3M Company (MMM)

Cash conversion cycle

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Days of inventory on hand (DOH)	days	93.43	101.69	101.73	121.39	90.81	111.09	109.17	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
Days of sales outstanding (DSO)	days	47.44	52.42	53.17	70.56	65.21	61.79	58.22	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
Number of days of payables	days	67.20	67.70	70.48	83.59	63.92	68.08	66.80	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
Cash conversion cycle	days	73.66	86.40	84.41	108.36	92.11	104.80	100.59	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

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 93.43 + 47.44 – 67.20
= 73.66

The cash conversion cycle of 3M Company has shown fluctuations over the past several quarters. The cycle represents the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

From March 31, 2020, to December 31, 2024, the cash conversion cycle ranged from a high of 108.36 days in March 31, 2024, to a low of 73.66 days in December 31, 2024. This indicates variability in the efficiency of managing the company's working capital during this period.

A longer cash conversion cycle suggests that the company takes more time to generate cash from its operational activities, potentially facing challenges in managing its inventory levels, collections from customers, and payment to suppliers efficiently.

Conversely, a shorter cash conversion cycle reflects improved liquidity and efficient working capital management. Companies aim to reduce their cash conversion cycle to improve cash flow and operational efficiency.

Overall, monitoring the cash conversion cycle is crucial for assessing the company's financial health and operational effectiveness in managing its working capital requirements. A consistent and optimal cash conversion cycle can indicate a healthy balance between maintaining adequate liquidity and maximizing operational performance.