# Liquidity and Capital Resources

# Cash Conversion Cycle

Three Months Ended
November 30,
2018	November 30,
2017	November 30,
2016
(Amounts in thousands)
Days sales outstanding
Revenue (products and services)	(a)	$ 5,622,201	$ 5,311,877	$ 3,886,902
Accounts receivable, including receivable from
related parties	(b)	3,855,496	2,846,448	1,756,596
Days sales outstanding	(c) = (b)/((a)/the
number of days
during the
period)	62	49	41
Days inventory outstanding
Cost of revenue (products and services)	(d)	$ 4,970,717	$ 4,849,909	$ 3,508,116
Inventories	(e)	2,518,319	2,162,626	1,741,734
Days inventory outstanding	(f) = (e)/((d)/the
number of days
during the
period)	46	41	45
Days payable outstanding
Cost of revenue (products and services)	(g)	$ 4,970,717	$ 4,849,909	$ 3,508,116
Accounts payable, including payable to
related parties	(h)	3,048,102	2,643,608	1,713,834
Days payable outstanding	(i) = (h)/((g)/the
number of days
during the
period)	56	50	44
Cash conversion cycle	(j) = (c)+(f)-(i)	52	40	42

# Cash Flows

Our Technology Solutions business is working capital intensive. Our working capital needs are primarily to finance accounts receivable and inventory. We rely heavily on term loans, accounts receivable arrangements, our securitization programs and our revolver programs for our working capital needs. We have financed our growth and cash needs to date primarily through cash generated from operations and financing activities. As a general rule, when sales volumes are increasing, our net investment in working capital dollars typically increases, which generally results in decreased cash flow generated from operating activities. Conversely, when sales volume decreases, our net investment in working capital dollars typically decreases, which generally results in increases in cash flows generated from operating activities. We calculate cash conversion cycle as days of the last fiscal quarter’s sales outstanding in accounts receivable plus days of supply on hand in inventory, less days of the last fiscal quarter’s direct cost outstanding in accounts payable. Our cash conversion cycle was 52 days, 40 days and 42 days at the end of fiscal years 2018, 2017 and 2016, respectively. The increase in fiscal year 2018, compared to the prior two years, was primarily a result of higher days sales outstanding due the Convergys acquisition which was included from the date of acquisition. In addition, higher inventory due to growth and the impact of more revenue recorded on a net basis in our Technology Solutions segment also increased our cash conversion cycle.

To increase our market share and better serve our customers, we may further expand our operations through investments or acquisitions. We expect that such expansion would require an initial investment in working capital, personnel, facilities and operations. These investments or acquisitions would likely be funded primarily by our existing cash and cash equivalents, additional borrowings, or the issuance of securities.

Net cash provided by operating activities was \$100.7 million in fiscal year 2018, primarily generated from our net income of \$300.6 million, adjustments for non-cash items of \$204.9 million, an increase in accounts payable of \$382.0 million and the net change in other assets and liabilities of \$94.1 million, partially offset by an increase in accounts receivable of \$513.0 million, and an increase in inventories of \$367.9 million. The increase in accounts payable and inventories was primarily due to