Super Micro Computer Inc (SMCI)

Cash conversion cycle

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Days of inventory on hand (DOH)	days	122.34	90.34	128.33	125.69	110.48
Days of sales outstanding (DSO)	days	66.66	58.84	59.21	48.48	45.08
Number of days of payables	days	41.57	48.55	54.42	73.94	54.19
Cash conversion cycle	days	147.42	100.63	133.12	100.24	101.37

June 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 122.34 + 66.66 – 41.57
= 147.42

The cash conversion cycle of Super Micro Computer Inc has shown fluctuation over the past five years. As of June 30, 2020, the company had a cash conversion cycle of 101.37 days, which decreased slightly to 100.24 days by June 30, 2021. However, by June 30, 2022, the cash conversion cycle increased significantly to 133.12 days, indicating a potential delay in converting inventory and receivables into cash.

The trend reversed in the following year, with the cash conversion cycle decreasing to 100.63 days as of June 30, 2023. This improvement suggests more efficient management of working capital to accelerate cash flows within the business. However, by June 30, 2024, the cash conversion cycle rose again to 147.42 days, signaling a longer timeframe for the company to convert its investments in inventory and receivables back into cash.

Overall, the fluctuating nature of Super Micro Computer Inc's cash conversion cycle over the years indicates the company's varying efficiency in managing its working capital and cash flow. Monitoring and optimizing this cycle is crucial for the company to ensure healthy liquidity and operational efficiency in the long term.