Netflix Inc (NFLX)
Cash conversion cycle
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | 7.57 | 7.48 | 6.82 | 4.85 |
| Days of sales outstanding (DSO) | days | 22.48 | 17.74 | 27.99 | 11.23 | 10.84 |
| Number of days of payables | days | 15.61 | 13.84 | 12.79 | 17.64 | 15.68 |
| Cash conversion cycle | days | 6.87 | 11.48 | 22.68 | 0.42 | 0.01 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 22.48 – 15.61
= 6.87
The cash conversion cycle of Netflix Inc has fluctuated over the years based on the provided data. In December 2020, the company had a very efficient cash conversion cycle of 0.01 days, indicating a quick turnover of cash. However, by December 2022, the cash conversion cycle had significantly increased to 22.68 days, implying that Netflix was taking longer to convert its investments in inventory and accounts receivable into cash.
Subsequently, by December 2023 and December 2024, the cash conversion cycle decreased to 11.48 days and 6.87 days respectively, showcasing an improvement in Netflix's efficiency in managing its working capital and generating cash.
Overall, the trend in Netflix Inc's cash conversion cycle indicates fluctuations in the company's ability to efficiently convert its investments into cash over the years. Analyzing these changes can provide insights into the company's liquidity management and operational efficiency.