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.