Leidos Holdings Inc (LDOS)

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	8.58	8.29	8.88	8.74	8.51	8.61	8.72	8.59	8.53	8.51	8.08	8.96	9.54	10.32	10.73	—	2.75	—	—	—
Days of sales outstanding (DSO)	days	57.43	59.06	60.94	62.95	59.58	58.75	62.88	63.45	58.16	61.87	62.53	61.97	63.43	56.94	56.33	57.38	57.05	60.06	63.87	67.16
Number of days of payables	days	20.36	—	—	—	21.73	—	—	—	21.55	—	—	—	25.27	—	—	—	22.64	—	—	—
Cash conversion cycle	days	45.64	67.35	69.82	71.68	46.36	67.36	71.60	72.04	45.15	70.38	70.61	70.93	47.70	67.27	67.06	57.38	37.17	60.06	63.87	67.16

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 8.58 + 57.43 – 20.36
= 45.64

The cash conversion cycle of Leidos Holdings Inc, a measure of how long it takes for the company to convert its investment in inventory and other resources into cash flows from sales, has shown variability over the period analyzed. The trend indicates fluctuations in the efficiency of the company's working capital management.

The average cash conversion cycle over the period appears to be around 60 days, with some quarters showing shorter cycles in the range of 45-50 days and others longer cycles exceeding 70 days. This variability suggests potential challenges in managing inventory levels, collecting receivables, and extending payables efficiently.

A shorter cash conversion cycle implies that the company is able to generate cash more quickly from its operations, which can be a positive indicator of liquidity and operational efficiency. Conversely, a longer cycle may signal inefficiencies in working capital management, potentially leading to increased financing costs and reduced profitability.

It is essential for Leidos Holdings Inc to monitor its cash conversion cycle closely and implement strategies to optimize working capital management, streamline operations, and enhance cash flows to improve overall financial performance and sustainability.