HP Inc (HPQ)
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 | 59.34 | 54.87 | 57.83 | 47.11 | 43.98 |
| Days of sales outstanding (DSO) | days | 37.96 | 7.37 | 45.12 | 48.16 | 49.59 |
| Number of days of payables | days | 121.46 | 110.28 | 117.22 | 116.16 | 113.47 |
| Cash conversion cycle | days | -24.17 | -48.04 | -14.28 | -20.90 | -19.90 |
October 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 59.34 + 37.96 – 121.46
= -24.17
The cash conversion cycle, which reflects the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales, has shown fluctuating patterns in recent years. In 2023, at -18.38 days, the cash conversion cycle extended beyond the previous year's -15.48 days, indicating a longer period for the company to realize cash from its operating cycle. This increase was a departure from the improving trend observed between 2020 and 2022, where the cycle had shown a consistent decline. Despite the negative values, signaling efficient management of working capital, the widening of the cycle in 2023 suggests a potential need for a closer examination of the company's inventory management and sales processes.
Peer comparison
Oct 31, 2023