Trade Desk Inc (TTD)
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 | 497.20 | 538.33 | 542.99 | 616.45 | 691.60 |
| Number of days of payables | days | 2,034.68 | 2,313.53 | 2,429.78 | 2,727.66 | 2,752.58 |
| Cash conversion cycle | days | -1,537.47 | -1,775.20 | -1,886.80 | -2,111.21 | -2,060.99 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 497.20 – 2,034.68
= -1,537.47
The provided data indicates that Trade Desk Inc’s cash conversion cycle (CCC) has consistently remained in negative territory from December 31, 2020, through December 31, 2024. Specifically, the values are as follows:
- December 31, 2020: -2,060.99 days
- December 31, 2021: -2,111.21 days
- December 31, 2022: -1,886.80 days
- December 31, 2023: -1,775.20 days
- December 31, 2024: -1,537.47 days
Over this period, the CCC has shown a gradual reduction in absolute value, decreasing from approximately -2,061 days to -1,537 days. This trend signifies that the company’s cash conversion cycle has become less negative over time, although it remains in negative territory. A negative CCC generally indicates that the firm collects cash from sales before it needs to pay suppliers, which is typically a sign of strong liquidity management and favorable operating cycles.
The observed upward trend towards a less negative value suggests an improvement in the efficiency of working capital management. Specifically, it may imply that the company’s accounts receivable collection periods and inventory turnover have become somewhat longer relative to accounts payable deferral periods, or that the company is optimizing its cash flows by balancing receivables and payables more favorably.
In summary, while Trade Desk Inc’s cash conversion cycle has not shifted into positive territory, the reduction in the negative days reflects an ongoing improvement in how swiftly the company converts its investments in working capital into cash, potentially indicating enhanced operational efficiency or strategic adjustments aimed at optimizing liquidity and cash flow timing.
Peer comparison
Dec 31, 2024