SolarWinds Corp (SWI)
Cash conversion cycle
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | — | — | — | — |
| Days of sales outstanding (DSO) | days | 52.78 | 49.99 | 51.34 | 48.87 | 59.36 |
| Number of days of payables | days | 32.63 | 40.70 | 53.41 | 11.78 | 21.39 |
| Cash conversion cycle | days | 20.15 | 9.29 | -2.07 | 37.08 | 37.97 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 52.78 – 32.63
= 20.15
The cash conversion cycle of SolarWinds Corp has shown a mixed trend over the years. In December 2020 and 2021, the company had a relatively stable cash conversion cycle of around 37 days, indicating that it took approximately 37 days to convert its investments in inventory and other resources into cash.
However, there was a significant improvement in efficiency by December 2022, with a negative cash conversion cycle of -2.07 days. This suggests that the company was collecting cash from its sales cycle before paying its suppliers and transforming inventory into sales, a favorable scenario for liquidity and working capital management.
The trend changed in the following years, with the cash conversion cycle increasing to 9.29 days in December 2023 and 20.15 days in December 2024. This rise indicates that the company may have faced challenges in managing its working capital efficiently, leading to a longer time to convert investments into cash.
Overall, although there were fluctuations, SolarWinds Corp has generally maintained a relatively efficient cash conversion cycle, which is vital for operational and financial health. However, the recent increase in the cycle warrants further analysis to ensure optimal working capital management in the future.
Peer comparison
Dec 31, 2024