Simulations Plus Inc (SLP)

Cash conversion cycle

		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	Nov 30, 2019
Days of inventory on hand (DOH)	days	18.73	—	—	0.99	25.23	—	13.77	33.72	46.92	—	15.12	19.51	34.85	17.12	42.70	19.58	33.25	13.94	16.81	3.35
Days of sales outstanding (DSO)	days	46.19	54.04	74.02	60.80	62.50	66.95	76.47	79.89	93.35	130.43	110.16	89.56	77.38	102.48	90.33	62.39	65.14	98.85	70.11	64.71
Number of days of payables	days	5.13	9.21	8.17	8.50	4.52	11.92	12.14	8.09	7.59	14.23	13.94	0.63	13.33	10.37	13.67	11.61	12.03	23.57	22.99	22.56
Cash conversion cycle	days	59.79	44.84	65.84	53.29	83.21	55.03	78.10	105.52	132.68	116.21	111.34	108.44	98.90	109.23	119.37	70.36	86.35	89.21	63.93	45.50

August 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 18.73 + 46.19 – 5.13
= 59.79

The cash conversion cycle of Simulations Plus Inc has varied over the periods provided. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory into cash flows from sales.

From the data given, we see that the cash conversion cycle fluctuates, indicating changes in the efficiency of the company's operations. A shorter cash conversion cycle is generally preferred as it signifies that the company can quickly convert its resources into cash.

Simulations Plus Inc's cash conversion cycle ranged from a low of 44.84 days to a high of 132.68 days over the periods provided. The company's most recent cash conversion cycle stands at 59.79 days, suggesting an improvement in efficiency compared to previous periods.

Analyzing trends in the cash conversion cycle can provide insights into the company's management of inventory, accounts receivable, and accounts payable. It is important for the company to closely monitor and manage its cash conversion cycle to optimize cash flow and operational efficiency.