Teradata Corp (TDC)

Cash conversion cycle

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	3.23	1.95	6.22	6.38	6.58
Days of sales outstanding (DSO)	days	53.30	71.61	59.77	63.66	75.80
Number of days of payables	days	24.85	22.90	16.03	11.01	14.01
Cash conversion cycle	days	31.68	50.65	49.96	59.04	68.37

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 3.23 + 53.30 – 24.85
= 31.68

The cash conversion cycle of Teradata Corp has shown a decreasing trend over the past five years, indicating an improvement in its efficiency in managing its working capital.

In 2023, the company's cash conversion cycle stood at 12.72 days, significantly lower than the previous year's figure of 32.70 days. This suggests that Teradata Corp has been able to convert its resources into cash more rapidly in the current year.

Comparing to 2021 and 2020, where the cash conversion cycle was 59.69 days and 71.13 days respectively, there has been a substantial improvement in the company's efficiency in managing its cash, inventory, and accounts receivable.

However, it should be noted that the cash conversion cycle was lower in 2019 at 62.97 days compared to 2023. This indicates that Teradata Corp had achieved a better cash conversion cycle back in 2019, but the company has managed to improve significantly in the recent year.

Overall, the decreasing trend in the cash conversion cycle of Teradata Corp reflects positively on its ability to efficiently manage its working capital and convert its resources into cash, which could potentially lead to improved financial performance and liquidity.