Duolingo Inc (DUOL)

Cash conversion cycle

		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
Days of inventory on hand (DOH)	days	—	—	—	130.65	133.87	128.63	—	—	—
Days of sales outstanding (DSO)	days	47.84	61.15	46.54	44.06	47.45	46.16	32.54	33.62	37.70
Number of days of payables	days	6.15	6.29	7.66	7.05	3.29	4.32	13.40	6.58	9.74
Cash conversion cycle	days	41.70	54.86	38.89	167.66	178.03	170.47	19.14	27.04	27.96

March 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 47.84 – 6.15
= 41.70

Duolingo Inc's cash conversion cycle has shown fluctuations over the past several quarters. The cash conversion cycle measures the average number of days it takes for a company to convert its investments in inventory and other resources into cash flow from sales.

Looking at the data, we can see that in the most recent quarter ending March 31, 2024, Duolingo Inc's cash conversion cycle was 41.70 days, indicating that the company takes approximately 41.70 days to convert its investments in inventory and other resources into cash flow from sales. This represents an improvement from the previous quarter, where the cash conversion cycle was 54.86 days.

In the quarter ending December 31, 2023, the cash conversion cycle increased significantly to 167.66 days, showing a prolonged period for Duolingo Inc to convert its investments into cash flow. This spike in the cash conversion cycle may indicate potential issues with inventory management, sales collection, or payment terms during that period.

Overall, it is essential for Duolingo Inc to monitor and manage its cash conversion cycle effectively to ensure efficient operations and optimize its working capital management. fluctuations in the cash conversion cycle can provide insights into the company's operational efficiency, liquidity, and overall financial health.