Oracle Corporation (ORCL)

Cash conversion cycle

		May 31, 2025	May 31, 2024	May 31, 2023	May 31, 2022	May 31, 2021
Days of inventory on hand (DOH)	days	—	8.05	8.02	12.91	6.60
Days of sales outstanding (DSO)	days	54.42	54.27	50.53	51.20	48.77
Number of days of payables	days	808.95	56.81	32.40	54.15	34.62
Cash conversion cycle	days	-754.53	5.51	26.15	9.96	20.75

May 31, 2025 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 54.42 – 808.95
= -754.53

The analysis of Oracle Corporation’s cash conversion cycle (CCC) over the specified period reveals notable fluctuations that reflect the company's operational efficiency and liquidity management strategies.

As of May 31, 2021, the CCC was approximately 20.75 days, indicating that it took around three weeks for the company to convert its investments in inventory and receivables into cash, considering the period it delayed payments to suppliers. The subsequent year, this metric significantly declined to 9.96 days, suggesting improved working capital management and faster conversion of receivables and inventory into cash, relative to its payables.

By May 31, 2023, the CCC increased again to 26.15 days, indicating a slight deterioration in operational efficiency or potential changes in supplier or customer payment behaviors. This upward trend was interrupted dramatically by May 31, 2024, when the CCC dropped sharply to 5.51 days, reflecting a substantial acceleration in cash collection or inventory turnover, or a strategic enhancement in payment terms that minimized the cycle duration.

The most striking data point appears on May 31, 2025, with the CCC recorded at -754.53 days. A negative CCC indicates that Oracle is collecting receivables, receiving collections, or settling payables in such a way that it effectively generates cash well before it needs to settle its liabilities. In extremis, this suggests that the company is able to sustain operations and possibly generate significant cash inflows early within the cycle or delay its payments to suppliers substantially. Such a negative figure may also reflect accounting anomalies, extraordinary operational circumstances, or strategic financing arrangements that allow the company to operate with minimal net working capital requirements for an extended period.

Overall, the observed progression from positive cycles around 20 days to a highly negative figure signals a dramatic shift in Oracle’s operational cash flow management, pointing to a highly efficient or strategically optimized working capital cycle in the most recent period. However, such an extreme negative value warrants further investigation to understand underlying causes, whether operational, financial, or accounting-related.