Exelixis Inc (EXEL)

Cash conversion cycle

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	10.28	23.47	22.07	23.22	18.00
Days of sales outstanding (DSO)	days	47.35	48.66	71.90	59.46	44.91
Number of days of payables	days	20.03	23.03	19.48	26.17	16.17
Cash conversion cycle	days	37.59	49.11	74.49	56.52	46.73

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 10.28 + 47.35 – 20.03
= 37.59

Exelixis Inc's cash conversion cycle has shown fluctuations over the past five years. The company's cash conversion cycle measures the average number of days it takes for Exelixis to convert its investments in inventory and other resources into cash through sales to customers and then collects the resulting accounts receivable.

In 2023, Exelixis Inc's cash conversion cycle decreased to 37.59 days from 49.11 days in 2022. This indicates that the company was able to convert its investments into cash more efficiently in 2023 compared to the previous year. A shorter cash conversion cycle suggests that Exelixis was able to sell its inventory more quickly, receive payments from customers sooner, or manage its accounts payable more effectively.

Looking back further, in 2021, the cash conversion cycle was at its highest at 74.49 days, indicating a slower conversion of investments into cash. However, the company improved its efficiency in 2023 compared to 2021 by significantly reducing this cycle length.

Analyzing the trend over the five-year period, despite some fluctuations, Exelixis Inc has, on average, managed to reduce its cash conversion cycle duration, improving its liquidity and operational efficiency. This trend suggests that the company has been more effective in managing its working capital, inventory, and accounts receivable, which could positively impact its overall financial performance and cash flow in the long run.