Enphase Energy Inc (ENPH)

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	63.26	42.64	38.66	36.84	40.29	44.86	45.89	38.55	32.81	33.11	23.22	26.39	35.58	32.80	25.32	27.40	29.03	32.93	26.92	19.99
Days of sales outstanding (DSO)	days	71.06	75.38	67.91	72.02	69.04	66.47	65.70	85.95	88.11	80.74	96.71	98.98	85.86	62.08	45.30	47.76	85.01	96.32	88.00	86.12
Number of days of payables	days	34.40	22.07	18.41	25.98	33.66	28.43	31.85	41.87	50.17	46.67	50.52	61.69	61.86	42.07	19.60	27.34	52.04	66.12	88.41	80.88
Cash conversion cycle	days	99.91	95.95	88.17	82.89	75.67	82.89	79.75	82.63	70.75	67.17	69.41	63.68	59.58	52.80	51.03	47.82	62.00	63.14	26.52	25.22

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 63.26 + 71.06 – 34.40
= 99.91

The cash conversion cycle (CCC) of Enphase Energy Inc has shown fluctuations over the past eight quarters. The CCC represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

In Q4 2023, the CCC increased to 99.91 days, indicating that it took the company approximately 100 days to convert its investments into cash. This was a notable increase from the previous quarter, Q3 2023, where the CCC was 95.95 days. The longer CCC in Q4 2023 may suggest potential challenges in managing inventory, collection of receivables, and cash flow conversion efficiency.

Looking back at the trend, the CCC has been gradually increasing since Q1 2023, where it was at 82.89 days. The peak CCC was observed in Q4 2022 at 75.67 days, followed by fluctuations in subsequent quarters. This indicates that the company may have experienced difficulties in managing working capital efficiently and optimizing the cash conversion process during this period.

Overall, Enphase Energy Inc's CCC trend highlights the importance of closely monitoring and managing working capital components to improve operational efficiency and cash flow generation. It is essential for the company to assess its inventory management, accounts receivable collection, and payment practices in order to streamline the cash conversion cycle and enhance overall financial performance.