Alphabet Inc Class C (GOOG)

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	—	7.72	3.85	3.14	5.07
Days of sales outstanding (DSO)	days	57.29	52.24	57.05	62.76	62.00
Number of days of payables	days	20.51	14.83	19.86	24.08	28.23
Cash conversion cycle	days	36.78	45.13	41.04	41.82	38.84

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 57.29 – 20.51
= 36.78

The cash conversion cycle (CCC) of Alphabet Inc has shown some fluctuation over the past five years. In 2023, the company's CCC decreased to 36.43 days from 44.85 days in 2022. This indicates a more efficient management of working capital, as the company's ability to convert its resources into cash has improved. The decrease in CCC suggests that Alphabet Inc has been able to collect receivables, manage its inventory, and pay its liabilities more effectively in 2023 compared to the prior year.

It's worth noting that the CCC was relatively stable between 2021 and 2022, with a small increase in 2022. This may be attributed to changes in the company's operating cycle, such as variations in inventory turnover, accounts receivable collection, and accounts payable payment periods.

Additionally, the CCC decreased compared to 2020, which also indicates that Alphabet Inc improved its working capital management that year. However, in 2019, the CCC was slightly lower at 38.84 days compared to 2023. This suggests that the company was more efficient in converting its resources into cash in 2019, albeit only marginally.

Overall, the decreasing trend in the cash conversion cycle from 2022 to 2023 reflects Alphabet Inc's effectiveness in managing its working capital and converting its resources into cash, which is a positive indicator of the company's financial efficiency.