NVIDIA Corporation (NVDA)

Cash conversion cycle

		Jan 28, 2024	Oct 29, 2023	Jul 30, 2023	Apr 30, 2023	Jan 29, 2023	Oct 30, 2022	Jul 31, 2022	May 1, 2022	Jan 30, 2022	Oct 31, 2021	Aug 1, 2021	May 2, 2021	Jan 31, 2021	Oct 25, 2020	Jul 26, 2020	Apr 26, 2020	Jan 26, 2020	Oct 27, 2019	Jul 28, 2019	Apr 28, 2019
Days of inventory on hand (DOH)	days	115.99	128.95	136.36	148.87	162.08	134.98	120.68	112.47	100.72	94.30	97.22	100.48	106.13	98.80	105.33	95.70	86.10	94.17	104.14	120.21
Days of sales outstanding (DSO)	days	59.91	67.59	78.92	57.55	51.79	62.71	65.26	—	63.06	59.45	—	—	53.17	62.89	58.22	59.10	55.40	53.01	55.94	42.25
Number of days of payables	days	59.27	64.22	60.90	36.84	37.48	45.19	75.13	71.08	68.94	70.27	67.79	61.44	66.78	72.50	67.14	64.57	60.42	53.16	37.80	31.02
Cash conversion cycle	days	116.63	132.32	154.37	169.58	176.38	152.51	110.82	41.39	94.84	83.48	29.43	39.04	92.52	89.19	96.41	90.24	81.08	94.03	122.28	131.44

January 28, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 115.99 + 59.91 – 59.27
= 116.63

The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash inflows from sales. A shorter cash conversion cycle is generally favorable as it indicates the company is efficiently managing its working capital.

Analyzing the cash conversion cycle trend for NVIDIA Corp over the past eight quarters, we observe fluctuations in the cycle duration. The cycle ranged from 108.58 days to 176.38 days during this period.

In Q1 2023, the company had a relatively short cash conversion cycle of 108.58 days, indicating efficient management of inventory, receivables, and payables. However, the cycle increased steadily over the next three quarters, reaching its peak at 176.38 days in Q4 2023.

Subsequently, there was an improvement in the cash conversion cycle in the first two quarters of 2024, with the cycle duration declining to 116.63 days in Q4 2024. This reduction suggests a more efficient management of working capital during these periods.

Overall, NVIDIA Corp should continue monitoring and managing its cash conversion cycle to ensure optimal efficiency in converting its resources into cash, which can positively impact its liquidity and overall financial performance.