Airbnb Inc (ABNB)

Cash conversion cycle

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021
Days of inventory on hand (DOH)	days	—	—	4.66
Days of sales outstanding (DSO)	days	7.55	7.05	7.31
Number of days of payables	days	30.22	33.36	37.26
Cash conversion cycle	days	-22.68	-26.31	-25.29

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 7.55 – 30.22
= -22.68

The cash conversion cycle measures the time it takes for a company, in this case Airbnb Inc, to convert its investments in inventory and other resources into cash inflows from sales. A negative cash conversion cycle indicates that the company is able to generate cash through its operating cycle before having to pay its suppliers.

Looking at Airbnb Inc's cash conversion cycle over the past five years, we can see a trend of improvement as the cycle has gradually decreased. In 2019, the company had a cash conversion cycle of -46.20 days, which means that it was able to convert its investments into cash in a little over a month before needing to pay off suppliers. This improved significantly to -33.29 days in 2020, indicating further efficiency in managing cash flows.

The trend continued in 2021 and 2022, with a cash conversion cycle of -37.38 days and -33.36 days respectively. Finally, in 2023, the company achieved a cash conversion cycle of 0.00 days, suggesting that it has streamlined its operations to the point where it can essentially convert investments into cash instantaneously.

Overall, the consistent reduction in the cash conversion cycle reflects Airbnb Inc's ability to efficiently manage working capital and cash flow, possibly by optimizing inventory management and payment terms with suppliers. This trend is generally positive as it indicates improved liquidity and financial health for the company.