Oracle Corporation (ORCL)

Cash conversion cycle

		May 31, 2024	May 31, 2023	May 31, 2022	May 31, 2021	May 31, 2020
Days of inventory on hand (DOH)	days	9.00	7.41	7.43	4.76	6.90
Days of sales outstanding (DSO)	days	54.27	50.53	51.20	48.77	54.90
Number of days of payables	days	63.49	29.95	31.18	24.98	20.82
Cash conversion cycle	days	-0.23	27.99	27.45	28.55	40.98

May 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 9.00 + 54.27 – 63.49
= -0.23

The cash conversion cycle of Oracle Corporation has fluctuated over the past five years. In the most recent fiscal year ending May 31, 2024, the company reported a negative cash conversion cycle of -0.23 days, indicating that Oracle is able to convert its investments into cash more quickly than it pays off its liabilities related to goods and services. This efficient management of working capital may suggest a strong liquidity position and effective cash flow management.

In the preceding years, the cash conversion cycle ranged from 27.45 to 40.98 days, with the longest cycle observed in the fiscal year ending May 31, 2020. During these periods, Oracle took an average of around a month to convert its resources invested in inventory and accounts receivable into cash. While a longer cash conversion cycle can imply slower cash generation and potentially tighter liquidity, it is important to note that the specific circumstances of the company and its industry should be considered when evaluating the significance of these metrics.

Overall, the recent trend towards a more negative or shorter cash conversion cycle for Oracle Corporation suggests an improvement in efficiency in managing working capital and converting investments into cash, which could support the company's financial health and ability to meet its obligations promptly.