DigitalOcean Holdings Inc (DOCN)

Cash conversion cycle

Dec 31, 2023 Dec 31, 2022 Dec 31, 2021
Days of inventory on hand (DOH) days
Days of sales outstanding (DSO) days 32.76 34.09 33.74
Number of days of payables days 5.09 36.41 27.08
Cash conversion cycle days 27.67 -2.31 6.66

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 32.76 – 5.09
= 27.67

The cash conversion cycle of DigitalOcean Holdings Inc has shown significant fluctuations over the past three years. In 2023, the company's cash conversion cycle was 27.67 days, indicating that it takes approximately 27.67 days for the company to convert its investments in inventory and other resources into cash from sales. This represents a substantial increase compared to the previous year.

In 2022, the company reported a negative cash conversion cycle of -2.31 days, indicating that the company was able to generate cash from its operational cycle before paying its suppliers. This negative cycle suggests efficient management of working capital and swift conversion of inventory into sales, resulting in a quicker cash conversion process.

However, in 2021, DigitalOcean Holdings Inc reported a cash conversion cycle of 6.66 days, which indicates a moderate timeline for converting investments in inventory and other resources into cash from sales. This figure suggests that the company had a slightly slower conversion process compared to the previous year.

Overall, the fluctuations in DigitalOcean Holdings Inc's cash conversion cycle demonstrate varying efficiency levels in managing working capital and the conversion of assets into cash over the three-year period. It is important for the company to monitor and optimize its cash conversion cycle to ensure efficient utilization of resources and improve its overall financial performance.


Peer comparison

Dec 31, 2023