Godaddy Inc (GDDY)

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	—	65.21	65.56	67.37	72.48
Days of sales outstanding (DSO)	days	6.80	5.54	6.28	4.73	3.82
Number of days of payables	days	20.12	17.91	12.13	8.11	12.79
Cash conversion cycle	days	-13.32	52.84	59.72	63.99	63.51

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 6.80 – 20.12
= -13.32

The cash conversion cycle, a key metric in assessing a company's operational efficiency, indicates how quickly a company can convert its investments in inventory and other resources into cash inflows from sales. Godaddy Inc's cash conversion cycle has fluctuated over the past five years, ranging from -27.78 days in 2023 to -22.01 days in 2019.

The negative values of the cash conversion cycle for Godaddy Inc suggest that the company generally operates with an efficient working capital management system where it takes less time to convert resources into cash. The decreasing trend from -22.01 days in 2019 to -27.78 days in 2023 indicates a potential improvement in the company's ability to manage its working capital effectively over time.

A negative cash conversion cycle means that Godaddy Inc is able to collect cash from customers before having to pay its suppliers and vendors. This situation can be advantageous as it provides the company with more liquidity and flexibility to reinvest in operations, repay debts, or pursue growth opportunities.

Overall, the trend of negative cash conversion cycle values for Godaddy Inc implies that the company has been successful in optimizing its working capital management processes, ultimately contributing to its financial health and operational efficiency.