Super Micro Computer Inc (SMCI)

Cash conversion cycle

		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	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	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	93.33	88.51	81.41	96.63
Days of sales outstanding (DSO)	days	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	42.20	41.02	42.45	37.25
Number of days of payables	days	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	52.01	42.91	43.79	42.15
Cash conversion cycle	days	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	83.53	86.62	80.07	91.73

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 116.39 + 59.29 – 59.52
= 116.16

Super Micro Computer Inc's cash conversion cycle has fluctuated over the past eight quarters, indicating variations in efficiency in managing its working capital. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources to cash flows from sales.

In Q2 2024, the company's cash conversion cycle was 116.16 days, an increase from the previous quarter's 99.71 days. This suggests that Super Micro Computer Inc took longer to convert its investments into cash during that quarter. However, the cycle was still more efficient compared to two quarters ago when it reached 123.12 days.

The lowest cash conversion cycle was recorded in Q1 2024 at 99.71 days, indicating an improvement in working capital management efficiency. Conversely, the highest cycle was observed in Q4 2022 at 142.23 days, reflecting a longer period to convert investments into cash flows.

Overall, Super Micro Computer Inc should focus on better inventory management and optimizing its accounts receivable and accounts payable processes to shorten its cash conversion cycle. This would help improve liquidity, optimize working capital, and enhance overall financial performance.