Meta Platforms Inc. (META)
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 | — | — | — | — | — |
| Days of sales outstanding (DSO) | days | 44.01 | 42.24 | 43.51 | 48.21 | 49.23 |
| Number of days of payables | days | 80.31 | 88.28 | 82.75 | 29.10 | 38.96 |
| Cash conversion cycle | days | -36.30 | -46.04 | -39.24 | 19.10 | 10.27 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 44.01 – 80.31
= -36.30
The cash conversion cycle of Meta Platforms Inc has displayed fluctuating trends over the past five years. In 2023, the company improved its cash conversion cycle significantly compared to the prior year, reducing it to -24.43 days from -29.99 days in 2022.
A negative cash conversion cycle indicates that Meta Platforms Inc is efficiently managing its working capital, as it takes less time to convert its investments in inventory and accounts receivable into cash from sales. This can be attributed to effective inventory and accounts receivable management practices.
However, when looking at a broader historical perspective, the company's cash conversion cycle was more favorable in 2019 and 2020, when it was positive. This indicates that Meta Platforms Inc took longer to convert its resources into cash from sales during those periods.
Overall, the recent improvement in the cash conversion cycle suggests that Meta Platforms Inc has been successful in streamlining its working capital processes, which can lead to enhanced liquidity and operational efficiency.
Peer comparison
Dec 31, 2023