Analog Devices Inc (ADI)

Cash conversion cycle

		Nov 2, 2024	Oct 28, 2023	Oct 29, 2022	Oct 30, 2021	Oct 31, 2020
Days of inventory on hand (DOH)	days	77.12	76.23	63.58	94.52	69.34
Days of sales outstanding (DSO)	days	51.67	44.50	55.63	76.83	49.76
Number of days of payables	days	25.97	22.89	26.44	34.91	25.91
Cash conversion cycle	days	102.82	97.85	92.77	136.43	93.19

November 2, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 77.12 + 51.67 – 25.97
= 102.82

Analog Devices Inc's cash conversion cycle measures the time it takes for the company to convert its investments in inventory and accounts receivable into cash. The trend over the past five years shows fluctuations in the cash conversion cycle. In 2024, the cycle lengthened to 102.82 days compared to 97.85 days in 2023, indicating a slower conversion of inventory and receivables into cash. This could be a result of a more extended period between paying suppliers and receiving funds from customers.

In 2022, the cash conversion cycle decreased to 92.77 days, reflecting an improvement in efficiency in managing inventory and collecting receivables. However, in 2021, the cycle increased significantly to 136.43 days, suggesting potential challenges in inventory management and collection processes during that period. The cycle then improved in 2020 to 93.19 days, indicating a more efficient conversion of investments into cash.

Overall, Analog Devices Inc's cash conversion cycle has shown variability over the past five years, with fluctuations in efficiency in managing working capital. It is essential for the company to closely monitor and address factors impacting the cycle to optimize cash flow and strengthen its financial performance.