Microsoft Corporation (MSFT)

Cash conversion cycle

		Jun 30, 2025	Mar 31, 2025	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
Days of inventory on hand (DOH)	days	3.90	3.71	4.14	7.62	6.14	6.68	8.56	16.41	13.85	16.03	16.74	24.17	21.80	19.98	19.12	22.69	18.42	16.20	14.48	21.15
Days of sales outstanding (DSO)	days	90.57	69.89	67.18	63.39	84.76	67.93	68.69	61.78	83.86	65.79	64.08	56.22	81.48	61.82	66.17	56.64	82.61	60.06	65.04	56.69
Number of days of payables	days	115.21	114.74	103.04	106.66	108.33	92.69	93.81	105.63	100.28	85.29	86.24	94.05	110.69	97.51	96.97	98.65	105.96	96.78	96.08	97.82
Cash conversion cycle	days	-20.75	-41.15	-31.71	-35.65	-17.43	-18.08	-16.56	-27.44	-2.56	-3.46	-5.42	-13.66	-7.41	-15.71	-11.69	-19.33	-4.93	-20.53	-16.57	-19.97

June 30, 2025 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 3.90 + 90.57 – 115.21
= -20.75

The provided data on Microsoft Corporation's cash conversion cycle (CCC) from September 2020 through June 2025 indicates predominantly negative values throughout the period, reflecting that the company generally operates with a cash conversion cycle that is less than zero. This negative CCC signifies that Microsoft is able to collect cash from its sales and settle its payables before it needs to outlay cash for inventory or receivables, an indication of highly efficient working capital management.

Throughout the period, the CCC fluctuates but remains in negative territory, indicating consistent operational efficiency. For instance, the CCC was approximately -19.97 days at September 2020, improving slightly to -16.57 days at December 2020, and reaching as low as approximately -41.15 days in March 2025. The most negative point observed is in March 2025, suggesting that Microsoft is increasingly able to generate cash flow from its operations ahead of its payables obligations.

There are periods where the CCC slightly worsens, such as towards the end of 2022 and early 2023, but the overall trend reflects sustained efficiency. The negative cycle indicates rapid receivables collection relative to inventory holding and payable deferral, characteristic of a company with strong liquidity and cash management practices.

In summary, Microsoft’s cash conversion cycle data demonstrates ongoing operational efficiencies and effective working capital management, characterized by a negative cycle that consistently allows the company to generate cash more quickly than it disburses it. The trend towards increasingly negative values in recent periods suggests continual improvements in cash flow timing and operational effectiveness.