Advanced Micro Devices Inc (AMD)

Cash conversion cycle

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020
Days of inventory on hand (DOH)	days	114.65	109.98	101.19	91.59	83.66	86.14	91.02	84.60	80.20	81.51	69.42	72.92	70.19	74.35	75.10	80.27	79.65	82.82	95.52	79.32
Days of sales outstanding (DSO)	days	95.86	107.96	89.54	80.34	103.18	83.15	71.70	—	80.65	69.59	68.69	71.28	67.49	54.96	55.66	70.17	82.39	91.04	87.33	97.37
Number of days of payables	days	39.79	51.78	34.45	27.92	39.51	43.51	55.39	50.30	53.02	56.54	39.80	44.27	47.43	40.97	35.57	46.09	26.64	48.21	57.86	49.05
Cash conversion cycle	days	170.72	166.16	156.28	144.01	147.32	125.78	107.34	34.30	107.83	94.56	98.32	99.92	90.26	88.35	95.18	104.36	135.39	125.65	124.99	127.65

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 114.65 + 95.86 – 39.79
= 170.72

The cash conversion cycle (CCC) of Advanced Micro Devices Inc has shown fluctuations over the reported periods. The CCC is a measure of the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

From March 31, 2020, to December 31, 2022, the CCC demonstrated a general downward trend, indicating that the company was becoming more efficient in managing its working capital and turning its assets into cash. This trend suggests that the company was able to streamline its operations and improve its liquidity position during this period.

However, from March 31, 2023, to December 31, 2024, the CCC experienced a significant increase, reaching its peak at 170.72 days by the end of December 2024. This rise indicates a potential slowdown in the company's ability to convert its investments into cash, which could be attributed to factors such as increased inventory levels, longer payment cycles, or lower sales turnover during this period.

Overall, the fluctuation in the CCC of Advanced Micro Devices Inc highlights the importance of efficient working capital management in sustaining and enhancing the company's financial health and operational efficiency. Understanding and monitoring the CCC can provide valuable insights into the company's liquidity, efficiency, and potential financial risks.