DigitalOcean Holdings Inc (DOCN)
Cash conversion cycle
| Dec 31, 2024 | 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 | — | 22.57 | — | — | — | — | — | — | — | 42.77 | — | — | — |
| Days of sales outstanding (DSO) | days | 33.89 | 33.26 | 33.48 | 32.72 | 32.76 | 32.57 | 32.05 | 32.67 | 34.09 | 40.92 | 32.66 | 33.58 | 33.74 |
| Number of days of payables | days | 63.29 | 15.08 | 11.34 | 5.64 | 4.98 | 19.15 | 13.67 | 16.98 | 36.41 | 21.89 | 35.44 | 33.44 | 27.08 |
| Cash conversion cycle | days | -29.40 | 40.75 | 22.15 | 27.08 | 27.78 | 13.42 | 18.38 | 15.69 | -2.31 | 61.80 | -2.77 | 0.15 | 6.66 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 33.89 – 63.29
= -29.40
The cash conversion cycle is a financial metric that reflects the efficiency of a company's working capital management by measuring the time it takes to convert its investments in inventory and other resources into cash flows from sales.
Analyzing the data provided for DigitalOcean Holdings Inc, we observe fluctuations in the cash conversion cycle over the reported periods:
1. The cash conversion cycle ranged from a positive 6.66 days on December 31, 2021, indicating that the company took approximately 6.66 days to convert its investments in inventory and other resources into cash flows from sales, to a negative cycle of -29.40 days on December 31, 2024, suggesting that the company was able to convert its investments into cash flows more quickly than the previous periods.
2. The shortest cash conversion cycle was observed on March 31, 2022, with only 0.15 days, indicating a potentially efficient management of working capital during that period.
3. On the other hand, the longest cash conversion cycle was recorded on September 30, 2022, with a significant increase to 61.80 days, which may imply challenges in efficiently managing working capital during that quarter.
4. Throughout the reporting periods, fluctuations in the cash conversion cycle were observed, with periods of both positive and negative cycles. It is essential for the company to monitor and manage its working capital effectively to ensure a healthy cash conversion cycle that optimizes cash flows and operational efficiency.
In conclusion, the data provided for DigitalOcean Holdings Inc reflects varying levels of efficiency in working capital management over the reported periods, demonstrating the importance of monitoring and improving the cash conversion cycle to enhance the company's financial performance and operational effectiveness.
Peer comparison
Dec 31, 2024