Penguin Solutions, Inc. (PENG)

Cash conversion cycle

		May 31, 2025	Feb 28, 2025	Nov 30, 2024	Aug 31, 2024	May 31, 2024	Feb 29, 2024	Nov 30, 2023	Aug 31, 2023	May 31, 2023	Feb 28, 2023	Nov 30, 2022	Aug 31, 2022	May 31, 2022	Feb 28, 2022	Nov 30, 2021	Aug 31, 2021	May 31, 2021	Feb 28, 2021	Nov 30, 2020	Aug 31, 2020
Days of inventory on hand (DOH)	days	70.29	77.57	102.21	66.50	94.96	88.35	96.52	72.86	72.70	86.72	117.00	70.47	96.45	87.91	89.14	111.27	97.34	72.18	57.94	65.67
Days of sales outstanding (DSO)	days	79.55	91.47	81.29	78.48	75.59	58.07	53.20	62.14	56.91	49.84	64.21	71.22	70.55	77.20	74.79	76.20	79.18	66.16	70.29	70.22
Number of days of payables	days	103.74	92.53	101.10	80.05	102.73	75.69	84.18	56.21	54.96	49.42	91.51	78.33	101.47	100.00	104.74	131.48	119.32	99.68	92.72	90.51
Cash conversion cycle	days	46.10	76.51	82.40	64.93	67.82	70.73	65.54	78.79	74.65	87.14	89.70	63.37	65.53	65.12	59.19	55.99	57.20	38.67	35.51	45.37

May 31, 2025 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 70.29 + 79.55 – 103.74
= 46.10

The analysis of Penguin Solutions, Inc.'s cash conversion cycle (CCC) over the specified period reveals significant fluctuations, indicative of evolving operational efficiencies and working capital management strategies. Initially, the CCC exhibited a relatively moderate duration of approximately 45.37 days as of August 31, 2020. This figure decreased to 35.51 days by November 30, 2020, reflecting improved management of receivables and inventories.

Subsequently, the cycle experienced minor increases, reaching 38.67 days by February 28, 2021, before sharply rising to 57.20 days on May 31, 2021. This upward trend continued into August 2021, with the CCC approaching 56 days, and further escalated to nearly 59 days by November 2021, suggesting potential delays in receivables collection, inventory turnover, or extended payables.

From late 2021 onwards, the CCC reached its peak at approximately 89.70 days as of November 2022, indicating a considerable extension in the duration of cash conversion. The subsequent quarters saw a gradual reduction, with the cycle decreasing to 87.14 days in February 2023 and further declining to around 74.65 days in May 2023. However, the cycle experienced a slight uptick again to approximately 78.79 days by August 2023.

Thereafter, a notable decrease was observed, with the CCC falling to 65.54 days as of November 2023, and then continuing downward to approximately 70.73 days in February 2024, followed by a modest increase to 67.82 days in May 2024. The latest data indicates an upward correction to 64.93 days as of August 2024, but a subsequent increase to 82.40 days in November 2024. The cycle then showed a decrease to 76.51 days in February 2025, followed by a significant reduction to 46.10 days in May 2025.

Overall, the data indicates periods of volatility, with the cycle initially trending downward, reaching a low point, then experiencing a substantial increase aligning with liquidity or operational challenges, before gradually improving in recent periods. The considerable fluctuations suggest ongoing adjustments in inventory management, receivables collection, and payables strategies, impacting the firm's cash flow cycle and overall operational efficiency.