Texas Instruments Incorporated (TXN)

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	197.51	207.06	214.55	190.19	160.83	142.54	133.26	126.60	116.81	114.94	117.02	126.74	137.44	227.73	203.08	159.98	139.54	129.41	128.94	129.77
Days of sales outstanding (DSO)	days	37.25	39.82	37.93	35.13	34.54	36.88	40.80	34.56	33.85	34.30	34.64	37.49	35.69	36.99	31.36	34.02	27.26	33.21	33.99	33.72
Number of days of payables	days	39.61	37.78	53.10	55.07	49.64	46.25	43.15	39.39	34.92	36.77	37.01	38.02	29.17	45.17	38.89	28.99	27.06	25.18	25.55	29.05
Cash conversion cycle	days	195.16	209.10	199.38	170.26	145.72	133.17	130.91	121.76	115.74	112.47	114.66	126.21	143.95	219.55	195.55	165.01	139.74	137.43	137.38	134.44

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 197.51 + 37.25 – 39.61
= 195.16

The cash conversion cycle of Texas Instruments Inc. has shown fluctuation over the past eight quarters. The cycle measures the time it takes for the company to convert its investments in inventory into cash receipts from customers.

In Q1 2022, the cash conversion cycle was 121.76 days, indicating a relatively efficient use of resources in the production and sales process. However, the cycle started to increase in Q2 2022 and continued to rise through Q4 2022, reaching 145.72 days. This suggests a potential slowdown in inventory turnover and cash collection efficiency during this period.

The trend continued in 2023, with the cash conversion cycle exceeding 200 days in Q2 and Q3. Q4 2023 saw a slight decrease in the cycle to 216.76 days, but it still remains higher compared to the earlier quarters in 2022.

Overall, the increasing trend in the cash conversion cycle may indicate a need for Texas Instruments Inc. to focus on optimizing its inventory management and sales collection processes to improve efficiency and cash flow generation.