Alphabet Inc Class A (GOOGL)

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 is a measure of how efficiently a company manages its working capital by evaluating the time it takes to convert its investments in inventory and other resources into cash flow from sales. A shorter cash conversion cycle indicates more efficient management of working capital.

Alphabet Inc's cash conversion cycle has exhibited some fluctuation over the past eight quarters. The cycle was 36.43 days at the end of December 2023, and it had increased gradually from the fourth quarter of 2022 to the third quarter of 2023, then decreased slightly in the most recent quarter. This suggests some variability in the company's ability to efficiently convert its resources into cash during this period.

It's essential to note that a lower cash conversion cycle is generally favorable, as it indicates that the company is able to quickly convert its investments into sales and subsequently into cash. Any significant changes in the management of inventory, accounts receivable, and accounts payable may have contributed to the variations observed in Alphabet Inc's cash conversion cycle over these quarters.

Overall, a detailed analysis of the company's working capital management and operational efficiency would provide a comprehensive understanding of the factors driving these fluctuations in the cash conversion cycle.