Dolby Laboratories (DLB)
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 | 91.31 | 85.22 | 76.69 | 74.54 | 66.60 | 60.80 | 65.21 | 46.47 | 37.65 | 30.78 | 31.26 | 38.79 | 50.80 | 63.66 | 71.37 | 64.71 | 66.58 | 73.36 | 97.17 | 89.75 |
| Days of sales outstanding (DSO) | days | 121.48 | 115.88 | 115.69 | 114.56 | 118.46 | 102.03 | — | — | 101.76 | 94.04 | 110.87 | 119.44 | 121.90 | 76.17 | 99.54 | 106.17 | 56.63 | 72.41 | 69.85 | 58.17 |
| Number of days of payables | days | 34.99 | 50.06 | 36.44 | 42.16 | 44.28 | 36.59 | 45.52 | 31.79 | 54.72 | 49.91 | 31.37 | 21.86 | 34.43 | 31.44 | 24.45 | 20.65 | 31.34 | 34.52 | 35.72 | 37.90 |
| Cash conversion cycle | days | 177.80 | 151.04 | 155.94 | 146.94 | 140.78 | 126.25 | 19.69 | 14.68 | 84.69 | 74.91 | 110.76 | 136.38 | 138.27 | 108.39 | 146.47 | 150.23 | 91.87 | 111.25 | 131.29 | 110.02 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 91.31 + 121.48 – 34.99
= 177.80
The cash conversion cycle of Dolby Laboratories has shown variability over the periods analyzed. The company's cash conversion cycle was longest in Dec 2023 at 177.80 days and shortest in Mar 31, 2022 at 14.68 days. Generally, a longer cash conversion cycle indicates that a company takes longer to collect cash from its sales relative to paying its suppliers for inventory, leading to potential liquidity challenges. Conversely, a shorter cash conversion cycle suggests efficient management of working capital.
A significant increase in the cash conversion cycle from Sep 2022 (126.25 days) to Dec 2022 (140.78 days) can indicate a potential issue with receivables or inventory management during that period. However, the company managed to bring the cycle significantly down in the following two quarters. The steep decline from Jun 2022 (19.69 days) to Mar 2022 (14.68 days) suggests that the company improved its efficiency in collecting cash from customers and managing inventory levels.
Overall, Dolby Laboratories should continue monitoring its cash conversion cycle closely to ensure efficient working capital management. By analyzing the components of the cycle (days sales outstanding, days inventory outstanding, and days payables outstanding), the company can identify areas for improvement and strive for optimal working capital efficiency.
Peer comparison
Dec 31, 2023