Dayforce Inc. (DAY)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | 1,975.63 | 2,011.62 | 2,737.79 | — |
| Days of sales outstanding (DSO) | days | 56.52 | 54.10 | 53.56 | 45.71 | 37.25 |
| Number of days of payables | days | 28.07 | 25.64 | 29.40 | 28.33 | 34.59 |
| Cash conversion cycle | days | 28.45 | 2,004.08 | 2,035.79 | 2,755.17 | 2.66 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 56.52 – 28.07
= 28.45
The cash conversion cycle of Dayforce Inc. has shown considerable fluctuations over the past five years. In 2023, the company's cash conversion cycle improved significantly to 28.45 days, indicating a more efficient management of its cash, inventory, and receivables. This is in stark contrast to the substantial deterioration observed in 2020 and 2021, where the cash conversion cycle extended to 2,755.17 days and 2,035.79 days respectively, suggesting delays in converting sales into cash.
The sharp increase in the cash conversion cycle in 2020 and 2021 may hint at potential issues with inventory management, payment collection from customers, or cash flow constraints during those periods. However, the remarkable improvement in 2023 signifies enhanced operational efficiency and better control over working capital management.
Despite the positive trend in 2023, it would be prudent for Dayforce Inc. to continue monitoring its cash conversion cycle closely to ensure sustained improvements and optimize its cash flow management processes further.
Peer comparison
Dec 31, 2023