Super Micro Computer Inc (SMCI)

Cash conversion cycle

		Dec 31, 2024	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
Days of inventory on hand (DOH)	days	72.00	110.25	122.34	151.57	116.39	122.79	90.34	104.60	94.99	126.58	128.33	146.00	141.32	131.61	125.69	114.88	107.63	101.73	110.48	114.44
Days of sales outstanding (DSO)	days	53.64	53.02	66.66	50.96	59.29	41.77	58.84	37.31	42.19	44.68	59.21	53.59	43.54	43.68	48.48	45.25	37.84	35.82	45.08	39.12
Number of days of payables	days	11.00	37.63	41.57	40.15	59.52	64.85	48.55	43.58	37.41	57.24	54.42	71.65	70.49	62.73	73.94	59.10	52.82	43.82	54.19	61.15
Cash conversion cycle	days	114.64	125.64	147.42	162.38	116.16	99.71	100.63	98.33	99.77	114.02	133.12	127.94	114.37	112.56	100.24	101.03	92.64	93.73	101.37	92.42

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 72.00 + 53.64 – 11.00
= 114.64

The cash conversion cycle of Super Micro Computer Inc has displayed fluctuations over the past couple of years, indicating potential challenges in managing its working capital efficiently. The cash conversion cycle, which represents the time taken to convert inventory into cash from sales, has ranged from around 92 days to as high as 162 days in the most recent period.

In the earlier periods, from March 2020 to September 2021, the cash conversion cycle remained relatively stable, hovering around the 90 to 110-day range. However, there was a noticeable increase in the cycle starting from March 2022, reaching a peak of 162 days by March 2024.

The increasing cash conversion cycle may suggest issues with inventory management, collection of receivables, or delays in payment to suppliers. A prolonged cash conversion cycle can tie up working capital, impacting liquidity and overall financial health. It is essential for the company to closely monitor and address the factors contributing to the lengthening cycle to ensure efficient cash flow management and sustainable operations.