International Business Machines (IBM)
Cash conversion cycle
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 17.30 | 15.38 | 20.35 | 23.27 | 27.20 |
| Days of sales outstanding (DSO) | days | 44.45 | 45.58 | 85.68 | 95.32 | 123.95 |
| Number of days of payables | days | 54.10 | 54.72 | 53.11 | 55.81 | 60.54 |
| Cash conversion cycle | days | 7.64 | 6.23 | 52.92 | 62.78 | 90.61 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 17.30 + 44.45 – 54.10
= 7.64
The cash conversion cycle of International Business Machines has shown a consistent improvement over the years, reflecting the company's efficiency in managing its working capital. In December 31, 2020, the cash conversion cycle was 90.61 days, indicating that it took the company approximately 90 days to convert its investments in inventory and receivables into cash flows from sales.
By December 31, 2021, the cash conversion cycle had decreased to 62.78 days, suggesting a more efficient collection of receivables and management of inventory levels. This trend continued in the subsequent years, with the cycle further decreasing to 52.92 days by December 31, 2022, indicating a continued focus on optimizing working capital management.
Notably, there was a significant improvement in the cash conversion cycle by December 31, 2023, dropping to just 6.23 days. This sharp decrease may reflect a more streamlined process in converting sales into cash, which is a positive sign of swift cash inflows.
By December 31, 2024, the cycle slightly increased to 7.64 days, still maintaining a very low level compared to previous years. Overall, the decreasing trend in the cash conversion cycle demonstrates International Business Machines' effective utilization of its resources to generate cash flows and highlights the company's strong working capital management practices.
Peer comparison
Dec 31, 2024