Western Digital Corporation (WDC)

Cash conversion cycle

		Jun 30, 2024	Mar 31, 2024	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
Days of inventory on hand (DOH)	days	108.26	104.10	102.85	110.37	114.37	116.38	104.61	102.12	91.55	89.77	90.35	89.50	93.06	95.28	91.69	83.82	75.04	75.30	75.73	80.29
Days of sales outstanding (DSO)	days	60.51	56.66	50.68	47.80	48.59	41.82	44.95	51.42	55.32	—	53.74	—	49.63	—	—	—	—	—	—	—
Number of days of payables	days	—	—	—	—	—	38.23	33.08	44.58	47.86	45.02	50.09	47.88	49.78	46.75	49.72	48.69	47.54	43.51	42.11	42.11
Cash conversion cycle	days	168.76	160.76	153.53	158.17	162.95	119.97	116.48	108.96	99.01	44.75	93.99	41.62	92.92	48.53	41.97	35.13	27.50	31.79	33.62	38.18

June 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 108.26 + 60.51 – —
= 168.76

The cash conversion cycle for Western Digital Corporation has shown fluctuations over the past several quarters. It measures the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

From December 2019 to June 2020, the cash conversion cycle gradually decreased, reaching a low of 27.5 days in September 2020. This indicates that the company was efficiently managing its inventory, accounts receivable, and accounts payable during this period.

However, starting from December 2020, the cash conversion cycle began to increase, reaching a peak of 168.76 days in June 2024. This suggests that the company may have experienced challenges in converting its resources into cash efficiently. Possible reasons for this increase could include difficulties in managing inventory levels, collecting receivables, or delays in paying suppliers.

Overall, Western Digital Corporation should focus on optimizing its cash conversion cycle to improve its liquidity and operational efficiency. Analyzing the components of the cycle, such as inventory turnover, accounts receivable collection period, and accounts payable period, could help identify areas for improvement and streamline the cash conversion process.