This indicates that the overall time to turn inventory into cash was reduced during 2020, lengthened considerably in 2021, and improved slightly thereafter.

Average Payables Payment Period

The average time taken to pay suppliers decreased from 32 days in 2019 to 29 days in 2020, then lengthened considerably to 43 days in 2021. It subsequently shortened to roughly 35-36 days in 2023 and 2024, reflecting a period of slower payments followed by a return to a more moderate payment pace.

Cash Conversion Cycle

The cash conversion cycle remained relatively stable over the years, fluctuating between 15 and 18 days. This suggests consistent management of the time between cash outflows for inventory and payables and cash inflows from receivables, maintaining an efficient cash flow process despite the variations in individual components.

Cost of Sales

The cost of sales experienced a decline from 48,705 million USD in mid-2019 to 41,941 million USD in mid-2021. This reduction suggests an initial effort to control or reduce expenses relative to sales in that period. However, from 2021 onwards, there is a noticeable upward trend, climbing sharply to 64,236 million USD by mid-2024. This increase may reflect higher sales volumes or increased costs, indicating expanding operations or inflationary pressures affecting input prices.

Inventories

Inventory levels decreased slightly from 3,216 million USD in 2019 to 3,095 million USD in 2020, followed by a consistent and steady rise each subsequent year, reaching 4,678 million USD in 2024. This increase in inventories suggests a buildup in stock, possibly to support anticipated sales growth or to mitigate supply chain challenges. The consistent growth beyond 2020 indicates a strategic accumulation of inventory over time.

Inventory Turnover

The inventory turnover ratio shows a declining trend from 15.14 in 2019 to a low of 11.35 in 2021, indicating that inventory was being sold or used less frequently during this period. This may correspond with the increased inventory levels and was potentially influenced by changing demand dynamics or supply disruptions. From 2021 onwards, the ratio improved somewhat to around 13.7-13.9 by 2024, suggesting a partial recovery in inventory management efficiency or faster inventory movement, although it does not return to the initial higher turnover levels seen in 2019.

Sales

Sales exhibited a declining trend from 2019 through 2021, dropping from approximately $60.1 billion in 2019 to around $51.3 billion in 2021. However, starting in 2022, there was a significant recovery and growth, with sales increasing to $68.6 billion and continuing to rise to $78.8 billion by 2024. This suggests a strong rebound and expansion in revenue generation after the earlier contraction.

Accounts Receivable, Less Allowances

The balance of accounts receivable showed variability over the period. It declined notably from $4.18 billion in 2019 to a low of $2.89 billion in 2020, followed by a steady increase each year thereafter, reaching $5.32 billion in 2024. This upward trend in receivables corresponds with the overall increase in sales in recent years and may reflect greater customer credit extended or sales growth on credit terms.

Receivables Turnover Ratio

The receivables turnover ratio fluctuated during the timeframe. Initially, it increased from 14.38 in 2019 to a peak of 18.28 in 2020, indicating faster collection of receivables during that year. However, this ratio decreased sharply to 13.57 in 2021 and then stabilized, maintaining values around 14.8 to 15 in the subsequent years. The initial increase followed by a decline and stabilization may indicate changes in collection efficiency or credit policy adjustments over time.

Cost of Sales

The cost of sales exhibited variability over the examined periods. Initially, there was a decline from 48,705 million USD in mid-2019 to 41,941 million USD by mid-2021. Subsequently, a significant upward trend is observed, with the cost rising sharply to 56,316 million USD in mid-2022 and continuing to increase to 64,236 million USD by mid-2024. This indicates a possible increase in operational scale or input costs during the latter years.

Accounts Payable

Accounts payable demonstrated fluctuations aligning somewhat with cost changes. After dropping from 4,315 million USD in 2019 to a low of 3,447 million USD in 2020, it rose notably to 6,290 million USD by mid-2024. The rising trend after 2020 suggests growing liabilities to suppliers, which may correlate with increased purchasing or extended payment terms in recent years.

Payables Turnover Ratio

The payables turnover ratio, reflecting the efficiency and frequency of paying suppliers, decreased from 11.29 in mid-2019 to a low of 8.59 in mid-2021. Afterward, it rose moderately to about 10.21 by mid-2024. This pattern indicates a period of slower payments or longer credit terms through 2021, followed by somewhat faster payment cycles thereafter, though the ratio did not return to the 2019 peak levels.

Overall Insights

The financial data reveal a cyclical nature in cost and payable management. Early reductions in cost of sales and accounts payable may reflect efficiency improvements or reduced business activity around 2020-2021. The following years show increased operational costs and higher payables balances, suggesting expansion or increased input costs. The partial recovery in payables turnover ratio implies some regained efficiency in managing payables, albeit not to previous highs. These trends highlight the importance of monitoring working capital components as they directly impact liquidity and operational cash flows.

Working Capital

The working capital exhibited significant fluctuations over the periods presented. Starting at 2,038 million USD in mid-2019, it rose markedly to 5,630 million USD in mid-2020, indicating enhanced short-term liquidity or increased current assets relative to current liabilities. However, this peak was followed by a decline over the subsequent years, dropping to 1,802 million USD by mid-2024. This downward trend after 2020 suggests a reduction in available short-term resources or possibly greater current liabilities.

Sales

Sales figures demonstrated a generally upward trend throughout the timeframe. Beginning at 60,114 million USD in 2019, there was a dip in 2020 to 52,893 million USD, potentially indicative of external factors influencing revenue during that year. Following this, a steady recovery and growth occurred, culminating in 78,844 million USD by mid-2024, marking the highest sales value in the series and suggesting successful expansion or increased market demand.

Working Capital Turnover

The working capital turnover ratio, which measures how efficiently working capital is used to generate sales, showed notable variability. It began at a high level of 29.49 in 2019, plummeted to 9.39 in 2020—reflecting possibly the spike in working capital paired with reduced sales that year—then recovered to 15.03 in 2021. Subsequently, the ratio increased substantially to 43.75 by mid-2024. This upward trajectory in recent years indicates improved efficiency in utilizing working capital to drive sales.

Overall Observations

The data reveal a period of volatility in working capital and sales around 2020, likely corresponding with external economic challenges. Despite an initial surge in working capital, the subsequent reduction aligns with a recovery and growth phase in sales. The improving working capital turnover ratio in the later years points to enhanced operational efficiency and more effective use of available resources to support expanding sales volumes.

Inventory Turnover

The inventory turnover ratio exhibited a general decline from 15.14 in June 2019 to its lowest point of 11.35 in July 2021. Following this period, a partial recovery is observed with the ratio increasing to 13.92 by July 2023, then slightly decreasing to 13.73 in June 2024. This trend suggests a decrease in the efficiency of inventory management initially, with improvements seen in the later years, although the ratio had not fully returned to the 2019 level by 2024.

Average Inventory Processing Period

The average inventory processing period increased from 24 days in June 2019 to a peak of 32 days in July 2021, indicating slower inventory turnover during this time. Subsequently, the period shortened progressively to 26 days by July 2023, with a minor increase to 27 days in June 2024. This pattern aligns inversely with the inventory turnover ratio, reinforcing the observation of reduced efficiency around 2021 followed by an improvement in managing inventory levels in the following years.

Overall Insights

There is a clear correlation between the inventory turnover ratio and the average inventory processing period, with the former decreasing as the latter increased, especially around 2020-2021. The data indicates a period of less efficient inventory management during this timeframe, possibly due to external or operational challenges. However, post-2021, the company appears to have enhanced its inventory control processes, shortening the inventory processing period and improving turnover ratios, yet not fully reverting to the pre-2019 performance levels by mid-2024.

Receivables Turnover

The receivables turnover ratio exhibits notable fluctuations over the analyzed periods. It began at 14.38 in mid-2019, increased sharply to 18.28 in 2020, indicating a quicker collection of receivables during that year. However, it then decreased to 13.57 in 2021, followed by a slight recovery to 14.18 in 2022. The ratio further improved to 14.99 in 2023 before slightly declining to 14.81 in 2024. Overall, after a peak in 2020, the receivables turnover settled to levels close to those at the start of the period.

Average Receivable Collection Period

The average receivable collection period inversely mirrors the receivables turnover trend, starting at 25 days in 2019 and decreasing to 20 days in 2020, reflecting faster collection. Subsequently, the period extended to 27 days in 2021, then progressively shortened to 26 days in 2022 and 24 days in 2023. In 2024, it returned to 25 days. These fluctuations suggest some variability in credit collection efficiency, with a general trend toward stability in the latter years.

Summary of Trends

The reciprocal movement of the receivables turnover ratio and the average collection period aligns with expected financial behavior, as faster receivables turnover corresponds to shorter collection periods. The data indicates that the company experienced its most efficient receivables management around 2020, with some decline in 2021, followed by a modest improvement and stabilization. The values in 2023 and 2024 suggest a consistent management approach to receivables, maintaining collection periods near the initial levels, indicating stable credit risk management and collection practices.

The financial data reveals trends in inventory management, receivables collection, and the overall operating cycle over a six-year period.

Average inventory processing period

The average inventory processing period shows variability, starting at 24 days in 2019 and increasing to a peak of 32 days in 2021. Subsequently, it declines to 26 days in 2023 before slightly rising again to 27 days in 2024. This indicates some fluctuations in inventory turnover efficiency, with a general trend toward improvement after 2021 but still above the initial 2019 level.

Average receivable collection period

The receivable collection period exhibits a decrease from 25 days in 2019 to a low of 20 days in 2020, which suggests improved efficiency in collecting receivables during that year. However, it then rises to 27 days in 2021, before gradually declining again to 24-25 days in the subsequent years. This pattern indicates some inconsistency, but overall a trend toward moderate stability in receivables collection duration.

Operating cycle

The operating cycle, representing the sum of inventory processing and receivable collection periods, saw a decrease from 49 days in 2019 to 46 days in 2020, followed by an increase to 59 days in 2021. It then gradually decreased to 50 days in 2023 and slightly increased to 52 days in 2024. This reflects an initial efficiency improvement followed by a temporary lengthening of the cycle, and then a partial recovery toward more efficient operation.

Payables Turnover

The payables turnover ratio demonstrates a fluctuating trend over the examined periods. Starting at 11.29 in 2019, an increase is observed in 2020, reaching 12.47. This is followed by a notable decline to 8.59 in 2021. Subsequently, the ratio recovers partially, increasing to 9.79 in 2022 and further to 10.35 in 2023, before experiencing a slight decrease to 10.21 in 2024. These variations indicate changes in the frequency of payments made to suppliers, suggesting periods of either faster or slower payment cycles.

Average Payables Payment Period

The average payables payment period, expressed in number of days, exhibits an inverse relationship with the payables turnover ratio. Initially, the period shortens from 32 days in 2019 to 29 days in 2020, consistent with a higher payables turnover. However, a significant increase to 43 days occurs in 2021, corresponding to the lowest turnover ratio in the dataset. Following that, the payment period decreases gradually over subsequent years, moving to 37 days in 2022, 35 days in 2023, and slightly increasing to 36 days in 2024. This pattern suggests that the company extended its payment terms or delayed payments in 2021 but has since worked towards reducing the payment period, stabilizing it near earlier levels.

Overall Insights

The data reveal a cyclical behavior in payment practices, with a peak in payment speed around 2020, a slowdown in 2021, and a gradual recovery in subsequent years. The increase in days payable in 2021 might have been a strategic response to external conditions or cash flow management needs. The ratios indicate that by 2024, the company maintains a moderately efficient payment cycle, balancing between optimizing supplier relations and preserving liquidity.

Average Inventory Processing Period

The average inventory processing period increased from 24 days in 2019 to a peak of 32 days in 2021, indicating slower inventory turnover during this period. Subsequently, it declined to 26-27 days by 2023 and 2024, suggesting a recovery toward more efficient inventory management, though still slightly above the initial 2019 level.

Average Receivable Collection Period

The average receivable collection period showed fluctuations, starting at 25 days in 2019, decreasing to a low of 20 days in 2020, then rising to 27 days in 2021. It stabilized around 24-26 days from 2022 to 2024, reflecting relatively consistent collection efficiency with some initial variability.

Average Payables Payment Period

The average payables payment period rose from 32 days in 2019 to a high of 43 days in 2021, indicating an extended duration in paying suppliers. After 2021, the period shortened to 35-37 days by 2023 and 2024, though it remained above 2019 levels. This pattern suggests efforts to manage cash outflows by lengthening payment times initially, followed by moderate normalization.

Cash Conversion Cycle

The cash conversion cycle remained relatively stable throughout the period, fluctuating slightly between 15 and 18 days. It stayed at 17 days in both 2019 and 2020, dipped to 15 days in 2023, and was 16 days in 2024. This stability suggests effective overall working capital management despite the variations in inventory, receivables, and payables periods.