Jabil Circuit Inc (JBL)

Cash conversion cycle

		Aug 31, 2024	Aug 31, 2023	Aug 31, 2022	Aug 31, 2021	Aug 31, 2020
Days of inventory on hand (DOH)	days	56.24	57.20	69.63	57.08	42.77
Days of sales outstanding (DSO)	days	—	38.59	43.76	39.34	—
Number of days of payables	days	81.41	62.40	90.97	88.47	77.66
Cash conversion cycle	days	-25.17	33.39	22.42	7.96	-34.89

August 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 56.24 + — – 81.41
= -25.17

The cash conversion cycle of Jabil Circuit Inc has exhibited fluctuations over the past five years. In 2024, the company's cash conversion cycle improved significantly to -25.17 days, indicating a more efficient management of working capital. This suggests that Jabil Circuit Inc is able to convert its inventory into cash and receive payments from customers at a faster rate.

In contrast, in 2023 and 2022, the company's cash conversion cycle increased to 33.39 days and 22.42 days, respectively, signaling a slower conversion of inventory into cash and a longer collection period from customers. This may indicate potential liquidity challenges or inefficiencies in managing working capital during those years.

However, in 2021, the cash conversion cycle improved to 7.96 days, demonstrating a more efficient working capital management compared to the previous years. This improvement suggests that Jabil Circuit Inc was able to streamline its operations and convert inventory to cash more quickly, leading to a shorter cash conversion cycle.

Looking back to 2020, the company had a negative cash conversion cycle of -34.89 days, which implies that Jabil Circuit Inc could efficiently convert inventory into cash and receive payments from customers even before paying suppliers. This indicates strong liquidity and efficient management of working capital during that year.

Overall, the analysis of the cash conversion cycle for Jabil Circuit Inc over the past five years reveals fluctuations in efficiency and effectiveness in managing working capital, with 2024 showing a notable improvement in converting inventory into cash and receiving payments from customers.