Broadcom Inc (AVGO)

Cash conversion cycle

		Nov 3, 2024	Oct 29, 2023	Oct 30, 2022	Oct 31, 2021	Nov 1, 2020
Days of inventory on hand (DOH)	days	33.70	62.25	63.25	44.64	35.30
Days of sales outstanding (DSO)	days	31.25	32.14	32.52	27.54	35.10
Number of days of payables	days	31.82	39.68	32.79	37.37	29.42
Cash conversion cycle	days	33.13	54.70	62.98	34.80	40.97

November 3, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 33.70 + 31.25 – 31.82
= 33.13

Broadcom Inc's cash conversion cycle has fluctuated over the past five years. In the most recent fiscal year, ending on November 3, 2024, the company's cash conversion cycle was 33.13 days, reflecting a significant improvement compared to the previous year's cycle of 54.70 days. This indicates that Broadcom has been able to manage its working capital more efficiently, resulting in a faster conversion of inventory into cash.

Looking further back, we observe that the cash conversion cycle was higher in fiscal year 2022 at 62.98 days but decreased in fiscal year 2021 to 34.80 days. This suggests that the company may have faced challenges in managing its cash conversion cycle in fiscal year 2022 but successfully improved its efficiency in the following year.

Comparing the most recent data to that of fiscal year 2020, we see that the cash conversion cycle has slightly decreased from 40.97 days to 33.13 days, indicating a positive trend in the company's working capital management over the past five years.

Overall, Broadcom Inc has shown variability in its cash conversion cycle performance, with improvements in recent years suggesting enhanced working capital management practices. It is important for the company to continue monitoring and optimizing its cash conversion cycle to ensure efficient use of resources and sustained financial health.