Eli Lilly and Company (LLY)

Payables turnover

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cost of revenue	US$ in thousands	14,596,700	13,521,600	14,399,600	11,912,100	11,526,500
Payables	US$ in thousands	2,598,800	1,930,600	1,670,600	1,606,700	1,405,300
Payables turnover		5.62	7.00	8.62	7.41	8.20

December 31, 2023 calculation

Payables turnover = Cost of revenue ÷ Payables
= $14,596,700K ÷ $2,598,800K
= 5.62

The payables turnover ratio for Lilly(Eli) & Co has been fluctuating over the past five years, ranging from 2.73 to 4.38. A decreasing trend from 2019 to 2020 was followed by an increase in 2021 before declining again in 2022 and 2023. The payables turnover ratio indicates the number of times a company pays off its accounts payable during a period, with a higher ratio generally considered more favorable as it suggests the company is efficiently managing its payables.

A payables turnover ratio of 2.73 in 2023 indicates that Lilly(Eli) & Co paid off its accounts payable approximately 2.73 times during the year. This suggests a slight decrease in payables turnover compared to the prior year's ratio of 3.43, which may signal a lengthening of the time taken by the company to settle its outstanding payables.

It is essential for investors and stakeholders to further investigate the reasons behind the fluctuating payables turnover ratio to assess the company's payment practices, liquidity management, and relationships with suppliers. Additionally, analyzing the trend over a longer period and comparing it with industry peers can provide more insights into Lilly(Eli) & Co's financial performance and efficiency in managing its working capital.