Palo Alto Networks Inc (PANW)

Cash conversion cycle

		Jul 31, 2024	Apr 30, 2024	Jan 31, 2024	Oct 31, 2023	Jul 31, 2023	Apr 30, 2023	Jan 31, 2023	Oct 31, 2022	Jul 31, 2022	Apr 30, 2022	Jan 31, 2022	Oct 31, 2021	Jul 31, 2021	Apr 30, 2021	Jan 31, 2021	Oct 31, 2020	Jul 31, 2020	Apr 30, 2020	Jan 31, 2020	Oct 31, 2019
Days of inventory on hand (DOH)	days	—	—	—	23.62	24.73	23.64	24.06	—	—	—	—	—	—	—	—	—	—	—	—	—
Days of sales outstanding (DSO)	days	152.07	107.36	113.94	94.54	151.80	95.45	86.37	87.64	150.23	97.04	81.71	75.64	117.82	76.04	69.58	72.16	114.09	76.65	64.86	62.09
Number of days of payables	days	7.51	7.26	12.21	9.47	9.65	6.83	9.85	10.03	10.62	9.42	11.05	9.19	5.87	7.93	5.19	5.94	8.08	6.87	7.63	10.74
Cash conversion cycle	days	144.56	100.10	101.73	108.69	166.88	112.26	100.58	77.61	139.61	87.62	70.67	66.45	111.95	68.11	64.39	66.22	106.01	69.78	57.23	51.35

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, a measure of how efficiently the company manages its working capital, has been fluctuating over the past few reporting periods.

On average, the company takes around 100 days to convert its investments in inventory and other resources into cash receipts from customers and then back into cash used to replenish inventory.

The company's cash conversion cycle reached its peak at 166.88 days in the quarter ending July 31, 2023, indicating delays in the conversion process and potentially inefficient management of working capital during that period.

On the other hand, the lowest cash conversion cycle of 51.35 days was recorded in the quarter ending October 31, 2019, indicating a more efficient management of working capital during that time.

Overall, Palo Alto Networks Inc should aim to optimize its cash conversion cycle by streamlining its inventory management, improving accounts receivable collection processes, and negotiating favorable credit terms with suppliers to enhance cash flow efficiency and overall financial performance.