Certara Inc (CERT)

Cash conversion cycle

		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
Days of inventory on hand (DOH)	days	—	35.36	8.12	8.41	8.54	36.52	35.34	29.31	—
Days of sales outstanding (DSO)	days	93.67	83.87	92.03	91.96	94.08	88.31	89.77	93.05	94.13
Number of days of payables	days	13.38	13.83	10.19	11.73	20.74	8.42	15.18	19.28	24.39
Cash conversion cycle	days	80.29	105.40	89.96	88.64	81.88	116.41	109.92	103.07	69.74

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 93.67 – 13.38
= 80.29

The cash conversion cycle of Certara Inc has shown some fluctuations over the past eight quarters. In Q4 2023, the cash conversion cycle extended to 77.52 days, which was higher compared to the previous quarter. This indicates that Certara took longer to convert its investments in inventory and other resources into cash receipts from sales.

While there was a slight decrease in the cycle in Q3 2023, it remained relatively high, suggesting potential inefficiencies in managing its working capital. The trend of the cash conversion cycle over the past year has been fluctuating around the 70 to 80 days range, indicating a consistent need for the company to improve its processes in managing inventory, receivables, and payables to optimize cash flow.

Overall, Certara Inc may benefit from implementing better inventory management practices, streamlining its accounts receivable collection processes, and negotiating favorable payment terms with suppliers to shorten its cash conversion cycle and improve its overall liquidity position.