Qualcomm Incorporated (QCOM)

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	141.30	147.71	143.51	139.99	137.69	124.20	111.70	102.05	93.48	82.61	87.35	82.76	87.61	102.45	99.35	71.80	60.80	59.43	69.39	64.86
Days of sales outstanding (DSO)	days	—	19.97	—	—	—	34.75	—	—	—	24.19	—	—	—	41.85	17.16	—	—	15.94	15.30	42.09
Number of days of payables	days	48.56	43.98	37.76	29.19	50.89	74.35	77.35	83.43	85.37	70.38	75.53	79.04	83.39	88.65	86.76	87.05	73.57	58.07	62.08	62.68
Cash conversion cycle	days	92.74	123.71	105.75	110.80	86.80	84.60	34.35	18.62	8.11	36.43	11.82	3.72	4.22	55.65	29.75	-15.25	-12.76	17.30	22.62	44.27

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 141.30 + — – 48.56
= 92.74

The cash conversion cycle for Qualcomm Incorporated has shown fluctuations over the past few quarters. The cycle represents the time it takes for a company to convert its investment in inventory and other inputs into cash flows from sales. A longer cash conversion cycle may indicate inefficiencies in managing working capital.

In the latest quarter, ending December 31, 2023, Qualcomm's cash conversion cycle increased to 92.74 days from the previous quarter's 123.71 days. This suggests a slightly improved efficiency in converting its inventory and accounts receivable into cash.

Looking at the trend over the past several quarters, the cash conversion cycle was relatively stable in 2022, with fluctuations around 80-90 days. However, there was a significant increase in the cycle in mid-2022, reaching a peak of 105.75 days in June 2022, before decreasing to 18.62 days in March 2022. This drastic reduction in the cycle in early 2022 could indicate more efficient management of working capital during that period.

Qualcomm faced challenges in managing its cash conversion cycle towards the end of 2020 and throughout 2021, with negative cycle days recorded in the first quarter of 2020 and the fourth quarter of 2019. Negative days indicate that Qualcomm was able to collect cash from customers before paying suppliers and therefore had a negative cash conversion cycle.

Overall, a lower cash conversion cycle is generally favorable as it indicates faster cash conversion and efficient management of working capital. Qualcomm should continue to monitor its cash conversion cycle closely to ensure optimal efficiency in its operations and cash flow management.