Broadcom Inc (AVGO)

Cash conversion cycle

		Nov 3, 2024	Aug 4, 2024	May 5, 2024	Feb 4, 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	Nov 1, 2020	Aug 2, 2020	May 3, 2020	Feb 2, 2020
Days of inventory on hand (DOH)	days	33.70	40.90	45.13	54.73	62.25	59.79	60.83	61.00	63.25	61.70	57.05	52.54	44.64	40.11	34.96	33.15	35.30	38.40	33.93	34.02
Days of sales outstanding (DSO)	days	31.25	36.37	47.10	46.67	32.14	30.00	31.57	34.30	32.52	31.20	—	32.52	27.54	—	—	37.32	35.10	—	—	—
Number of days of payables	days	31.82	37.94	35.31	42.65	39.68	32.20	26.80	29.65	32.79	23.90	36.56	37.26	37.37	33.47	28.90	31.27	29.42	38.79	43.79	35.50
Cash conversion cycle	days	33.13	39.33	56.93	58.75	54.70	57.59	65.60	65.66	62.98	69.00	20.49	47.79	34.80	6.64	6.06	39.20	40.97	-0.39	-9.86	-1.48

November 3, 2024 calculation

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

The cash conversion cycle of Broadcom Inc fluctuated over the periods analyzed. The company's efficiency in managing its cash resources and converting its inputs into cash receipts improved initially from negative 9.86 days to 6.06 days by May 2021 but then deteriorated to 69.00 days by July 2022. However, there was a significant improvement in the cash conversion cycle to 20.49 days by January 2023, indicating better management of working capital.

Subsequently, Broadcom Inc faced challenges as the cash conversion cycle increased to 65.66 days by January 2024 and further to 58.75 days by February 2024. This prolonged cycle suggests that the company took longer to convert its investments in inventory and accounts receivable into cash. By November 2024, the cash conversion cycle improved slightly to 33.13 days, but it still remained higher compared to previous periods.

Overall, Broadcom Inc should focus on streamlining its operations and managing its working capital more efficiently to reduce the cash conversion cycle and improve its cash flow position. A lower cash conversion cycle indicates effective working capital management and can lead to increased liquidity and profitability for the company.