SolarEdge Technologies Inc (SEDG)

Cash conversion cycle

		Sep 30, 2024	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
Days of inventory on hand (DOH)	days	158.15	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
Days of sales outstanding (DSO)	days	11.26	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
Number of days of payables	days	18.76	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
Cash conversion cycle	days	150.64	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

September 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 158.15 + 11.26 – 18.76
= 150.64

The cash conversion cycle of SolarEdge Technologies Inc has shown varying trends over the past several quarters. The cycle measures the amount of time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

It is observed that the cash conversion cycle fluctuated significantly from a low of 43.40 days in December 2022 to a high of 362.10 days in June 2024. This indicates potential inefficiencies in managing inventory, accounts receivable, and accounts payable.

The upward spikes in the cash conversion cycle suggest longer delays in receiving cash from customers compared to paying suppliers and managing inventory, which could lead to working capital constraints. Conversely, the lower cycle values in some quarters indicate more efficient cash management and quicker conversion of investments into cash.

Overall, SolarEdge Technologies Inc may benefit from focusing on improving working capital management efficiency to reduce the cash conversion cycle and enhance its liquidity position. This could involve streamlining inventory management, optimizing accounts receivable collection processes, and negotiating favorable payment terms with suppliers.