Tesla Inc (TSLA)

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	54.66	66.76	66.06	75.12	62.87	65.10	70.98	79.34	77.32	68.61	60.44	53.87	52.25	52.68	52.94	53.24	60.10	69.28	71.11	77.06
Days of sales outstanding (DSO)	days	16.51	12.47	14.33	14.99	13.23	9.61	13.38	12.72	13.26	10.72	11.35	13.62	13.05	15.37	18.66	19.30	21.93	22.88	21.23	18.00
Number of days of payables	days	56.74	67.33	60.76	68.99	66.58	66.13	75.51	87.78	91.87	92.33	83.58	89.93	90.98	83.69	84.53	85.65	88.68	81.44	64.38	68.08
Cash conversion cycle	days	14.43	11.90	19.63	21.12	9.52	8.59	8.85	4.28	-1.29	-13.00	-11.79	-22.44	-25.69	-15.64	-12.94	-13.12	-6.64	10.72	27.95	26.98

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 54.66 + 16.51 – 56.74
= 14.43

The cash conversion cycle is a crucial financial metric that measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. In the case of Tesla Inc, the cash conversion cycle showed fluctuations over the analyzed period, as follows:

- From March 31, 2020, to December 31, 2020, Tesla's cash conversion cycle improved significantly from 26.98 days to -6.64 days. This indicates that Tesla was able to generate cash from its operations more efficiently and swiftly during this period.

- Subsequently, from March 31, 2021, to December 31, 2024, Tesla continued to maintain negative cash conversion cycle days, reflecting the company's ability to manage its working capital effectively and streamline its operations.

- The lowest point in the cash conversion cycle was recorded on December 31, 2021, with -25.69 days, indicating that Tesla was able to convert its resources into cash at a rapid pace during that quarter.

- Towards the end of the period, the cash conversion cycle increased slightly, reaching 14.43 days on December 31, 2024. This may suggest a small delay in converting inventory and resources into cash compared to previous periods.

Overall, Tesla's cash conversion cycle demonstrated strong efficiency and effectiveness in managing its working capital and operational processes during most of the analyzed period, leading to improved cash generation and liquidity.