Palo Alto Networks Inc (PANW)

Cash conversion cycle

		Jul 31, 2024	Jul 31, 2023	Jul 31, 2022	Jul 31, 2021	Jul 31, 2020
Days of inventory on hand (DOH)	days	—	24.73	—	—	—
Days of sales outstanding (DSO)	days	152.07	151.80	150.23	117.82	114.26
Number of days of payables	days	7.51	9.65	10.62	5.87	8.01
Cash conversion cycle	days	144.56	166.88	139.61	111.95	106.25

July 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 152.07 – 7.51
= 144.56

The cash conversion cycle of Palo Alto Networks Inc has fluctuated over the past five years, demonstrating the company's efficiency in managing its operating cycle. In July 2024, the cash conversion cycle stood at 144.56 days, showing an improvement compared to the prior year of 166.88 days. This indicates that the company is taking less time to convert its investments in inventory and other resources into cash from sales.

Despite the improvement in 2024, the trend over the past five years shows variability in the company's working capital management. In 2022, the cash conversion cycle was 139.61 days, which was lower than 2023 but higher than the more efficient cycle in 2021. Furthermore, the company achieved its most effective conversion cycle in 2020, with only 106.25 days required to convert resources into cash.

Overall, Palo Alto Networks Inc should continue to focus on optimizing its cash conversion cycle to enhance liquidity, manage working capital efficiently, and ultimately improve its overall financial performance.