Time Warner Inc. (NYSE:TWX)

Inventory Turnover

The inventory turnover ratio displayed a downward trend from 2013 to 2017. It increased from 8 in 2013 to a peak of 9.34 in 2014, followed by a gradual decline each year afterward, ending at 7.35 in 2017. This indicates a decreasing efficiency in managing inventory over time.

Receivables Turnover

The receivables turnover ratio remained relatively stable but showed slight fluctuations over the period. Starting at 3.79 in 2013, it dipped to 3.54 in 2014, returned to 3.79 in 2015, and subsequently declined to 3.33 by 2017. This suggests a modest increase in the duration of receivables collection.

Payables Turnover

The payables turnover ratio exhibited variability without a clear trend. After increasing from 23.42 in 2013 to 27.66 in 2014, it declined to 24.74 in 2015, rose again to 31.07 in 2016, and finally decreased to 22.71 in 2017. This inconsistency suggests fluctuating payment practices toward suppliers.

Working Capital Turnover

The working capital turnover ratio mostly remained stable from 2013 to 2016, fluctuating between 6.23 and 7.75. However, 2017 saw a significant spike to 27.38, indicating a substantial increase in sales generated per unit of working capital for that year, possibly due to operational changes or reclassification of working capital components.

Average Inventory Processing Period

The average inventory processing period shortened from 46 days in 2013 to 39 days in 2014, then slightly increased to 40 days in 2015. From 2015 onwards, it consistently increased, reaching 50 days in 2017. This trend complements the declining inventory turnover, reflecting longer inventory holding times.

Average Receivable Collection Period

The average receivable collection period lengthened gradually over the years. From 96 days in 2013, it increased to 103 days in 2014, fluctuated somewhat, and ultimately extended to 110 days by 2017, indicating slower customer payments or extended credit terms.

Operating Cycle

The operating cycle exhibited a general upward trend, beginning at 142 days in 2013, maintaining that level in 2014, then slightly decreasing to 136 days in 2015 before increasing to 160 days in 2017. This reflects the combined effects of inventory and receivable period changes, suggesting longer cash-to-cash cycles.

Average Payables Payment Period

This period fluctuated without a definitive trend, ranging from 16 days in 2013, dipping to 12 days in 2016, then returning to 16 days in 2017. This indicates varying payment speeds to suppliers over time, potentially impacting cash outflows.

Cash Conversion Cycle

The cash conversion cycle increased overall, indicating lengthening time from cash outflow for inventory until cash inflow from sales. It was 126 days in 2013, rose to 129 in 2014, then declined to 121 in 2015 before reaching a high of 144 days in 2017. This extension suggests a trend toward reduced liquidity efficiency.

Costs of revenues

The costs of revenues displayed a generally increasing trend over the observed five-year period. Starting from approximately 16,230 million US dollars at the end of 2013, costs slightly declined in 2014 to 15,875 million but then increased moderately to 16,154 million in 2015 and continued rising in the following years to reach 17,647 million by the end of 2017. This upward trajectory suggests rising expenses associated with generating revenue.

Inventories

Inventory levels fluctuated initially but showed an overall upward trend over the period. They decreased from 2,028 million US dollars at the end of 2013 to a low of 1,700 million in 2014, then increased steadily to 2,401 million by the end of 2017. This pattern indicates a potential accumulation of stock or an adjustment in inventory management strategy toward higher inventory holdings.

Inventory turnover ratio

The inventory turnover ratio experienced noticeable changes, reflecting shifts in how efficiently inventory was utilized. The ratio improved from 8.00 times in 2013 to a peak of 9.34 times in 2014, indicating increased efficiency in inventory management or stronger sales relative to inventory. However, starting in 2015, the turnover ratio declined steadily to 9.22, then further to 7.94 in 2016, and reached 7.35 by 2017. The declining turnover ratio suggests a slowing in inventory movement or possibly growing inventory levels not matched by sales growth.

Revenues

The revenue figures display a fluctuating yet generally upward trend over the five-year period. Revenues declined from $29,795 million in 2013 to $27,359 million in 2014, marking a significant dip. However, from 2014 onward, revenues recovered steadily, reaching $31,271 million by the end of 2017, thus surpassing the initial 2013 figure. This indicates a rebound and gradual growth in the company’s sales performance in the latter part of the period.

Receivables, less allowances

The net receivables amount showed some variation but an overall increasing trend. Beginning at $7,868 million in 2013, there was a slight decrease in 2014 and 2015, with receivables falling to $7,720 million and $7,411 million respectively. However, a notable increase occurred in 2016 and 2017, reaching $8,699 million and $9,401 million respectively. This rise suggests that the company accumulated higher accounts receivable balances toward the end of the period, potentially reflecting extended credit terms or increased customer balances.

Receivables turnover

The receivables turnover ratio presents a varied pattern with a general decline over the examined years. The ratio was 3.79 in 2013, decreased to 3.54 in 2014, rebounded to 3.79 again in 2015, and then declined more consistently to 3.37 in 2016 and further to 3.33 in 2017. The declining trend in receivables turnover, especially in the last two years, indicates a slowing collection rate of receivables relative to sales, which may suggest looser credit policies or delays in customer payments.

Summary

Overall, the data reveals that the company’s revenues experienced a dip early in the period but recovered and grew by 2017. At the same time, receivables trended upward in the latter years, while the receivables turnover ratio decreased, pointing to an increasing receivables balance with slower collection efficiency. These dynamics may warrant monitoring of credit management practices to ensure cash flow stability as sales expand.

Costs of Revenues

The costs of revenues showed a generally increasing trend over the five-year period. Starting at $16,230 million in 2013, there was a slight decline in 2014 to $15,875 million, followed by a gradual increase reaching $17,647 million in 2017. This indicates a rising expense level tied to revenue generation towards the end of the period, with a minor dip noted in 2014.

Accounts Payable

The accounts payable figures showed variability without a clear upward or downward trend. The balance stood at $693 million in 2013, decreased to $574 million in 2014, then increased to $653 million in 2015. It dropped again to $527 million in 2016 before rising sharply to $777 million in 2017. This fluctuation may reflect changes in payment practices or supplier credit terms.

Payables Turnover Ratio

The payables turnover ratio displayed notable fluctuations throughout the period. Beginning at 23.42 in 2013, it rose significantly to 27.66 in 2014, then fell to 24.74 in 2015. A marked increase occurred in 2016 to 31.07, followed by a considerable decrease to 22.71 in 2017. These variations suggest changes in how quickly the company settled its payables, with faster payments in 2016 and slower payments in 2017.

The financial data reveals several notable trends in the company's annual performance over the five-year period ending December 31, 2017.

Working Capital

Working capital displayed a declining trend overall, starting from a high of 4,461 million US dollars in 2013 and reducing to 1,142 million US dollars by 2017. Although there was a rebound in 2015 to 4,511 million US dollars following a dip in 2014, the subsequent years saw a significant decrease, particularly from 2016 to 2017, where working capital dropped sharply from 3,782 million to 1,142 million US dollars.

Revenues

Revenues demonstrated moderate fluctuations, beginning at 29,795 million US dollars in 2013 and showing a slight decline in 2014 to 27,359 million US dollars. In the subsequent years, revenues gradually increased each year, reaching 31,271 million US dollars in 2017, surpassing the initial 2013 level. This indicates a recovery phase and steady growth in revenue generation.

Working Capital Turnover

The working capital turnover ratio experienced some variation across the period. It started at 6.68 in 2013 and rose slightly in 2014 to 6.88. The ratio then dipped in 2015 to 6.23 before climbing to 7.75 by the end of 2016. The most striking change occurred in 2017, where the turnover ratio surged dramatically to 27.38. This sharp increase reflects a substantial improvement in how efficiently working capital was used to generate revenues during the last year examined, coinciding with the steep decline in working capital and the rise in revenues.

Overall, the data suggests that while working capital diminished considerably by 2017, the company improved its efficiency in utilizing working capital to generate sales, as evidenced by the significant increase in working capital turnover. The stability and gradual growth in revenue support positive operational dynamics despite the reduction in working capital resources.

The financial data reveals key trends related to inventory management over a five-year period.

Inventory Turnover

The inventory turnover ratio generally declined from 2014 to 2017. After increasing from 8.00 in 2013 to a peak of 9.34 in 2014, the ratio showed a downward trend, falling to 9.22 in 2015, then more sharply to 7.94 in 2016, and further to 7.35 in 2017. This overall decrease suggests that the company was turning over its inventory less frequently each year following 2014.

Average Inventory Processing Period

Complementing the turnover ratio, the average inventory processing period exhibits an inverse pattern. It initially decreased from 46 days in 2013 to a low of 39 days in 2014, indicating faster inventory processing. However, starting in 2015, the period increased to 40 days and continued rising to 46 days in 2016 and 50 days in 2017. This indicates that inventory was held longer on average in later years.

Overall Insights

The declining turnover ratio combined with the increasing average inventory processing period suggests a gradual slowdown in inventory movement over the period from 2014 to 2017. The company’s inventory management efficiency diminished in terms of how quickly inventory was sold or used. This may have implications for working capital utilization, potential obsolescence risk, or changes in demand or supply chain dynamics during these years.

Receivables Turnover

The receivables turnover ratio exhibited a fluctuating yet generally declining trend over the five-year period. Beginning at 3.79 in 2013, it experienced a slight dip to 3.54 in 2014, a rebound to 3.79 in 2015, followed by a steady decrease to 3.37 in 2016 and further to 3.33 in 2017. This downward tendency in the later years suggests a reduced efficiency in collecting receivables.

Average Receivable Collection Period

The average receivable collection period has inversely mirrored the receivables turnover ratio. Starting at 96 days in 2013, it rose to 103 days in 2014, returned to 96 days in 2015, and then escalated to 108 days in 2016 and 110 days in 2017. This trend indicates an increasing time taken to collect receivables, implying potential delays in cash inflows.

Overall Analysis

The combined analysis of these indicators points to a gradual decline in receivables management efficiency. While there was some recovery in 2015, the subsequent downtrend in receivables turnover alongside the extended collection periods in 2016 and 2017 may reflect challenges in managing credit sales or changes in customer payment behavior. This pattern could potentially affect the company’s liquidity and working capital management.

Average Inventory Processing Period

The average inventory processing period showed a decreasing trend from 46 days in 2013 to 39 days in 2014, indicating an improvement in inventory turnover efficiency. However, from 2014 onwards, the period increased slightly to 40 days in 2015, returned to 46 days in 2016, and further increased to 50 days in 2017, suggesting a gradual decline in inventory management efficiency in the later years.

Average Receivable Collection Period

The average receivable collection period demonstrated variability over the years. It increased from 96 days in 2013 to 103 days in 2014, then decreased back to 96 days in 2015. After that, a rising trend is observed with 108 days in 2016 and 110 days in 2017, indicating a lengthening of the time taken to collect receivables and potential concerns regarding cash flow management.

Operating Cycle

The operating cycle remained relatively stable at 142 days in both 2013 and 2014, then showed a slight improvement to 136 days in 2015. However, it increased significantly to 154 days in 2016 and further to 160 days in 2017. This overall elongation of the operating cycle suggests that the company’s cash conversion process became slower, which may impact liquidity and operational efficiency.

Payables Turnover

The payables turnover ratio fluctuated over the five-year period under review. It increased notably from 23.42 in 2013 to a peak of 31.07 in 2016, indicating a faster rate of paying off suppliers. However, in 2017, the ratio declined sharply to 22.71, the lowest in the period. Overall, the trend suggests variability in payment efficiency, with a particularly high payout speed in 2016 followed by a deceleration in 2017.

Average Payables Payment Period

The average payables payment period, expressed in number of days, shows a somewhat inverse pattern to the payables turnover ratio. It decreased from 16 days in 2013 to a minimum of 12 days in 2016, signifying quicker payments to creditors. By 2017, this metric increased back to 16 days, indicating a lengthened payment duration compared to the prior two years. This trend corroborates the observed decline in payables turnover in 2017, reflecting potentially more extended credit terms or delayed payments.

Summary of Payment Practices

Overall, the analysis reveals that the company experienced more expedient payment practices between 2014 and 2016, characterized by higher turnover ratios and shorter payment periods. The reversal of these trends in 2017 suggests a return to longer payment cycles and reduced turnover. These shifts may be attributable to operational changes, supplier negotiations, or liquidity management strategies implemented in the latter year.

Average inventory processing period

The average inventory processing period exhibits a decline from 46 days in 2013 to 39 days in 2014, indicating improved inventory turnover efficiency. However, it slightly increased to 40 days in 2015 and returned to 46 days by 2016. In 2017, the period further extended to 50 days, suggesting a slowdown in inventory processing towards the end of the period analyzed.

Average receivable collection period

The average receivable collection period shows fluctuations with an initial increase from 96 days in 2013 to 103 days in 2014. It then decreased back to 96 days in 2015, followed by a notable increase to 108 days in 2016, and a further increase to 110 days in 2017. This trend indicates a growing difficulty or leniency in collecting receivables over time.

Average payables payment period

The average payables payment period demonstrates variability over the years, decreasing from 16 days in 2013 to 13 days in 2014, rising slightly to 15 days in 2015, then dipping to the lowest point of 12 days in 2016, and finally increasing again to 16 days in 2017. This suggests occasional changes in supplier payment strategies, possibly to optimize cash flow.

Cash conversion cycle

The cash conversion cycle, calculated as inventory processing plus receivable collection minus payables payment periods, starts at 126 days in 2013 and experiences a slight increase to 129 days in 2014. It improved to 121 days in 2015 but then worsened significantly to 142 days in 2016 and further to 144 days in 2017. This upward trend indicates a lengthening cycle in converting investments in inventory and receivables back into cash, potentially highlighting worsening working capital management.