Extreme Networks Inc (EXTR)

Cash conversion cycle

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Days of inventory on hand (DOH)	days	52.96	32.91	21.00	15.44	27.98
Days of sales outstanding (DSO)	days	29.23	51.27	60.87	57.87	48.40
Number of days of payables	days	19.31	36.86	35.97	28.24	21.65
Cash conversion cycle	days	62.88	47.32	45.90	45.08	54.73

June 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 52.96 + 29.23 – 19.31
= 62.88

The cash conversion cycle of Extreme Networks Inc has fluctuated over the past five years. In 2024, the cash conversion cycle increased to 62.88 days from 47.32 days in 2023, indicating a longer time taken to convert its investments in inventory and other resources into cash. This increase may be attributed to challenges in managing inventory, collecting receivables, or delaying payables.

Comparing 2024 to 2020, there has been an overall increase in the cash conversion cycle, indicating potential inefficiencies in managing working capital over the years. An increase in the cash conversion cycle suggests that Extreme Networks Inc may be facing difficulties in efficiently managing its working capital processes, which could impact its liquidity and operational efficiency.

It is essential for the company to focus on optimizing its inventory management, collection of receivables, and payment of payables to reduce its cash conversion cycle. Doing so will enhance its cash flow and overall financial performance, ensuring better liquidity and operational efficiency in the long run.