Aspen Technology Inc (AZPN)

Cash conversion cycle

		Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022
Days of inventory on hand (DOH)	days	—	—	2.88	14.69	11.16	9.60	7.22
Days of sales outstanding (DSO)	days	37.40	69.21	44.84	30.80	42.92	27.39	43.51
Number of days of payables	days	7.73	9.45	15.77	14.68	19.83	9.69	12.32
Cash conversion cycle	days	29.67	59.76	31.95	30.81	34.25	27.30	38.41

June 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 37.40 – 7.73
= 29.67

Based on the data provided, Aspen Technology Inc's cash conversion cycle has shown fluctuations over the past few quarters. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

In the most recent quarter ending June 30, 2024, Aspen Technology Inc's cash conversion cycle was 29.67 days, indicating that the company was able to efficiently convert its resources into cash flow within a relatively short period. This was a significant improvement compared to the previous quarter ending March 31, 2024, where the company's cash conversion cycle was 59.76 days, suggesting a slowdown in the cash conversion process.

Looking further back, Aspen Technology Inc's cash conversion cycle was relatively stable in the quarters ending December 31, 2023, and September 30, 2023, at 31.95 days and 30.81 days, respectively. However, in the quarter ending June 30, 2023, the company experienced a slight increase in the cash conversion cycle to 34.25 days before improving in the following quarter ending March 31, 2023, to 27.30 days.

In general, a lower cash conversion cycle indicates that a company is efficiently managing its working capital and generating cash from its operations more effectively. However, fluctuations in the cash conversion cycle can be influenced by various factors such as changes in sales, inventory management, and payment terms with suppliers and customers.

Aspen Technology Inc should continue to monitor its cash conversion cycle closely and take necessary steps to maintain operational efficiency and improve cash flow management. This analysis highlights the importance of optimizing working capital processes to enhance financial performance and overall liquidity for the company.