Analog Devices Inc (ADI)

Days of sales outstanding (DSO)

		Feb 3, 2024	Oct 28, 2023	Jul 29, 2023	Apr 29, 2023	Jan 28, 2023	Oct 29, 2022	Jul 30, 2022	Apr 30, 2022	Jan 29, 2022	Oct 30, 2021	Jul 31, 2021	May 1, 2021	Jan 30, 2021	Oct 31, 2020	Aug 1, 2020	May 2, 2020	Feb 1, 2020	Nov 2, 2019	Aug 3, 2019	May 4, 2019
Receivables turnover		9.44	8.20	7.79	7.82	7.59	6.56	6.13	5.83	4.96	4.83	7.84	—	7.02	7.53	—	—	—	9.35	—	—
DSO	days	38.65	44.50	46.85	46.66	48.11	55.65	59.54	62.56	73.56	75.56	46.54	—	51.96	48.47	—	—	—	39.03	—	—

February 3, 2024 calculation

DSO = 365 ÷ Receivables turnover
= 365 ÷ 9.44
= 38.65

Days Sales Outstanding (DSO) measures the average number of days it takes for a company to collect revenue after making a sale. A lower DSO indicates that a company is efficient in collecting payments from customers.

Analyzing Analog Devices Inc.'s DSO over the past eight quarters, we can observe a decreasing trend from 60.18 days in Q2 2022 to 37.76 days in Q1 2024. This downward trend signifies that Analog Devices has been improving its efficiency in collecting payments from customers.

The reduction in DSO indicates that the company may have implemented better credit policies, improved collections processes, or experienced faster customer payments. A declining DSO generally reflects positively on a company's cash flow and liquidity position.

Although variations in DSO can be impacted by industry norms, customer payment terms, and economic conditions, Analog Devices' consistent decrease in DSO over the quarters suggests effective management of account receivables and stronger working capital management.

Investors and stakeholders often view a decreasing trend in DSO as a positive indicator of the company's financial health and operational efficiency. It implies that Analog Devices is converting its sales into cash more rapidly and effectively managing its receivables, which can contribute to improved profitability and cash flow generation.