Northrop Grumman Corporation (NOC)

Days of sales outstanding (DSO)

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Receivables turnover		5.50	4.88	5.13	5.54	5.08
DSO	days	66.39	74.73	71.22	65.87	71.83

December 31, 2023 calculation

DSO = 365 ÷ Receivables turnover
= 365 ÷ 5.50
= 66.39

Days Sales Outstanding (DSO) is a key indicator of Northrop Grumman Corp.'s efficiency in collecting receivables from its customers. A lower DSO suggests a shorter time frame for converting sales into cash, indicating effective credit and collection management. Analyzing the trend in DSO over the past five years, we observe a fluctuating pattern.

In 2023, the DSO stands at 66.39 days, indicating an improvement compared to the prior year. This may suggest enhanced efficiency in collecting receivables. On the other hand, the DSO had increased in the previous year, reaching 74.73 days, indicating a longer collection period compared to 2021. While this increase might suggest a delay in cash inflows, further investigation is required to understand the underlying factors.

In 2021, the DSO was 71.22 days, slightly higher than 2020, which reported a DSO of 65.87 days, showing a more efficient receivables collection process. However, in 2019, the DSO increased to 71.83 days, indicating a lengthened time frame for collecting sales proceeds.

Overall, the fluctuating trend in DSO over the past five years indicates the need for Northrop Grumman Corp. to focus on maintaining a consistently efficient collection process to optimize cash flow and working capital management. Further analysis of the company's credit policies, customer base, and industry-specific dynamics could provide additional insights into the factors driving the observed fluctuations in DSO.