3M Company (MMM)

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	95.26	100.56	103.99	101.83	101.95	105.94	105.83	101.11	96.81	97.74	98.54	95.60	93.18	87.91	92.61	90.89	88.05	86.69	93.19	98.85
Days of sales outstanding (DSO)	days	53.05	54.08	54.63	50.64	48.33	49.58	51.12	49.74	48.11	50.79	52.45	53.34	53.36	53.21	51.91	54.40	54.42	57.31	61.05	58.37
Number of days of payables	days	64.10	61.63	63.64	60.07	60.41	57.79	61.36	60.48	58.14	56.51	59.65	57.26	56.29	48.72	43.88	47.57	47.46	44.98	46.16	50.30
Cash conversion cycle	days	84.20	93.01	94.98	92.40	89.87	97.73	95.59	90.38	86.77	92.02	91.34	91.69	90.24	92.40	100.64	97.72	95.01	99.02	108.08	106.92

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 95.26 + 53.05 – 64.10
= 84.20

The cash conversion cycle for 3M Co. has shown some fluctuation over the past eight quarters. In Q4 2023, the company's cash conversion cycle was 84.20 days, which decreased compared to the previous quarter. This indicates that 3M Co. was able to convert its investments in inventory and receivables into cash more efficiently during this period.

However, it's noteworthy that the cash conversion cycle increased in Q3 and Q2 2023, reaching 93.01 days and 94.98 days, respectively. This suggests that 3M Co. may have faced challenges in managing its inventory and collecting receivables efficiently during those quarters, leading to a longer cash conversion cycle.

Comparing Q4 2023 to the same quarter in the previous year, there was a slight improvement as the cash conversion cycle decreased from 89.87 days in Q4 2022 to 84.20 days in Q4 2023. This improvement may indicate that 3M Co. implemented better strategies to manage its working capital and optimize cash flow during the year.

Overall, tracking the cash conversion cycle can provide insights into how effectively 3M Co. is managing its working capital and turning its investments into cash. The company should continue to focus on streamlining its inventory management and accounts receivable processes to maintain a shorter cash conversion cycle and improve its overall liquidity position.