Microsoft Corporation (MSFT)

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	5.66	10.73	9.05	10.51	10.99	16.23	14.63	13.35	12.71	14.97	12.04	10.49	9.28	13.39	9.45	8.55	9.66	13.95	11.09	8.39
Days of sales outstanding (DSO)	days	69.50	62.41	84.73	67.74	65.80	58.14	84.24	64.47	68.97	59.18	85.80	62.52	67.45	60.13	82.81	60.57	64.82	54.46	86.82	58.37
Number of days of payables	days	62.00	69.08	65.51	55.89	56.63	63.15	74.30	65.17	64.49	65.11	69.23	62.70	61.61	61.92	62.51	48.08	46.68	45.63	50.41	32.44
Cash conversion cycle	days	13.16	4.06	28.28	22.36	20.15	11.21	24.58	12.65	17.19	9.04	28.61	10.32	15.12	11.60	29.75	21.04	27.80	22.78	47.49	34.32

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 5.66 + 69.50 – 62.00
= 13.16

The cash conversion cycle of Microsoft Corporation has shown significant variability over the past eight quarters. The cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A negative cash conversion cycle indicates that the company is able to collect cash from its sales before it needs to pay its suppliers, which can be a favorable position.

In the most recent quarter, the cash conversion cycle was -16.56 days, indicating that Microsoft was able to convert its investments in inventory and other operating resources into cash and collect cash from its sales before needing to pay its suppliers, resulting in a negative cycle. This suggests efficient management of working capital and a favorable position in terms of cash flows.

The trend over the past eight quarters has been generally favorable, with the cash conversion cycle fluctuating between negative 27.44 days and negative 2.56 days. This indicates that Microsoft has been consistently efficient in managing its working capital and converting sales into cash, contributing to its liquidity and financial stability.

Overall, the trend in Microsoft's cash conversion cycle reflects effective working capital management and efficient cash flow generation, which are favorable indicators for the company's financial performance.