Verizon Communications Inc (VZ)

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	15.35	12.96	19.30	27.01	13.40
Days of sales outstanding (DSO)	days	73.95	70.82	65.37	65.14	68.05
Number of days of payables	days	71.21	63.15	70.71	71.08	49.72
Cash conversion cycle	days	18.09	20.64	13.96	21.07	31.72

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 15.35 + 73.95 – 71.21
= 18.09

Verizon Communications Inc's cash conversion cycle has shown a decreasing trend over the past five years. In 2020, the cycle was 31.72 days, indicating that it took the company around a month to convert its investments in inventory and accounts receivable into cash. However, by the end of 2024, the cash conversion cycle had decreased to 18.09 days, showing an improvement in efficiency in managing its working capital.

The reduction in the cash conversion cycle suggests that Verizon Communications Inc has been able to streamline its operations and manage its inventory and receivables more effectively over the years. This improved efficiency in converting investments into cash can lead to better liquidity and cash flow management for the company, potentially enhancing its overall financial performance.

Overall, the declining trend in the cash conversion cycle for Verizon Communications Inc reflects a positive development in its working capital management, indicating improved operational efficiency and potentially stronger financial health in recent years.