Advanced Micro Devices Inc (AMD)

Cash conversion cycle

		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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	95.71	98.66	104.68	97.33	80.20	81.51	69.42	72.92	70.19	74.35	75.10	80.27	79.65	82.82	95.52	79.32	77.70	89.34	88.63	80.56
Days of sales outstanding (DSO)	days	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	112.97	97.72	108.75	99.53
Number of days of payables	days	45.20	49.83	63.70	57.87	53.02	56.54	39.80	44.27	47.43	40.97	35.57	46.09	26.64	48.21	57.86	49.05	78.17	65.54	72.30	40.83
Cash conversion cycle	days	153.68	131.98	112.69	39.46	107.83	94.56	98.32	99.92	90.26	88.35	95.18	104.36	135.39	125.65	124.99	127.65	112.49	121.51	125.08	139.26

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 95.71 + 103.18 – 45.20
= 153.68

The cash conversion cycle of Advanced Micro Devices Inc has shown fluctuations over the past years, indicating changes in its efficiency in managing its working capital.

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. A shorter cash conversion cycle is generally preferred as it signifies a quicker turnaround of cash flow.

Looking at the data provided, we can see that the company's cash conversion cycle has ranged from a low of 39.46 days to a high of 153.68 days over the period. The trend shows some variation in the cycle length, with periods of improvement followed by periods of deterioration.

Analyzing the most recent data, the cash conversion cycle stood at 153.68 days as of December 31, 2023, indicating a relatively longer time taken to generate cash from its operating activities compared to previous quarters. This suggests that the company may be facing challenges in efficiently managing its inventory, receivables, and payables during this period.

Conversely, the cycle improved to 39.46 days as of March 31, 2023, which could be a result of better inventory management, quicker collection of receivables, or extended payment terms to suppliers. A shorter cycle during this period indicates enhanced efficiency in converting assets into cash and indicates positive working capital management.

Overall, it is essential for Advanced Micro Devices Inc to monitor and optimize its cash conversion cycle consistently to ensure effective management of its working capital, which is critical for sustaining operational activities and generating cash flow.