Qualcomm Incorporated (QCOM)

Cash conversion cycle

		Sep 30, 2024	Jun 23, 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	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	137.43	133.40	138.08	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
Days of sales outstanding (DSO)	days	22.32	—	—	—	19.97	—	—	—	34.75	—	—	—	24.19	—	—	—	41.85	17.16	—	—
Number of days of payables	days	55.29	57.30	52.49	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
Cash conversion cycle	days	104.47	76.09	85.59	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

September 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 137.43 + 22.32 – 55.29
= 104.47

The cash conversion cycle of Qualcomm Incorporated has shown fluctuation over the past several quarters. The cycle measures the time it takes for a company to convert its investments in inventory and accounts receivable back into cash.

From December 2019 to September 2020, Qualcomm had negative cash conversion cycles, indicating that the company was able to convert its investments into cash at a faster rate than it needed to pay off its liabilities. This suggests efficient operations and effective management of working capital during this period.

However, from September 2020 to September 2024, the cash conversion cycle turned positive, indicating that Qualcomm took longer to convert its investments in inventory and accounts receivable back into cash. A longer cash conversion cycle may suggest issues with inventory management, extending the time taken to sell products or collect receivables.

There was a significant increase in the cash conversion cycle from September 2022 to September 2023, reaching the highest point of 123.71 days, which may raise concerns about Qualcomm's efficiency in managing working capital during that period.

Although Qualcomm showed some improvement in managing its cash conversion cycle in recent quarters, the company may benefit from further optimizing its working capital management to shorten the cycle and improve cash flow efficiency. It is important for Qualcomm to closely monitor and address the factors contributing to the fluctuations in its cash conversion cycle to ensure sustainable financial health and operational efficiency.