Cisco Systems Inc (CSCO)

Cash conversion cycle

		Jul 27, 2024	Apr 27, 2024	Jan 27, 2024	Oct 28, 2023	Jul 29, 2023	Apr 29, 2023	Jan 28, 2023	Oct 29, 2022	Jul 30, 2022	Apr 30, 2022	Jan 29, 2022	Oct 30, 2021	Jul 31, 2021	May 1, 2021	Jan 23, 2021	Oct 24, 2020	Jul 25, 2020	Apr 25, 2020	Jan 25, 2020	Oct 26, 2019
Days of inventory on hand (DOH)	days	37.06	34.10	34.66	35.61	39.03	38.36	35.77	30.97	30.42	26.55	24.48	22.20	18.88	19.43	18.10	16.39	16.02	14.83	16.08	15.74
Days of sales outstanding (DSO)	days	67.92	57.16	53.67	52.18	59.58	56.83	60.45	63.96	74.63	68.04	70.93	67.53	74.53	—	71.12	69.23	78.32	67.26	65.43	70.26
Number of days of payables	days	25.31	22.46	19.96	22.21	24.77	26.96	26.53	26.93	27.02	27.24	24.98	27.40	28.61	30.03	23.54	28.86	27.72	29.29	23.00	23.61
Cash conversion cycle	days	79.67	68.79	68.37	65.59	73.83	68.22	69.69	68.01	78.03	67.35	70.43	62.33	64.80	-10.60	65.68	56.76	66.62	52.81	58.51	62.39

July 27, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 37.06 + 67.92 – 25.31
= 79.67

The cash conversion cycle of Cisco Systems Inc has been fluctuating over the past several quarters. The cash conversion cycle is a measure of how long it takes for a company to convert its investments in inventory and other resources into cash flow from sales.

Based on the data provided, the cash conversion cycle for Cisco Systems Inc ranged from -10.60 days to 79.67 days over the past few quarters. A negative cash conversion cycle, as observed in the quarter ending January 2021, indicates that the company is receiving cash from customers before paying its suppliers, which can be a positive sign of efficient working capital management.

However, in most quarters, the cash conversion cycle has been positive, indicating that Cisco Systems Inc takes some time to convert its investments into cash. The company needs to monitor and potentially improve its cash conversion cycle to ensure efficient cash flow management and working capital optimization.

Overall, Cisco Systems Inc should focus on strategies to shorten its cash conversion cycle, such as improving inventory turnover, optimizing accounts receivable collection, and negotiating favorable payment terms with suppliers to enhance its liquidity position and overall financial performance.