Extreme Networks Inc (EXTR)

Cash conversion cycle

		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	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
Days of inventory on hand (DOH)	days	53.63	69.74	55.82	36.25	32.91	27.32	25.56	21.39	21.00	16.29	16.54	14.94	15.44	21.74	24.55	26.18	27.81	28.06	33.59	35.94
Days of sales outstanding (DSO)	days	29.23	28.56	30.81	35.54	51.27	47.60	47.38	51.07	60.88	54.04	45.63	46.18	57.73	51.74	53.34	49.95	48.42	36.37	57.83	55.79
Number of days of payables	days	19.56	30.66	32.13	28.77	36.86	37.29	34.61	35.06	35.97	29.58	26.18	29.19	28.24	28.29	26.44	27.87	21.53	22.45	27.82	27.71
Cash conversion cycle	days	63.31	67.64	54.50	43.03	47.31	37.63	38.33	37.40	45.90	40.76	35.99	31.93	44.93	45.19	51.44	48.26	54.71	41.97	63.59	64.02

June 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 53.63 + 29.23 – 19.56
= 63.31

The cash conversion cycle of Extreme Networks Inc has shown fluctuations over the past several quarters. It indicates the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

Looking at the trend, we can observe that the cash conversion cycle has varied between 31.93 days (Dec 31, 2021) and 67.64 days (Mar 31, 2024) over the past several quarters. This indicates that Extreme Networks has experienced differing efficiencies in managing its working capital during this period.

A shorter cash conversion cycle suggests that the company is efficiently collecting cash from its receivables and managing its inventory effectively, leading to quicker cash inflows. Conversely, a longer cash conversion cycle may indicate delays in collecting receivables or inefficient management of inventory, resulting in slower cash flows.

Extreme Networks should aim to consistently optimize its cash conversion cycle to ensure effective working capital management, improve liquidity, and enhance overall financial performance. Monitoring this metric closely and implementing strategies to streamline processes could help the company enhance its financial position and operational efficiency.