Microsoft Corporation (MSFT)

Cash conversion cycle

		Dec 31, 2024	Sep 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	Dec 31, 2019
Days of inventory on hand (DOH)	days	2.76	5.32	4.40	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
Days of sales outstanding (DSO)	days	68.54	66.24	68.84	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
Number of days of payables	days	68.76	74.47	61.03	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
Cash conversion cycle	days	2.55	-2.91	12.21	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

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 2.76 + 68.54 – 68.76
= 2.55

The cash conversion cycle measures the efficiency with which a company manages its working capital. Microsoft Corporation's cash conversion cycle has shown fluctuations over the periods analyzed.

In December 2019, the company had a cash conversion cycle of 27.80 days, indicating that it took approximately 27.80 days for Microsoft to convert its investments in inventory and accounts receivable into cash.

The cycle decreased to 21.04 days by March 2020, suggesting an improvement in Microsoft's ability to convert its resources into cash more quickly. However, there was a subsequent increase to 29.75 days by June 2020, indicating a longer cash conversion cycle.

Significant improvement was seen in September 2020, when the cycle reduced to 11.60 days, showing that Microsoft was managing its working capital more efficiently. This trend continued with further decreases in subsequent periods, reaching a low of -2.91 days by September 2024.

A negative cash conversion cycle typically indicates that Microsoft is collecting payments from customers before paying its suppliers, which can be a favorable situation as it allows the company to use suppliers' funds before its own.

By December 2024, the cycle increased slightly to 2.55 days, suggesting a small delay in the conversion process. Overall, Microsoft Corporation has shown variability in its cash conversion cycle over the analyzed periods, with periods of improvement and slight fluctuations in efficiency.