Microsoft Corporation (MSFT)

Cash conversion cycle

		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	Sep 30, 2019
Days of inventory on hand (DOH)	days	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	13.95
Days of sales outstanding (DSO)	days	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	54.46
Number of days of payables	days	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	45.63
Cash conversion cycle	days	-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	22.78

September 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 5.32 + 66.24 – 74.47
= -2.91

The cash conversion cycle for Microsoft Corporation has fluctuated over the past few years, ranging from negative days to around 30 days.

Most recently, as of September 30, 2024, the cash conversion cycle stands at -2.91 days, indicating that Microsoft is efficiently managing its working capital and turning its resources into cash quickly. This negative number suggests that the company is able to collect its receivables and convert inventory into sales faster than it takes to pay off its payables.

Looking back over the previous quarters, there has been variability in the cash conversion cycle, with periods of positive days indicating a longer time to convert resources into cash, and periods of negative days indicating a more efficient cash conversion process.

It's important to note that a shorter cash conversion cycle is generally considered positive as it means a company can operate with less working capital tied up in the business. On the other hand, a longer cash conversion cycle can indicate inefficiencies in the working capital management process.

In conclusion, Microsoft Corporation has shown fluctuations in its cash conversion cycle over the past few years, with recent periods demonstrating efficiency in converting resources into cash. However, continuous monitoring and optimization of the cash conversion cycle are essential for maintaining a healthy liquidity position and financial performance.