Cognizant Technology Solutions Corp Class A (CTSH)

Cash conversion cycle

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	—	—	—	—	—
Days of sales outstanding (DSO)	days	75.07	72.59	71.32	70.15	67.66
Number of days of payables	days	7.37	7.38	7.98	8.40	9.77
Cash conversion cycle	days	67.70	65.21	63.33	61.75	57.90

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 75.07 – 7.37
= 67.70

The cash conversion cycle of Cognizant Technology Solutions Corp Class A has shown a slight increase over the past years. As of December 31, 2020, the cash conversion cycle stood at 57.90 days, indicating that the company took approximately 57.90 days to convert its investments in inventory and other resources into cash from sales.

However, by December 31, 2024, the cash conversion cycle had extended to 67.70 days, suggesting a longer period for the company to realize its cash inflows relative to its outflows. This increase in the cash conversion cycle may imply potential liquidity challenges or inefficiencies in managing working capital, which could adversely impact the company's cash flow and overall financial health in the long run.

It is advisable for Cognizant Technology Solutions Corp Class A to closely monitor its cash conversion cycle and implement strategic measures to optimize working capital management, streamline operational processes, and enhance cash flow efficiency to ensure sustainable financial performance and competitiveness in the market.