Netflix Inc (NFLX)
Cash conversion cycle
| Dec 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | 7.76 | — | — | 7.57 | 8.89 | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| Days of sales outstanding (DSO) | days | 22.48 | 12.16 | 12.44 | 12.46 | 17.74 | 14.38 | 13.97 | 13.08 | 27.99 | 16.66 | 10.44 | 10.15 | 11.23 | 10.22 | 10.01 | 8.62 | 10.84 | 9.50 | 10.33 | 9.24 |
| Number of days of payables | days | 15.61 | 11.39 | 10.72 | 11.15 | 13.84 | 9.85 | 11.42 | 10.98 | 12.79 | 10.76 | 9.99 | 12.69 | 17.64 | 14.44 | 14.28 | 12.51 | 15.68 | 13.55 | 11.81 | 15.12 |
| Cash conversion cycle | days | 6.87 | 8.53 | 1.73 | 1.32 | 11.48 | 13.42 | 2.55 | 2.11 | 15.20 | 5.90 | 0.45 | -2.54 | -6.40 | -4.22 | -4.27 | -3.89 | -4.84 | -4.05 | -1.48 | -5.88 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 22.48 – 15.61
= 6.87
The cash conversion cycle is a financial metric that represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A negative cash conversion cycle indicates that a company is able to generate cash from its operations before having to pay suppliers and vendors.
Analyzing the data provided for Netflix Inc, we observe that the company had a negative cash conversion cycle for most of the periods listed. This implies that Netflix was efficient in managing its working capital during those periods, as it took fewer days to convert its investments into cash.
Specifically, Netflix's cash conversion cycle fluctuated between -6.40 days to 15.20 days over the data range. The negative values indicate that Netflix was able to generate cash quickly, while the positive values suggest that the company took longer to convert its investments into cash.
Notably, Netflix experienced an increase in its cash conversion cycle from June 30, 2022, to December 31, 2024, with the metric ranging from 0.45 days to 6.87 days. This trend indicates a potential slowdown in Netflix's ability to convert its resources into cash during those periods.
Overall, a negative cash conversion cycle is generally deemed favorable as it indicates efficient working capital management. However, an increasing trend in the metric may signal a need for the company to revisit its operations to ensure optimal cash flow generation.