Expedia Group Inc. (EXPE)

Cash conversion cycle

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	—	73.85	93.46	45.58	131.45
Days of sales outstanding (DSO)	days	82.50	68.25	58.90	60.21	79.68
Number of days of payables	days	44.64	39.85	37.96	29.29	152.88
Cash conversion cycle	days	37.86	102.25	114.41	76.51	58.25

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 82.50 – 44.64
= 37.86

Expedia Group Inc has shown a generally improving trend in its cash conversion cycle over the past five years. The company's cash conversion cycle, which measures the time it takes for a company to convert its investments in inventory back into cash, decreased from -398.59 days in 2019 to -642.96 days in 2023.

A negative cash conversion cycle indicates that Expedia Group is efficiently managing its working capital. The significant decrease in 2023 compared to previous years may suggest that the company has been able to collect cash from its sales faster or delay payments to suppliers, leading to improved cash flow efficiency.

However, it is essential to note that a very low or negative cash conversion cycle may also raise red flags about how the company is managing its working capital, particularly if it is artificially deflated due to an unsustainable practice. Therefore, it is crucial for Expedia Group to maintain a balance in managing its cash conversion cycle to ensure sustainable and efficient operations.