SolarEdge Technologies Inc (SEDG)

Cash conversion cycle

		Jun 30, 2024	Mar 31, 2024	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019
Days of inventory on hand (DOH)	days	375.78	304.07	231.82	169.93	140.21	131.14	117.48	101.06	97.17	102.16	103.97	93.39	110.11	127.67	121.32	105.76	90.52	68.91	65.88	95.35
Days of sales outstanding (DSO)	days	19.88	10.03	6.80	0.84	128.72	119.92	—	103.43	99.23	111.61	98.02	85.83	79.30	69.18	68.87	44.00	41.66	54.27	97.88	83.91
Number of days of payables	days	33.56	33.65	62.07	57.61	61.91	61.28	74.08	56.09	52.36	57.07	68.94	42.18	48.29	45.83	59.27	43.48	54.17	48.29	60.61	93.90
Cash conversion cycle	days	362.10	280.46	176.55	113.16	207.01	189.78	43.40	148.40	144.04	156.69	133.05	137.04	141.12	151.02	130.92	106.28	78.01	74.89	103.14	85.37

June 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 375.78 + 19.88 – 33.56
= 362.10

The cash conversion cycle of SolarEdge Technologies Inc has shown fluctuating trends over the past few quarters. The cycle measures how long it takes for a company to convert its investments in inventory and other resources into cash inflows from sales.

The company experienced a significant increase in its cash conversion cycle from March 2020 to June 2020, reaching 130.92 days, before decreasing gradually in the following quarters. By March 2021, the cycle had reduced to 106.28 days, indicating an improvement in the efficiency of the company's working capital management.

However, there was a notable spike in the cash conversion cycle in the fourth quarter of 2021, with the cycle increasing to 207.01 days. This suggests potential challenges in managing inventory levels, accounts receivable, and accounts payable during that period.

Subsequently, there was a sharp decrease in the cycle in the first quarter of 2022, with a significant improvement to 43.40 days, indicating enhanced liquidity and operating efficiency. However, this improvement was not sustained, as the cycle increased again in subsequent quarters.

By June 2024, the cash conversion cycle stood at 362.10 days, which is the highest reported value in the provided data. This prolonged cycle may raise concerns about the company's ability to efficiently manage its working capital and convert its investments into cash flow effectively.

In conclusion, SolarEdge Technologies Inc has exhibited fluctuations in its cash conversion cycle over the analyzed periods, reflecting varying levels of operational efficiency and working capital management. Further monitoring and analysis of working capital components would be essential to ensure sustainable cash flow generation and overall financial health.