Applied Materials Inc (AMAT)

Cash conversion cycle

		Jan 28, 2024	Oct 29, 2023	Jul 30, 2023	Apr 30, 2023	Jan 29, 2023	Oct 30, 2022	Jul 31, 2022	May 1, 2022	Jan 30, 2022	Oct 31, 2021	Aug 1, 2021	May 2, 2021	Jan 31, 2021	Oct 25, 2020	Jul 26, 2020	Apr 26, 2020	Jan 26, 2020	Oct 27, 2019	Jul 28, 2019	Apr 28, 2019
Days of inventory on hand (DOH)	days	128.86	130.32	131.75	134.43	139.45	139.95	134.78	125.54	116.88	119.11	119.70	129.31	137.71	144.02	159.00	157.42	150.19	154.22	157.45	157.95
Days of sales outstanding (DSO)	days	69.52	77.48	78.33	81.98	82.00	93.13	81.08	—	73.06	88.47	—	—	64.41	66.31	66.52	65.01	67.96	65.69	61.32	55.88
Number of days of payables	days	32.32	33.65	32.50	33.22	37.11	41.40	41.27	39.05	38.79	40.69	39.31	41.70	37.75	41.47	44.98	44.88	45.12	42.53	39.60	38.79
Cash conversion cycle	days	166.05	174.16	177.58	183.19	184.34	191.67	174.58	86.49	151.16	166.90	80.39	87.61	164.37	168.86	180.55	177.55	173.03	177.38	179.18	175.04

January 28, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 128.86 + 69.52 – 32.32
= 166.05

The cash conversion cycle of Applied Materials Inc. has shown some fluctuations over the past eight quarters. The company's cash conversion cycle has ranged from a low of 168.38 days in Q2 2022 to a high of 196.44 days in Q4 2022.

In general, a lower cash conversion cycle is favorable as it indicates that the company is able to convert its investments in inventory and accounts receivable into cash more quickly. Conversely, a higher cash conversion cycle suggests that the company is taking longer to convert its investments into cash.

Analyzing the trend over the past eight quarters, it is observed that Applied Materials Inc. experienced an increase in its cash conversion cycle from Q2 2022 to Q4 2022, reaching its peak at 196.44 days. However, the company managed to reduce the cash conversion cycle in the following quarters, with Q1 2024 showing an improvement at 174.72 days.

Overall, Applied Materials Inc. should continue to monitor and manage its cash conversion cycle effectively to ensure efficient utilization of its resources and improve its cash flow management.