Fair Isaac Corporation (FICO)

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	—	—	—	—	—	—	—	—	—	—	—	49.51	—	—	—	—	—	—	—	—
Days of sales outstanding (DSO)	days	140.19	152.58	154.55	146.53	133.46	135.90	128.26	112.35	110.40	123.99	114.97	117.47	136.78	145.41	136.38	135.02	126.91	133.74	104.46	94.24
Number of days of payables	days	21.33	22.31	19.72	15.99	19.85	20.86	21.75	20.78	23.88	22.78	20.26	20.04	22.06	23.28	20.35	26.08	33.72	25.05	21.77	18.50
Cash conversion cycle	days	118.86	130.27	134.82	130.54	113.61	115.03	106.52	91.57	86.52	101.21	94.71	146.95	114.73	122.13	116.03	108.93	93.20	108.69	82.69	75.74

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 140.19 – 21.33
= 118.86

The cash conversion cycle (CCC) of Fair, Isaac Corp. has shown fluctuations over the past eight quarters. The CCC measures the average time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

Between December 31, 2022, and June 30, 2023, the CCC exhibited an increasing trend, reaching its peak at 75.47 days. However, from June 30, 2023, to December 31, 2023, the CCC decreased, indicating an improvement in the company's efficiency in managing its working capital.

It is essential to analyze the components of the cash conversion cycle to fully understand the reasons behind these changes. For instance, an increase in the number of days of inventory held, a lengthening of the accounts receivable collection period, or a decrease in the accounts payable payment period could contribute to a longer CCC.

Moreover, it would be beneficial to compare Fair, Isaac Corp.'s CCC with industry benchmarks to assess its performance relative to peers. This analysis can provide valuable insights into the company's operational efficiency and working capital management.