SolarEdge Technologies Inc (SEDG)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 231.82 | 117.48 | 103.97 | 121.32 | 65.88 |
| Days of sales outstanding (DSO) | days | 6.80 | — | 98.02 | 68.87 | 97.88 |
| Number of days of payables | days | 62.07 | 74.08 | 68.94 | 59.27 | 60.61 |
| Cash conversion cycle | days | 176.55 | 43.40 | 133.05 | 130.92 | 103.14 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 231.82 + 6.80 – 62.07
= 176.55
The cash conversion cycle of Solaredge Technologies Inc has shown an increasing trend over the past five years. In 2019, the company had a cash conversion cycle of 163.75 days, which increased to 190.19 days in 2020, further increasing to 201.99 days in 2021, and 241.02 days in 2022. In the most recent period, as of December 31, 2023, the cash conversion cycle increased even further to 327.57 days.
This trend indicates that Solaredge Technologies Inc is taking longer to convert its investments in inventory and receivables into cash. A longer cash conversion cycle may signal inefficiencies in the company's operations, as it implies that the company is tying up more cash in its working capital, which could potentially impact liquidity and profitability.
It would be important for Solaredge Technologies Inc to closely monitor and address the factors contributing to the lengthening of its cash conversion cycle to improve operational efficiency and cash flow management in the future.
Peer comparison
Dec 31, 2023