Microsoft Corporation (MSFT)

Cash conversion cycle

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Days of inventory on hand (DOH)	days	6.14	13.85	21.80	18.42	15.01
Days of sales outstanding (DSO)	days	—	—	—	—	—
Number of days of payables	days	—	—	—	—	—
Cash conversion cycle	days	6.14	13.85	21.80	18.42	15.01

June 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 6.14 + — – —
= 6.14

The cash conversion cycle of Microsoft Corporation has shown fluctuations over the years based on the provided data. As of June 30, 2020, the cash conversion cycle stood at 15.01 days, indicating that the company took 15.01 days on average to convert its investments in inventory and other resources into cash flows from sales.

By June 30, 2021, the cash conversion cycle increased to 18.42 days, suggesting a lengthening period for Microsoft to convert its investments into cash. Subsequently, on June 30, 2022, the cycle further extended to 21.80 days, indicating a slower conversion process and potentially tying up capital for a longer period.

However, there was a notable improvement in efficiency by June 30, 2023, with the cash conversion cycle decreasing to 13.85 days, implying a quicker conversion of resources into cash flow. This improvement was even more pronounced by June 30, 2024, as the cycle reduced significantly to 6.14 days, signaling a more efficient management of inventory and accounts receivable.

Overall, while the cash conversion cycle of Microsoft Corporation experienced fluctuations over the years, the downward trend in recent years demonstrates an enhanced efficiency in managing working capital and converting investments into cash, which can be seen as a positive sign for the company's operational effectiveness.