Texas Instruments Incorporated (TXN)

Cash conversion cycle

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	252.38	224.56	160.83	116.81	137.44
Days of sales outstanding (DSO)	days	—	—	—	—	—
Number of days of payables	days	—	—	—	—	—
Cash conversion cycle	days	252.38	224.56	160.83	116.81	137.44

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 252.38 + — – —
= 252.38

Texas Instruments Incorporated's cash conversion cycle has demonstrated fluctuating trends over the years. As of December 31, 2020, the cash conversion cycle stood at 137.44 days, indicating the number of days it takes for the company to convert its investments in inventory and other resources into cash inflows from sales.

Subsequently, by December 31, 2021, the cash conversion cycle improved to 116.81 days, suggesting a more efficient management of inventory and receivables, resulting in quicker cash inflows.

However, there was a notable increase in the cash conversion cycle to 160.83 days by December 31, 2022. This could indicate potential challenges in managing working capital effectively, leading to longer periods before generating cash from sales.

The trend worsened further by December 31, 2023, with the cash conversion cycle reaching 224.56 days, signifying a prolonged period between cash outflows for production and cash inflows from sales.

As of December 31, 2024, the cash conversion cycle rose even higher to 252.38 days, implying a concerning delay in converting investments into cash, potentially indicating operational inefficiencies or difficulties in managing the company's cash flow.

In summary, the fluctuating and increasing cash conversion cycle observed in recent years suggests a need for Texas Instruments Incorporated to focus on enhancing its working capital management practices and optimizing its operational efficiency to shorten the cash conversion cycle and improve the company's overall financial performance.