F5 Networks Inc (FFIV)

Cash conversion cycle

		Sep 30, 2024	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
Days of inventory on hand (DOH)	days	16.48	17.14	14.68	7.39	7.16	8.93	10.06	11.94	13.93	8.98	5.74	4.14	4.51	4.86	5.40	6.17	6.71	7.04	7.74	8.61
Days of sales outstanding (DSO)	days	50.22	57.79	54.03	66.50	58.65	56.63	63.20	64.75	63.05	61.58	56.44	56.90	47.46	54.91	55.17	52.39	45.88	47.72	53.46	56.94
Number of days of payables	days	14.65	11.70	12.14	12.38	12.63	12.69	13.87	14.48	23.06	15.05	14.22	11.58	12.69	10.59	11.78	13.41	15.51	13.29	14.07	13.93
Cash conversion cycle	days	52.05	63.23	56.57	61.50	53.17	52.88	59.40	62.22	53.92	55.50	47.96	49.45	39.28	49.18	48.79	45.14	37.08	41.47	47.14	51.62

September 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 16.48 + 50.22 – 14.65
= 52.05

The cash conversion cycle of F5 Networks Inc has shown fluctuations over the past few quarters. The company's cash conversion cycle represents the time it takes for the company to convert its investments in inventory and other resources into cash flow from sales.

Analyzing the data, we can see that the cash conversion cycle has ranged from a low of 37.08 days on Dec 31, 2020, to a high of 63.23 days on Jun 30, 2024. Generally, a shorter cash conversion cycle is favorable as it indicates that the company is efficiently managing its working capital and turning its investments into cash quickly.

The increasing trend observed from the second quarter of 2024 to the third quarter of 2024, where the cash conversion cycle increased from 53.92 days to 63.23 days, may suggest potential issues in managing inventory, accounts receivable, or accounts payable. It's important for the company to closely monitor and address any inefficiencies that may be causing this lengthening of the cash conversion cycle to ensure optimal working capital management.

On the positive side, looking at the historical trend, F5 Networks Inc managed to reduce its cash conversion cycle significantly from the fourth quarter of 2021 to the first quarter of 2022, indicating improvements in working capital efficiency during that period. The company should aim to identify and implement strategies that help maintain or further reduce the cash conversion cycle in order to enhance its overall financial performance.

In conclusion, understanding the cash conversion cycle trend is crucial for evaluating the efficiency of F5 Networks Inc in managing its working capital and converting investments into cash. Monitoring and improving the cash conversion cycle can lead to enhanced liquidity and financial performance for the company.