International Business Machines (IBM)
Cash conversion cycle
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 15.38 | 18.57 | 19.96 | 21.10 | 20.35 | 23.40 | 22.39 | 24.40 | 23.27 | 46.69 | 37.12 | 32.04 | 27.20 | 29.15 | 27.33 | 25.37 | 22.57 | 15.22 | 15.42 | 15.40 |
| Days of sales outstanding (DSO) | days | 45.58 | 36.04 | 38.40 | 76.07 | 85.68 | 37.92 | 40.53 | 85.84 | 95.32 | 125.74 | 123.17 | 115.45 | 123.95 | 117.32 | 126.60 | 132.11 | 150.48 | 99.18 | 115.97 | 129.60 |
| Number of days of payables | days | 54.72 | 44.35 | 49.62 | 49.08 | 53.11 | 49.65 | 49.30 | 47.44 | 55.81 | 104.89 | 86.57 | 72.56 | 60.54 | 59.61 | 69.00 | 59.27 | 68.26 | 35.94 | 41.73 | 49.67 |
| Cash conversion cycle | days | 6.23 | 10.25 | 8.74 | 48.09 | 52.92 | 11.67 | 13.62 | 62.80 | 62.78 | 67.54 | 73.72 | 74.93 | 90.61 | 86.86 | 84.93 | 98.21 | 104.80 | 78.47 | 89.65 | 95.34 |
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 demonstrated fluctuating trends over the past eight quarters. In Q4 2023, the company's cash conversion cycle was 6.99 days, representing a significant improvement compared to the previous quarter. This indicates that IBM was able to efficiently convert its investments in inventory back into cash within a shorter time frame.
However, the cash conversion cycle had increased in Q3 2023, reaching 11.03 days, which suggests a slowdown in the conversion of inventory into sales and ultimately into cash. This trend continued in Q2 2023 with a slight improvement, but the cycle remained at 9.60 days, indicating a longer operating cycle for the company. In Q1 2023, the cycle increased further to 11.60 days, reflecting potential challenges in managing inventory and collecting receivables.
Comparing these recent quarters to the corresponding quarters in the previous year, there have been fluctuations in IBM's cash conversion cycle. Q4 2022 saw a cash conversion cycle of 11.61 days, which was lower than the peak seen in Q2 2022 at 13.21 days. However, the cycle extended to 20.86 days in Q1 2022, indicating a longer time taken for the company to convert its investments into cash.
Overall, IBM's cash conversion cycle has shown variability, highlighting potential areas for improvement in managing inventory, accounts receivable, and accounts payable. It is essential for the company to focus on optimizing these processes to enhance its cash flow efficiency and overall financial performance in the future.
Peer comparison
Dec 31, 2023
See also:
International Business Machines Cash Conversion Cycle (Quarterly Data)