International Business Machines (IBM)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 15.38 | 20.35 | 23.27 | 27.20 | 22.57 |
| Days of sales outstanding (DSO) | days | 45.58 | 85.68 | 95.32 | 123.95 | 150.49 |
| Number of days of payables | days | 54.72 | 53.11 | 55.81 | 60.54 | 68.26 |
| Cash conversion cycle | days | 6.23 | 52.92 | 62.78 | 90.61 | 104.80 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 15.38 + 45.58 – 54.72
= 6.23
The cash conversion cycle of International Business Machines Corp. has shown a declining trend over the past five years. The company's cash conversion cycle decreased from 83.16 days in 2019 to 6.99 days in 2023, indicating a significant improvement in its management of cash flow and working capital efficiency.
This downward trend indicates that IBM has been able to optimize its cash flow management, inventory turnover, and accounts receivable collection processes. A shorter cash conversion cycle suggests that the company is able to convert its investments in inventory and accounts receivable into cash more quickly, resulting in improved liquidity and financial performance.
The significant reduction in the cash conversion cycle from 2019 to 2023 reflects IBM's efforts to streamline its operations, enhance its supply chain efficiency, and effectively manage working capital. This improvement is a positive sign of the company's financial health and ability to generate cash efficiently.
Overall, the declining trend in International Business Machines Corp.'s cash conversion cycle indicates improved working capital management and enhanced operational efficiency, which bodes well for the company's financial stability and performance.
Peer comparison
Dec 31, 2023