Northrop Grumman Corporation (NOC)

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	98.87	115.12	110.66	97.43	86.75	73.06	68.30	63.04	62.01	63.75	63.55	65.53	59.20	82.43	82.12	78.50	78.91	93.86	90.14	32.13
Days of sales outstanding (DSO)	days	66.39	16.64	20.20	20.27	74.73	20.07	24.92	17.71	71.22	15.58	18.54	16.72	65.87	20.24	20.92	22.75	71.83	86.52	83.12	91.99
Number of days of payables	days	188.12	192.02	176.78	186.65	229.47	172.49	157.63	154.21	167.97	159.66	147.34	144.40	140.85	212.31	198.00	207.10	224.32	234.18	218.33	79.78
Cash conversion cycle	days	-22.85	-60.25	-45.93	-68.94	-67.99	-79.36	-64.41	-73.47	-34.75	-80.33	-65.25	-62.15	-15.79	-109.64	-94.95	-105.85	-73.58	-53.80	-45.08	44.33

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 98.87 + 66.39 – 188.12
= -22.85

Northrop Grumman Corp.'s cash conversion cycle measures the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales. A shorter cash conversion cycle is generally preferable as it indicates that the company is efficiently managing its working capital.

Reviewing the data, we can observe fluctuations in Northrop Grumman Corp.'s cash conversion cycle over the past eight quarters. The cycle peaked at 74.07 days in the second quarter of 2022 and reached its lowest point of 54.57 days in the fourth quarter of 2022.

The trend indicates that the company's ability to manage its inventory, accounts receivable, and accounts payable has varied over time. Higher days in the cash conversion cycle could signify increased time to convert inventory into sales and collect accounts receivable, potentially pointing to inefficiencies in working capital management. Conversely, lower days demonstrate more effective management of working capital.

It would be essential to assess the contributing factors to these fluctuations to determine the company's overall efficiency in converting its investments into cash flows and optimizing its cash conversion cycle.