Alphabet Inc Class C (GOOG)

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	—	8.23	6.31	6.64	7.72	9.30	6.01	4.29	3.85	4.48	3.39	3.61	3.14	3.83	3.91	4.33	5.07	7.43	5.37	6.19
Days of sales outstanding (DSO)	days	57.32	50.81	49.22	46.45	52.20	46.76	48.70	48.15	57.13	53.32	54.64	53.11	63.04	54.41	47.62	52.10	62.15	49.59	52.43	49.50
Number of days of payables	days	20.51	16.16	15.03	12.00	14.83	18.58	13.38	10.77	19.86	16.20	17.62	19.50	24.08	20.12	19.49	19.98	28.23	21.98	21.87	21.81
Cash conversion cycle	days	36.80	42.89	40.50	41.09	45.09	37.49	41.33	41.67	41.12	41.60	40.42	37.21	42.10	38.12	32.04	36.45	38.99	35.05	35.93	33.88

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 57.32 – 20.51
= 36.80

The cash conversion cycle (CCC) measures the time it takes for a company to convert its investments in inventory and accounts receivable into cash flows from sales. A lower CCC typically indicates a more efficient management of working capital.

Alphabet Inc's CCC fluctuated over the past eight quarters. In Q4 2023, the company's CCC decreased to 36.43 days from 42.47 days in Q3 2023, suggesting an improvement in the efficiency of its working capital management. However, this improvement may be compared to the CCC of 44.85 days in Q4 2022, indicating a positive trend over the year.

Overall, Alphabet Inc's CCC has exhibited some variability, yet the recent reduction in Q4 2023 suggests a potential enhancement in its ability to generate cash from its operating activities compared to the previous quarter. It is important to monitor this trend over time to assess the company's working capital management effectiveness.