Western Digital Corporation (WDC)

Cash conversion cycle

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Days of inventory on hand (DOH)	days	105.60	110.37	88.73	89.50	71.27
Days of sales outstanding (DSO)	days	60.51	48.55	55.28	49.43	53.17
Number of days of payables	days	—	—	46.39	47.87	45.15
Cash conversion cycle	days	166.11	158.93	97.62	91.06	79.29

June 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 105.60 + 60.51 – —
= 166.11

Western Digital Corporation's cash conversion cycle has shown fluctuations over the past five years. The cash conversion cycle, which represents the time taken to convert raw materials into cash from sales, has increased gradually from 79.29 days in 2020 to 166.11 days in 2024.

This increase indicates that the company may be taking longer to convert its inventory and accounts receivable into cash, which could potentially impact its liquidity and working capital management. A longer cash conversion cycle may suggest inefficiencies in the company's operations or difficulties in collecting receivables.

The significant increase in the cash conversion cycle from 2022 to 2024 is worth noting, as it indicates a slowing down in the conversion of resources into cash. Management may need to focus on optimizing inventory management, improving accounts receivable collection processes, or negotiating better payment terms with customers to reduce the cash conversion cycle and enhance cash flow efficiency.