Progress Software Corporation (PRGS)

Cash conversion cycle

		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	May 31, 2020	Feb 29, 2020
Days of inventory on hand (DOH)	days	—	—	—	—	—	—	—	—	19.48	18.40	11.49	13.83	16.52	—	—	—	—	—	—	—
Days of sales outstanding (DSO)	days	79.25	44.73	42.23	45.34	66.13	53.96	48.89	54.84	59.32	51.32	40.65	56.96	68.57	54.75	49.13	62.40	69.38	50.52	45.88	52.37
Number of days of payables	days	38.91	30.84	23.83	27.19	35.67	27.36	24.36	39.17	35.85	30.60	40.99	35.08	45.05	32.19	59.00	56.55	58.63	35.98	45.49	50.32
Cash conversion cycle	days	40.34	13.90	18.40	18.15	30.46	26.60	24.54	15.67	42.94	39.12	11.16	35.71	40.04	22.56	-9.87	5.85	10.74	14.55	0.39	2.04

November 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 79.25 – 38.91
= 40.34

The cash conversion cycle (CCC) of Progress Software Corporation has exhibited fluctuations over the past few years. The CCC represents the length of time it takes for a company to convert its investments in inventory and receivables into cash flows from sales.

From February 29, 2020, to May 31, 2020, the CCC decreased significantly from 2.04 days to 0.39 days, indicating an improvement in efficiency in managing inventory and collecting receivables. However, in the subsequent quarters, the CCC increased notably, reaching a peak of 40.34 days on November 30, 2024.

The negative CCC on May 31, 2021, implies that Progress Software Corporation was able to receive cash from customers before having to pay for its inventory, which is a favorable position. Subsequently, the CCC fluctuated, showing mixed performance in managing working capital.

The highest CCC of 42.94 days on November 30, 2022, suggests a potential delay in converting sales into cash, which may have implications for liquidity management. The CCC improvements seen in the following periods indicate efforts to streamline operations and enhance efficiency in working capital management.

Overall, monitoring the CCC is crucial for assessing the company's ability to efficiently manage its working capital and convert investments into cash. Further analysis and trend monitoring may provide insights into Progress Software Corporation's operational efficiency and financial health.