T-Mobile US Inc (TMUS)
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 | 24.99 | 25.96 | 40.35 | 39.74 | 23.19 |
| Days of sales outstanding (DSO) | days | 43.10 | 44.54 | 43.04 | 44.67 | 38.28 |
| Number of days of payables | days | 83.01 | 99.39 | 102.15 | 87.50 | 103.95 |
| Cash conversion cycle | days | -14.92 | -28.89 | -18.77 | -3.10 | -42.48 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 24.99 + 43.10 – 83.01
= -14.92
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 indicates that the company is able to efficiently manage its working capital and generate cash.
T-Mobile US Inc has shown fluctuations in its cash conversion cycle over the past five years. In 2023, the company reported a negative cash conversion cycle of -4.59 days, which suggests that it is able to quickly convert its investments into cash inflows. This improvement from the previous year's cycle of -9.83 days indicates that T-Mobile US Inc has enhanced its working capital management efficiency.
In 2021 and 2020, T-Mobile US Inc had positive cash conversion cycles of 1.53 days and 2.69 days, respectively. These figures indicate that the company took a few days on average to convert its investments into cash. However, in 2019, the company reported a significantly negative cash conversion cycle of -29.61 days, which implies that T-Mobile US Inc had a very efficient working capital management during that period.
Overall, T-Mobile US Inc has shown varying levels of efficiency in managing its cash conversion cycle over the past five years. The recent improvement in 2023 signifies that the company has been able to enhance its operational performance and working capital management, leading to a more efficient conversion of investments into cash inflows.