Applied Materials Inc (AMAT)

Cash conversion cycle

		Jan 31, 2025	Oct 31, 2024	Oct 27, 2024	Jul 31, 2024	Jul 28, 2024	Apr 30, 2024	Apr 28, 2024	Jan 31, 2024	Jan 28, 2024	Oct 31, 2023	Oct 29, 2023	Jul 31, 2023	Jul 30, 2023	Apr 30, 2023	Jan 31, 2023	Jan 29, 2023	Oct 31, 2022	Oct 30, 2022	Jul 31, 2022	May 1, 2022
Days of inventory on hand (DOH)	days	132.09	127.30	129.08	135.15	135.78	138.18	137.62	135.34	135.82	139.65	139.82	146.77	140.28	145.55	142.45	143.19	144.46	147.71	145.44	130.15
Days of sales outstanding (DSO)	days	—	—	71.86	—	68.50	—	68.32	—	69.05	—	77.98	—	78.08	—	—	80.18	—	92.85	—	—
Number of days of payables	days	—	—	37.38	—	35.85	—	35.23	—	34.06	—	36.10	—	34.60	—	—	38.10	—	43.70	—	40.48
Cash conversion cycle	days	132.09	127.30	163.56	135.15	168.43	138.18	170.70	135.34	170.80	139.65	181.70	146.77	183.76	145.55	142.45	185.26	144.46	196.87	145.44	89.67

January 31, 2025 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 132.09 + — – —
= 132.09

The cash conversion cycle of Applied Materials Inc has exhibited fluctuations over the period based on the provided data. The cycle represents the time it takes for the company to convert its investments in inventory into cash receipts from sales.

- The cycle ranged from a low of 89.67 days on May 1, 2022, to a high of 196.87 days on October 30, 2022, indicating potential inefficiencies in managing inventory, accounts receivable, and accounts payable during that period.

- There was a notable improvement in efficiency towards the beginning of 2024, with the cycle decreasing to 127.30 days on October 31, 2024, suggesting a more effective management of working capital.

- Overall, a shorter cash conversion cycle indicates that Applied Materials Inc is able to generate cash more quickly from its operational activities, while a longer cycle implies a delay in cash inflows.

- The company should focus on optimizing inventory management, improving the collection of receivables, and extending payable periods to enhance its working capital efficiency and cash flow generation.