Dream Finders Homes Inc (DFH)

Cash conversion cycle

		Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Days of inventory on hand (DOH)	days	266.26	194.17	182.26	151.70	149.22	150.09	147.35	157.57	198.08	209.03	218.45	241.77
Days of sales outstanding (DSO)	days	—	—	—	—	—	—	—	—	—	—	—	—
Number of days of payables	days	—	—	—	—	—	—	—	—	—	—	—	—
Cash conversion cycle	days	266.26	194.17	182.26	151.70	149.22	150.09	147.35	157.57	198.08	209.03	218.45	241.77

September 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 266.26 + — – —
= 266.26

The cash conversion cycle of Dream Finders Homes Inc has shown fluctuations over the various reporting periods. The company's cash conversion cycle is a measure of the time it takes for the company to convert its investment in inventory and other inputs into cash flows from sales.

Analyzing the trend, we can observe that the cash conversion cycle has been on an upward trend from the beginning of the period in December 2021 to September 2024. This indicates that the company is taking longer to convert its investments in inventory and other operating expenses into cash receipts from sales.

The highest cash conversion cycle was observed in September 2022 at 218.45 days, indicating that it took the company an average of 218.45 days to convert its investments into cash receipts. This might suggest inefficiencies in the company's operations in managing its working capital effectively.

It is important for Dream Finders Homes Inc to closely monitor and manage its cash conversion cycle as a prolonged cycle can tie up cash flow and impact the company's liquidity and overall financial health. By reducing the cash conversion cycle, the company can free up cash for other investments or use it to reduce debt, which can ultimately improve profitability and financial performance.