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.