Advanced Micro Devices Inc (AMD)

Cash conversion cycle

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	88.11	70.56	68.88	75.95	77.70
Days of sales outstanding (DSO)	days	103.33	80.65	67.54	82.51	114.96
Number of days of payables	days	41.61	46.64	46.54	25.41	78.17
Cash conversion cycle	days	149.83	104.57	89.88	133.05	114.48

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 88.11 + 103.33 – 41.61
= 149.83

The cash conversion cycle of Advanced Micro Devices Inc has shown fluctuations over the past five years. In 2023, the cash conversion cycle increased to 149.83 days from 104.57 days in 2022, indicating a decrease in efficiency in converting its investments in inventory and accounts receivable into cash. This may suggest potential challenges in managing working capital effectively during the period.

In 2021, the company experienced an improvement in its cash conversion cycle to 89.88 days, reflecting a more efficient management of its operating cycle compared to the previous years. However, in 2020 and 2019, the cash conversion cycle increased to 133.05 days and 114.48 days, respectively, indicating potential issues in converting its resources into cash flow within a shorter period.

Overall, the trend in the cash conversion cycle of Advanced Micro Devices Inc suggests some variability in working capital management efficiency over the years, highlighting the importance for the company to focus on optimizing its cash conversion processes to ensure better liquidity and financial performance.