DXC Technology Co (DXC)

Cash conversion cycle

		Mar 31, 2024	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
Days of inventory on hand (DOH)	days	—	13.59	13.46	15.53	13.32	32.68	17.05	16.79	15.74	12.72	10.98	12.88	13.69	9.51	11.58	9.51	9.21	13.10	16.83	32.09
Days of sales outstanding (DSO)	days	86.88	82.41	81.79	84.62	87.04	84.91	82.33	85.15	86.49	80.49	82.81	85.76	85.56	83.01	81.03	81.24	81.89	84.12	83.32	93.83
Number of days of payables	days	23.36	21.30	14.89	16.69	18.28	22.64	22.07	19.74	20.28	16.09	14.89	16.75	17.21	13.83	21.36	21.70	22.78	31.29	40.21	66.86
Cash conversion cycle	days	63.51	74.70	80.37	83.46	82.08	94.96	77.31	82.19	81.95	77.12	78.91	81.90	82.04	78.70	71.25	69.05	68.31	65.94	59.94	59.05

March 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 86.88 – 23.36
= 63.51

The cash conversion cycle of DXC Technology Co has displayed fluctuations over the past several quarters. The company's cash conversion cycle is a measure of how long it takes for the company to convert its investments in inventory into cash flows from sales.

From the data provided, we can see that the cash conversion cycle ranged from a low of 59.05 days in June 2019 to a high of 94.96 days in December 2022. The cycle has exhibited volatility, with periods of shorter cycles followed by longer cycles, indicating potential inefficiencies in managing working capital.

A shorter cash conversion cycle is generally favorable as it implies quicker turnover of assets and cash flows, while a longer cycle suggests delays in receiving cash from sales or inefficiencies in managing inventory and accounts receivable.

Overall, DXC Technology Co should focus on optimizing its working capital management to reduce the cash conversion cycle, thereby improving cash flow efficiency and overall financial performance.