Dell Technologies Inc (DELL)

Cash conversion cycle

		Feb 2, 2024	Feb 3, 2023	Jan 28, 2022	Jan 29, 2021	Jan 31, 2020
Days of inventory on hand (DOH)	days	19.57	21.90	27.15	18.67	18.66
Days of sales outstanding (DSO)	days	19.17	64.73	65.40	75.56	74.79
Number of days of payables	days	104.76	85.26	124.92	118.35	114.12
Cash conversion cycle	days	-66.02	1.36	-32.38	-24.11	-20.67

February 2, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 19.57 + 19.17 – 104.76
= -66.02

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 negative cash conversion cycle indicates that Dell Technologies Inc is efficient in managing its working capital and generating cash flows.

Over the five-year period from January 31, 2020, to February 2, 2024, Dell's cash conversion cycle has shown varying trends. The cycle was negative in all years except for February 3, 2023, indicating efficient management of cash flows and working capital. The most notable improvement was seen in the latest fiscal year ended February 2, 2024, where the cash conversion cycle significantly decreased to -66.02 days from the previous year's 1.36 days.

The negative cash conversion cycle can imply that Dell pays its suppliers after receiving payments from customers or has a rapid turnover of inventory. This efficiency in managing working capital can free up cash for other investments, debt repayments, or shareholder distributions.

Overall, Dell Technologies Inc's consistent negative cash conversion cycle over the years signifies strong liquidity management and effective working capital utilization.