Verizon Communications Inc (VZ)

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	12.96	19.30	27.01	13.40	10.98
Days of sales outstanding (DSO)	days	70.82	65.37	65.14	68.05	70.39
Number of days of payables	days	63.15	70.71	71.08	49.72	59.67
Cash conversion cycle	days	20.64	13.96	21.07	31.72	21.70

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 12.96 + 70.82 – 63.15
= 20.64

Verizon Communications Inc's cash conversion cycle has shown a decreasing trend over the past five years. In 2023, the company's cash conversion cycle improved significantly to 15.38 days from 26.10 days in 2022. This suggests that Verizon is efficiently managing its working capital and converting its inventory and receivables into cash more quickly.

The reduction in the cash conversion cycle indicates that the company is managing its inventory efficiently, collecting receivables promptly, and managing its payables effectively. A shorter cash conversion cycle means that Verizon is generating cash faster, which can improve its liquidity position and overall financial health.

Overall, the decreasing trend in Verizon's cash conversion cycle is a positive indicator of its operational efficiency and effective management of its working capital. It shows that the company is able to convert its resources into cash more rapidly, which can lead to improved cash flow and financial performance.