Workday Inc (WDAY)

Cash conversion cycle

		Jan 31, 2025	Oct 31, 2024	Jul 31, 2024	Apr 30, 2024	Jan 31, 2024	Oct 31, 2023	Jul 31, 2023	Apr 30, 2023	Jan 31, 2023	Oct 31, 2022	Jul 31, 2022	Apr 30, 2022	Jan 31, 2022	Oct 31, 2021	Jul 31, 2021	Apr 30, 2021	Jan 31, 2021	Oct 31, 2020	Jul 31, 2020	Apr 30, 2020
Days of inventory on hand (DOH)	days	—	—	—	—	—	24.76	24.23	23.99	24.76	—	23.54	—	—	—	—	—	—	—	—	—
Days of sales outstanding (DSO)	days	84.62	65.42	62.70	55.47	83.66	65.07	70.20	62.58	93.66	64.46	71.37	52.54	88.01	64.51	68.52	53.29	88.33	65.95	64.26	56.50
Number of days of payables	days	10.88	7.74	9.48	8.61	9.12	9.46	10.83	14.16	19.96	10.25	8.66	18.58	8.84	8.02	9.29	8.88	14.22	10.54	11.26	6.96
Cash conversion cycle	days	73.74	57.68	53.23	46.86	74.55	80.37	83.60	72.42	98.46	54.21	86.26	33.96	79.17	56.49	59.22	44.40	74.12	55.41	53.00	49.54

January 31, 2025 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 84.62 – 10.88
= 73.74

Workday Inc's cash conversion cycle has shown some fluctuations over the period from April 30, 2020, to January 31, 2025. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and accounts receivable into cash flows from sales.

From the data provided, it is observed that the cash conversion cycle ranges from a low of 33.96 days on April 30, 2022, to a high of 98.46 days on January 31, 2023. Generally, a shorter cash conversion cycle is preferred as it signifies efficient management of working capital and quick turnover of assets.

Workday Inc saw fluctuations in its cash conversion cycle, indicating changes in its inventory management, accounts receivable collection, and accounts payable payment. For example, the increase in days for the period ending January 31, 2023, suggests a longer period taken to collect receivables or manage inventory.

It is important for Workday Inc to monitor and manage its cash conversion cycle effectively to ensure optimal liquidity and efficient use of resources. Analyzing the reasons behind the fluctuations and implementing strategies to shorten the cycle can improve the company's financial health and operational efficiency.