Simulations Plus Inc (SLP)

Cash conversion cycle

		Aug 31, 2024	Aug 31, 2023	Aug 31, 2022	Aug 31, 2021	Aug 31, 2020
Days of inventory on hand (DOH)	days	13.95	25.23	46.92	34.85	33.25
Days of sales outstanding (DSO)	days	44.60	62.50	93.35	77.38	65.14
Number of days of payables	days	3.82	4.52	7.59	13.33	12.03
Cash conversion cycle	days	54.72	83.21	132.68	98.90	86.35

August 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 13.95 + 44.60 – 3.82
= 54.72

The cash conversion cycle for Simulations Plus Inc has fluctuated over the past five years. In 2024, the company's cash conversion cycle improved significantly to 54.72 days from 83.21 days in 2023. This indicates that the company is now taking less time to convert its investments in inventory and accounts receivable into cash.

Compared to 2022 and 2021, where the cash conversion cycle was 132.68 days and 98.90 days respectively, the company has shown improved efficiency in managing its working capital in recent years. This suggests that Simulations Plus Inc may have implemented better inventory management and accounts receivable collection strategies.

In 2020, the cash conversion cycle was 86.35 days, falling between the levels seen in 2021 and 2023. Overall, while there have been fluctuations in the cash conversion cycle over the years, the downward trend in recent years indicates that Simulations Plus Inc has been improving its liquidity management and working capital efficiency.