Certara Inc (CERT)

Cash conversion cycle

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021
Days of inventory on hand (DOH)	days	—	8.54	2.70
Days of sales outstanding (DSO)	days	93.72	94.08	94.13
Number of days of payables	days	13.38	20.74	24.39
Cash conversion cycle	days	80.33	81.88	72.44

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 93.72 – 13.38
= 80.33

The cash conversion cycle of Certara Inc has shown a slight increase over the past four years, from 68.55 days at the end of 2020 to 77.52 days at the end of 2023. This indicates that Certara is taking longer to convert its investments in inventory and accounts receivable into cash. A longer cash conversion cycle may imply inefficiencies in managing inventory, collecting receivables, or paying suppliers, which can negatively impact the company's liquidity and working capital management. Management should focus on improving the efficiency of its operations to reduce the cash conversion cycle and enhance cash flow generation.