HP Inc (HPQ)
Days of sales outstanding (DSO)
| Oct 31, 2024 | Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | ||
|---|---|---|---|---|---|---|
| Receivables turnover | 7.34 | 9.62 | 49.54 | 8.09 | 7.58 | |
| DSO | days | 49.73 | 37.96 | 7.37 | 45.12 | 48.16 |
October 31, 2024 calculation
DSO = 365 ÷ Receivables turnover
= 365 ÷ 7.34
= 49.73
HP Inc's days of sales outstanding (DSO) is a financial ratio used to assess how efficiently the company is managing its accounts receivable. A lower DSO indicates that the company is collecting payments from customers quickly, while a higher DSO suggests that it takes longer to convert sales into cash.
Analyzing the trend in HP Inc's DSO over the past five years, we observe that there has been significant variability in the DSO metric. In 2022, the DSO was notably low at 7.37 days, indicating a swift collection of receivables. However, this was followed by a substantial increase in DSO in 2023 to 37.96 days, indicating a slower collection process.
In 2024, HP Inc managed to reduce its DSO to 49.73 days, which is higher compared to the prior year. It is important to note that a higher DSO may potentially signal challenges in collecting payments promptly and efficiently. Therefore, HP Inc may need to focus on improving its account receivable management practices to shorten its DSO and enhance cash flow efficiency.
Overall, HP Inc should continue monitoring its DSO closely and implement strategies to optimize its accounts receivable collection processes to ensure a healthy balance between sales growth and cash flow management.
Peer comparison
Oct 31, 2024