Analog Devices Inc (ADI)

Cash conversion cycle

		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
Days of inventory on hand (DOH)	days	84.72	87.38	90.88	86.87	81.29	72.70	54.12	55.11	56.64	94.52	71.25	70.62	69.27	69.34	69.34	66.84	66.18	67.63	114.92	108.66
Days of sales outstanding (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	—	—
Number of days of payables	days	21.71	26.23	31.13	29.99	28.54	30.23	24.51	23.14	25.40	34.91	28.82	30.75	25.47	25.91	24.44	21.99	23.80	24.98	39.65	37.21
Cash conversion cycle	days	101.66	105.65	106.59	103.54	100.86	98.11	89.14	94.53	104.79	135.16	88.97	39.87	95.76	91.90	44.91	44.85	42.38	81.67	75.27	71.45

February 3, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 84.72 + 38.65 – 21.71
= 101.66

Analog Devices Inc. has shown some fluctuations in its cash conversion cycle over the past eight quarters. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

In Q1 2024, the company's cash conversion cycle was 134.86 days, indicating that it took approximately 134.86 days for Analog Devices to convert its investments in inventory into cash. This was a slight improvement from the previous quarter, Q4 2023, where the cycle was 138.31 days.

Looking back to earlier quarters, the cycle has shown variability, with values ranging from a low of 109.57 days in Q3 2022 to a high of 138.31 days in Q4 2023. Overall, the trend appears to be fluctuating around the 130-day mark.

Analyzing the cash conversion cycle can provide insights into the efficiency of Analog Devices' operations in managing its working capital. A shorter cycle indicates that the company is able to generate cash quickly from its sales, while a longer cycle may suggest inefficiencies in inventory management or collections processes.

Further assessment and comparison with industry benchmarks or trends over time can help determine the effectiveness of Analog Devices in managing its cash conversion cycle and optimizing its working capital efficiency.