Dayforce Inc. (DAY)
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 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | 2,198.32 | 1,902.25 | 2,893.03 | 1,975.63 | — | — | — | 2,011.62 | 3,268.72 | 2,079.97 | 3,006.71 | 2,737.79 | 1,979.93 | 2,049.46 | 2,846.30 | — | 2,156.71 | 3,369.95 | 3,870.44 |
| Days of sales outstanding (DSO) | days | 56.52 | — | — | — | 54.10 | — | — | — | 53.56 | — | — | — | 45.71 | — | — | — | 37.25 | — | — | — |
| Number of days of payables | days | 28.07 | 28.95 | 29.14 | 28.12 | 25.64 | 27.59 | 25.94 | 26.10 | 29.40 | 25.75 | 25.21 | 29.81 | 28.33 | 19.90 | 28.12 | 27.22 | 34.59 | 28.24 | 24.68 | 26.99 |
| Cash conversion cycle | days | 28.45 | 2,169.36 | 1,873.11 | 2,864.91 | 2,004.08 | -27.59 | -25.94 | -26.10 | 2,035.79 | 3,242.97 | 2,054.76 | 2,976.89 | 2,755.17 | 1,960.03 | 2,021.33 | 2,819.08 | 2.66 | 2,128.46 | 3,345.27 | 3,843.45 |
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 significant variability over the past few quarters, indicating fluctuations in the company's efficiency in managing its cash flow. The cash conversion cycle represents the time it takes for a company to convert its investments in inventory and other resources into cash received from sales.
Looking at the data, we observe that from December 2019 to March 2020, the cash conversion cycle was only 2.66 days, suggesting that the company was able to efficiently convert its investments into cash within a short timeframe. This efficiency declined in subsequent quarters, as seen by negative values in the cash conversion cycle, indicating that the company was able to collect cash from customers before paying suppliers and replenishing inventory.
However, from September 2021 to September 2023, the cash conversion cycle increased significantly, peaking at 3,345.27 days in March 2019 and 3,242.97 days in September 2021. Such prolonged cash conversion cycles suggest that the company may be facing challenges in managing its inventory, receivables, and payables effectively, which could potentially strain its liquidity and working capital management.
Overall, the fluctuating cash conversion cycle of Dayforce Inc. highlights the importance of closely monitoring and optimizing the company's operational and financial processes to improve cash flow management and overall financial performance.
Peer comparison
Dec 31, 2023