Sysco Corp. (NYSE:SYY)

Inventory Turnover

The inventory turnover ratio exhibits a generally declining trend from 15.14 in September 2018 to a low of 11.19 in December 2020, indicating a slower rate of inventory movement during this period. Post-2020, the ratio stabilizes and gradually improves, reaching values above 13 by mid-2024, which suggests a recovery in inventory efficiency.

Receivables Turnover

Receivables turnover fluctuates moderately, with initial values around 14.38 decreasing slightly to approximately 12.99 by early 2021 but then recovering and oscillating around 14 to 15 through mid-2024. This reflects some variability in the efficiency of collections, but generally, the company maintains consistent receivables management.

Payables Turnover

The payables turnover ratio shows a decline from about 12.14 in mid-2019 to lows near 8.53 in the first half of 2021, indicating longer payment periods to suppliers. Afterward, the ratio improves, increasing steadily above 10 by 2023 but remains slightly below earlier highs, implying a controlled approach in payout timing.

Working Capital Turnover

Working capital turnover is highly volatile, dropping sharply from 34.96 in March 2019 to a low of 8.7 in December 2020, indicating reduced efficiency in using working capital during that time. Subsequently, it rebounds dramatically, peaking near 43.75 in June 2024, suggesting a significant improvement in utilizing working capital to generate sales.

Average Inventory Processing Period

The average inventory processing period gradually increases from 24 days in late 2018 to a peak of around 33 days in December 2020, signifying slower inventory movement. Thereafter, it declines modestly to stabilize around 27 days in 2023 and 2024, reflecting improved inventory turnover speed.

Average Receivable Collection Period

The receivable collection period remains relatively stable, fluctuating between 20 and 28 days. Notably, it decreases to around 20 days in late 2019 but rises again to near 27–28 days during 2020 and 2021 before stabilizing around 25 days in recent periods. This suggests consistent collection efficiency with minor variations.

Operating Cycle

The operating cycle remains mostly steady, ranging from about 46 to 60 days. There was an increase to approximately 60 days around late 2020 and early 2021, indicating a longer duration to turn inventory and receivables into cash during that time, then a decline back to around 52 days in 2023 and 2024.

Average Payables Payment Period

This metric lengthens from roughly 29 days in late 2019 to a peak of 43 days in late 2020 to early 2021, highlighting an extension in payment terms or delays to suppliers. It decreases thereafter to about 33–36 days in the latest quarters, showing partial normalization but still a longer payment duration than before 2019.

Cash Conversion Cycle

The cash conversion cycle (CCC) fluctuates between 14 and 21 days, with a slight increase during 2019 to 2021 followed by a modest decrease around 15 days in 2023. This suggests that although there were temporary delays in converting investments back into cash during pandemic years, the CCC remains relatively controlled and efficient over time.

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

Cost of Sales

The cost of sales demonstrates a fluctuating pattern with an overall upward trajectory in the long term. Initially, from late 2018 to early 2020, cost of sales experienced moderate fluctuations, peaking near 12,496 million US dollars and then decreasing sharply in mid-2020 to a low of 7,301 million US dollars. This dip aligns with the early stages of 2020. Post this low, the cost of sales increased steadily, peaking around mid-2022 at over 15,500 million US dollars. Following this peak, the values slightly moderated but largely remained elevated relative to earlier years, reaching approximately 16,719 million US dollars in mid-2024.

Inventories

Inventories showed a relatively stable to slightly increasing trend throughout the period. Starting at around 3,354 million US dollars in late 2018, inventories remained mostly in the 3,000 to 4,600 million US dollar range, with some variability. Notably, there was a dip during mid-2020 concurrently with the decline in cost of sales. Afterward, inventories increased more consistently, reaching a maximum near 4,734 million US dollars in early 2024, before a small reduction towards mid-2024.

Inventory Turnover Ratio

The inventory turnover ratio, available only from early 2019 onward, indicates a gradual decline followed by some recovery. Starting at 15.14 in March 2019, the ratio decreased steadily to a low of 11.19 by late 2020, illustrating slower inventory movement relative to cost of sales during this period. Subsequently, turnover gradually improved, rising back to approximately 13.73 by mid-2024, indicating an enhanced efficiency in inventory management or quicker sales relative to inventory levels.

Overall, the cost of sales and inventories reflect the impact of market and operational conditions around early 2020, with a pronounced dip in cost of sales and inventories followed by recovery and growth. The inventory turnover ratio's decline and gradual recovery suggest shifts in operational efficiency and inventory management during these periods. The steady increase in absolute inventory levels alongside the rising cost of sales in later periods points to higher scale of operations or price effects impacting financials. These patterns are consistent with a business navigating fluctuating demand and supply conditions over the examined timeframe.

Sales Trends

Sales exhibited fluctuations over the observed quarters. Starting from approximately 15,215 million USD in late September 2018, sales slightly declined into late 2019 and early 2020, reaching a low of around 8,867 million USD by June 2020. This marked downturn corresponds with the initial impact period likely related to external factors affecting demand. Subsequently, sales demonstrated a recovery and growth trajectory, rising steadily from mid-2020 onward. By mid-2024, sales reached about 20,556 million USD, indicating a robust rebound and expansion beyond previous peak levels. The upward trend post-2020 reflects a positive sales momentum over recent quarters.

Accounts Receivable, Less Allowances

The accounts receivable balance showed a general upward movement over the period. Initial values hovered around 4,242 million USD in late 2018, followed by a dip in early 2020 aligning with the lowered sales figure during the same timeframe. From mid-2020 onward, accounts receivable steadily increased, reaching peaks above 5,500 million USD by mid-2024. This pattern is consistent with the sales recovery phase, potentially indicating higher credit sales volumes and possibly extended collection periods.

Receivables Turnover Ratio

Receivables turnover ratios were not reported in the earliest periods but available data from early 2019 indicates moderate variability. The ratio recorded a high of about 18.28 in June 2020, corresponding to the lower receivables balance and subdued sales, suggesting relatively efficient collections during that quarter. Subsequently, turnover ratios generally ranged between approximately 13.3 and 15.0, with moderate fluctuations but no clear upward or downward trend. This stability suggests consistent receivables management efficiency despite the underlying volatility in sales and receivables balances.

Overall Observations

There is a clear correlation between sales and accounts receivable, with both metrics dipping in early 2020 followed by a recovery to levels exceeding the prior highs. The receivables turnover ratio remained relatively stable around an average range, implying maintained collection performance through varying sales conditions. The data reflects the company’s ability to recover from a significant sales contraction and to sustain operational efficiency in receivables management thereafter.

Cost of Sales

The cost of sales shows notable fluctuations over the observed quarters. Initially, values remain relatively stable, oscillating around the 12,000 million USD mark through late 2018 to early 2019. A distinct decline occurs starting from the first quarter of 2020, reaching a trough in June 2020, likely reflecting a significant operational or market impact during that period.

Following this low point, the cost of sales progressively increases through 2021 and 2022, peaking in the latter part of 2022 and remaining elevated in 2023 and mid-2024. The upward trend indicates a resumption and growth in sales activity or increased input costs over these periods.

Accounts Payable

Accounts payable maintains a generally rising trend across the quarters. Early quarters show minor variations around the 4,200 million USD level, followed by a slight decrease in early 2020, coinciding with the dip observed in cost of sales.

From mid-2020 onwards, accounts payable predominantly increases, reaching highs above 6,000 million USD by mid-2024. This increase suggests either extended payment terms, higher purchases on credit, or growing operational scale contributing to rising liabilities.

Payables Turnover Ratio

The payables turnover ratio starts from recorded values beginning in the first quarter of 2019. Initially, the ratio displays a rising trend, moving from approximately 11.3 to 12.5 by the third quarter of 2019, indicating improved efficiency or quicker payments relative to purchases during that time.

However, during the challenging period in 2020, the ratio declines sharply to below 9 by the third quarter, suggesting slower payment cycles or lower turnover. From late 2020 onward, the ratio fluctuates moderately between roughly 8.5 and 11, with periodic increases towards the end of 2023.

This pattern reflects varying dynamics in payables management, potentially influenced by changing creditor terms, operational adjustments, or broader economic factors impacting payment behavior.

Working Capital

The working capital exhibited notable fluctuations over the analyzed quarters. Initially, it showed moderate variability between approximately $1.7 billion and $2.4 billion from late 2018 through late 2019. From early 2020, a sharp increase was evident, peaking around mid-2020 at over $5.6 billion. Subsequently, working capital declined steadily throughout 2021 and into early 2022, reaching values near $1.7 billion at the beginning of 2022 and staying at lower levels until the end of 2023. A moderate rise occurred in late 2023 and early 2024, though values remained below the mid-2020 peak, ending around $1.8 billion.

Sales

Sales figures remained relatively stable in the initial periods, maintaining a general range between $14.6 billion and $15.4 billion up to late 2019. A significant decrease occurred in early to mid-2020, with sales dropping sharply to under $9 billion in the quarter ending June 27, 2020. This drop coincided with the period of peak working capital. After this trough, sales recovered gradually, reaching and surpassing pre-downturn levels by mid-2021. From mid-2021 through mid-2024, sales generally trended upward, peaking near $20.5 billion in the most recent quarter. Despite minor fluctuations, the overall trend was positive in this latter period.

Working Capital Turnover

Working capital turnover ratios were absent in early periods but were available starting in mid-2019. Initially, the ratios were quite high, exceeding 25 and even reaching nearly 35, indicating efficient use of working capital relative to sales. However, these ratios declined sharply in early 2020, coinciding with the spike in working capital and dip in sales, bottoming out at around 8.7 to 9.6 in the first half of 2020. From mid-2020 onward, working capital turnover improved steadily, rising through 2021 and 2022 to peak values approaching 40 by late 2022 and 2023. During 2023 and into the first half of 2024, the turnover ratio showed increased variability but remained generally elevated, reflecting improved efficiency compared to the low points in 2020.

Overall Analysis

The data reflect a period of significant disruption around early to mid-2020, characterized by a sharp increase in working capital and simultaneous decline in sales, resulting in a marked reduction in working capital turnover. This could suggest challenges in inventory management, receivables, or payables during that period. Following this disruption, the company appeared to regain operational efficiency, as evidenced by the recovery and growth in sales and the improved working capital turnover ratios. Despite fluctuations, the general trend from mid-2020 onwards indicates stronger performance and more effective use of working capital relative to sales volume. The working capital levels normalized at lower values compared to the mid-2020 peak, while sales reached new highs, underscoring an improved balance and business recovery.

Inventory Turnover

The inventory turnover ratio shows a generally declining trend from an initial level above 15.0, reaching a low point near 11.19 around mid-2021. Following this trough, there is a gradual recovery with the ratio trending upwards again, reaching approximately 13.73 by mid-2024. This pattern indicates that the company’s efficiency in managing and selling inventory decreased significantly over the initial observed periods but improved progressively afterwards, suggesting better inventory management or increased sales activity in the later stages.

Average Inventory Processing Period

The average inventory processing period, which is the inverse indicator of inventory turnover, moved inversely to the turnover ratio. Initially around 24 days, it lengthened to a peak of about 33 days during mid-2021, signaling slower inventory movement during that time. From that peak, the processing period shortened steadily, stabilizing at around 27 days towards mid-2024. This confirms that inventory was held longer during the period of low turnover but was subsequently processed more quickly in line with improved turnover rates.

Overall Insights

The data suggest a period of operational challenge or market conditions leading to slower inventory turnover and longer inventory holding periods up to 2021. Post-2021, the trend reverses, indicating operational improvements or recovery in demand, leading to improved inventory efficiency. The company shows responsiveness in managing inventory levels and processing time, especially in the recent quarters, as inventory days declined and turnover improved but have not yet reached the initial higher efficiency levels observed earlier in the timeline.

Receivables Turnover Ratio

The receivables turnover ratio displays fluctuations over the analyzed period, generally oscillating between approximately 13.5 and 18.3. Starting in late 2018, the ratio increased from around 14.38 to a peak near 18.28 by the third quarter of 2020, indicating an improved efficiency in collecting receivables. However, following this peak, the ratio declined and stabilized around the 14 to 15 range through mid-2024. This trend suggests a return to a more moderate pace of receivables turnover after the period of heightened activity.

Average Receivable Collection Period

The average receivable collection period, measured in days, exhibits an inverse pattern in relation to receivables turnover. Initially, the collection period decreased from 25 days to a low of 20 days around the third quarter of 2020, aligning with the peak in turnover ratio and reflecting faster collection of receivables. Subsequently, the period increased slightly, stabilizing between 24 and 27 days through mid-2024. This suggests a moderate lengthening of the time taken to collect receivables compared to the peak efficiency period, but still generally consistent with the earlier levels.

Overall Analysis

The data indicates that the company experienced a phase of enhanced receivables management efficiency culminating between 2019 and 2020, with turnover rising and collection periods shortening. Post-2020, metrics reveal a normalization toward historical levels. The stabilization of both turnover ratio and collection period around these levels implies consistent receivables management practices in recent quarters without significant deterioration or improvement.

Average Inventory Processing Period

The average inventory processing period shows a gradual upward trend from 24 days in late 2018 to a peak of 33 days in mid-2020. Following this peak, there is a steady decline stabilizing around 27 days from late 2022 through mid-2024. This indicates an initial lengthening in the time inventory remains before processing, possibly due to changes in operations or supply chain disruptions, followed by improved efficiency or inventory turnover in recent periods.

Average Receivable Collection Period

The average receivable collection period exhibits variability fluctuating between 20 and 28 days over the period, without a clear long-term trend. Initially, the period was around 25 days at the end of 2018, then decreased to 20 days by mid-2019, increased again to around 27-28 days during late 2019 through early 2021, and stabilized near 24-26 days from 2022 onward. This suggests some inconsistencies in receivables collection, potentially influenced by changing customer payment behaviors or credit policies, with a relatively consistent collection timeframe in recent periods.

Operating Cycle

The operating cycle, as the sum of inventory processing and receivable collection periods, reflects the overall time taken to convert inventory and receivables into cash. This cycle increased from 49 days at the end of 2018 to a high of 60 days in mid-2020 and early 2021, indicating a lengthening operational cash conversion period. From 2022 onward, the cycle reduced gradually to approximately 52 days by mid-2024, denoting improved operational efficiency and potentially better working capital management following the prior increase.

Summary of Trends

The data reveals a notable increase in both inventory processing and operating cycle durations through 2019 to mid-2020, coinciding with the pandemic period, which may have impacted supply chain and operational processes. Receivable collection periods are more variable but generally maintained within a moderate range. Improvements in inventory management and cash conversion cycle are evident from late 2021 onwards, with stabilization in recent quarters suggesting a return to more efficient operational conditions.

Payables Turnover Ratio

The payables turnover ratio demonstrates a general fluctuating trend over the observed periods. Initially, figures from September 2019 to September 2020 show an increasing trend from 11.29 to a peak of 12.47, indicating a faster rate of paying off accounts payable during this time. Subsequently, from September 2020 to July 2021, the ratio declines significantly to 8.53, suggesting a slower payment pace. After this low point, the turnover ratio increases again, with variability but generally reaching around 11 by the end of the series in June 2024. This pattern indicates periods of accelerated payment activity interspersed with deceleration phases.

Average Payables Payment Period

The average payables payment period moves inversely to the payables turnover ratio, as expected. From September 2019 to September 2020, the payment period shortens from 32 days down to 29 days, coinciding with the increase in turnover ratio. However, from September 2020 through July 2021, the payment period extends markedly, reaching up to 43 days, corresponding with the dip in payables turnover. Post July 2021, the payment period generally decreases again, fluctuating mostly between 33 and 39 days until June 2024. This variation suggests changes in payment policies or cash management strategies, with the company stretching out payment periods during certain quarters and shortening them in others.

Overall Observations

The data reflects a cyclical rhythm in the management of payables, with alternating periods of quicker and slower payment. The significant elongation of the average payment period observed around late 2020 to mid-2021 may indicate temporary cash flow management measures, possibly in response to external conditions. The tendency of the company to resume faster payables turnover afterward suggests efforts to restore standard payment cycles. Towards the latest periods, the payables turnover stabilizes in the range of around 10–11 times per year, and payment periods settle around one month, indicative of a consistent payables management approach.

The analysis of the financial data reveals distinct trends in the company's working capital components and overall cash conversion efficiency over the observed periods.

Average Inventory Processing Period

The average inventory processing period shows a gradual increase from 24 days in early 2019 to a peak of 33 days by June 27, 2020. Subsequently, it decreases moderately and stabilizes around 27 days from early 2023 onward. This pattern suggests an initial lengthening in the time inventory remains within the system, followed by efforts or conditions leading to more efficient inventory turnover in recent periods.

Average Receivable Collection Period

The receivable collection period experiences fluctuations, starting at 25 days in early 2019, rising to a high of 28 days by January 1, 2022, and then steadily decreasing to a more favorable 24-26 day range in the latest quarters. These changes indicate some variability in the speed with which receivables are collected, with recent improvements in credit management or customer payment behavior.

Average Payables Payment Period

The payables payment period remains relatively consistent in the low 30-day range initially but spikes to a peak of 43 days by July 3, 2021, indicating a strategic extension in payment terms or delayed payments during that period. Following this peak, the period declines back to the mid-30 day range and shows minor fluctuations thereafter, suggesting a return towards more typical payment cycles.

Cash Conversion Cycle (CCC)

The cash conversion cycle demonstrates moderate volatility throughout the periods, beginning at 17 days in early 2019, increasing to a peak of 21 days by March 28, 2020, and then oscillating between 16 and 19 days in subsequent periods. Overall, the CCC remains relatively stable in the range of approximately 16 to 19 days, reflecting consistent management of the combined effects of inventory, receivables, and payables on cash flow efficiency.

In summary, the company experienced some operational changes around 2020, notably with inventory holding and payables management, which impacted the overall cash conversion cycle. Since then, there appears to be a concerted effort to optimize working capital dynamics, as evidenced by stabilized inventory days and improved receivables collection. Payables management has also moderated following a peak in payment days. These trends collectively indicate an emphasis on maintaining steady liquidity and efficient cash flow management in the latest periods.