NCR Voyix Corporation (VYX)
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 | 100.34 | 96.38 | 193.54 | 46.84 | 57.30 |
| Days of sales outstanding (DSO) | days | 50.41 | 52.29 | 48.91 | 65.68 | 78.65 |
| Number of days of payables | days | 199.49 | 160.36 | 212.02 | 49.26 | 61.39 |
| Cash conversion cycle | days | -48.74 | -11.70 | 30.43 | 63.27 | 74.55 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 100.34 + 50.41 – 199.49
= -48.74
The cash conversion cycle of NCR Voyix Corporation has exhibited varying trends over the past five years. The company's cash conversion cycle, which represents the time it takes for a company to convert its investments in inventory and other resources into cash inflows from sales, has shown significant fluctuations.
In 2019, the cash conversion cycle stood at 74.55 days, indicating that the company took more than two months to convert its resources into cash. However, over the subsequent years, there was a notable improvement in the efficiency of the company's cash conversion cycle. By the end of 2020, the cycle had decreased to 63.27 days, reflecting an enhanced ability to convert investments into cash more quickly.
The most significant improvement was observed in 2021, where the cash conversion cycle turned positive to 30.43 days, indicating that the company was able to convert its investments into cash in a shorter period than in previous years. This suggests improved inventory management and collection of accounts receivable, leading to faster cash conversion.
Moreover, by the end of 2022, the cash conversion cycle further reduced to -11.70 days, signaling that the company was able to convert its investments into cash even before paying suppliers. This negative cycle indicates a highly efficient cash conversion process, which could be advantageous for the company's liquidity position and working capital management.
The trend continued in 2023, with the cash conversion cycle showing a further reduction to -48.74 days. This reflects the company's continued efficiency in converting its investments into cash quickly, potentially due to improved supply chain management and effective working capital practices.
Overall, NCR Voyix Corporation has made significant progress in optimizing its cash conversion cycle over the past five years, moving from taking over two months to convert investments into cash to achieving a negative cash conversion cycle by the end of 2023. This indicates improved operational efficiency and effective management of working capital, which could positively impact the company's financial health and overall liquidity position.