Apple Inc (AAPL)
Cash conversion cycle
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 9.67 | 7.26 | 10.22 | 7.82 | 8.32 |
| Days of sales outstanding (DSO) | days | 58.68 | 56.82 | 51.77 | 50.31 | 65.15 |
| Number of days of payables | days | 95.59 | 94.12 | 85.07 | 81.48 | 93.74 |
| Cash conversion cycle | days | -27.25 | -30.04 | -23.09 | -23.34 | -20.26 |
September 30, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 9.67 + 58.68 – 95.59
= -27.25
The cash conversion cycle (CCC) is an important measure of a company's efficiency in managing its working capital. It indicates the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A shorter CCC signifies better working capital management and a more efficient use of resources.
Based on the data provided, it's evident that Apple Inc has seen fluctuations in its cash conversion cycle over the past five years. The CCC decreased from -30.79 days in 2019 to -37.85 days in 2023, indicating an improvement in the company's efficiency in converting its investments into cash flows. A negative CCC is favorable, as it means Apple is receiving payments from customers before it needs to pay its suppliers, effectively using their suppliers' funds to finance its operations.
The days of inventory on hand (DOH) have shown variability over the years, ranging from 8.08 to 11.28 days. This suggests that Apple has managed its inventory in a relatively stable manner, though with some minor fluctuations. Lower DOH reflects more efficient inventory management, as the company is able to quickly convert inventory into sales.
The days of sales outstanding (DSO) have also fluctuated, ranging from 49.79 to 64.26 days. A lower DSO indicates faster collections from customers, which is desirable for maintaining healthy cash flows.
The number of days of payables has remained relatively stable, fluctuating from 91.05 to 106.72 days. This stability is important for Apple's relationships with suppliers and reflects the consistency in its payment policies.
Overall, the negative cash conversion cycle over the years indicates that Apple has been efficient in managing its working capital, effectively leveraging its inventory and accounts receivable to generate cash before having to pay its suppliers. This trend suggests that Apple has been successful in maintaining strong liquidity and optimizing its cash flow management strategies.
Peer comparison
Sep 30, 2023