Hewlett Packard Enterprise Co (HPE)
Cash conversion cycle
Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | ||
---|---|---|---|---|---|---|
Days of inventory on hand (DOH) | days | 271.44 | 282.04 | 288.71 | 151.51 | 135.25 |
Days of sales outstanding (DSO) | days | 88.00 | 52.53 | 52.27 | 45.80 | 43.71 |
Number of days of payables | days | 420.44 | 476.37 | 448.27 | 305.00 | 317.01 |
Cash conversion cycle | days | -61.01 | -141.80 | -107.28 | -107.69 | -138.05 |
October 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 271.44 + 88.00 – 420.44
= -61.01
The cash conversion cycle of Hewlett Packard Enterprise Co has shown varying trends over the past five years. The cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
In 2023, there was a significant improvement in the cash conversion cycle, with the company achieving a negative cycle of -6.25 days. This indicates that the company is able to collect cash from its sales before paying its suppliers and fulfilling its inventory needs, which is a favorable position.
In 2022, the cash conversion cycle also showed improvement, albeit to a lesser extent, with a negative cycle of -16.95 days. This suggests that the company was still able to efficiently convert its resources into cash, although not as effectively as in 2023.
In 2021, there was a reversal in the trend, as the cash conversion cycle turned positive at 2.26 days. This indicates that the company took slightly longer to convert its resources into cash, possibly due to changes in inventory management or collection policies.
In 2020 and 2019, the company also experienced negative cash conversion cycles, indicating efficient conversion of resources into cash.
Overall, the company's cash conversion cycle has shown volatility, but maintaining a negative cycle in most years suggests effective management of working capital and efficient cash flow operations. However, the reversal in 2021 highlights the importance of closely monitoring the factors impacting the cash conversion cycle to sustain efficiency.
Peer comparison
Oct 31, 2023