Wolfspeed Inc (WOLF)

Cash conversion cycle

		Jun 30, 2024	Jun 30, 2023	Jun 30, 2022	Jun 30, 2021	Jun 30, 2020
Days of inventory on hand (DOH)	days	164.64	117.91	116.88	109.64	50.75
Days of sales outstanding (DSO)	days	89.87	71.79	151.34	85.83	49.99
Number of days of payables	days	19.80	18.58	29.76	29.09	44.50
Cash conversion cycle	days	234.71	171.12	238.45	166.38	56.23

June 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 164.64 + 89.87 – 19.80
= 234.71

The cash conversion cycle of Wolfspeed Inc has displayed some fluctuation over the past five years. In the most recent year, as of June 30, 2024, the company's cash conversion cycle stood at 234.71 days, showing an increase from the previous year's 171.12 days. This signifies that Wolfspeed took longer to convert its investments in inventory back into cash.

Comparing this to the figures from two years prior, in 2022, where the cash conversion cycle was 238.45 days, it is evident that Wolfspeed had temporarily improved its efficiency in managing its working capital in 2023. However, the cycle lengthened again in 2024.

The significant variability in the cash conversion cycle over the years may indicate fluctuations in Wolfspeed's inventory management, accounts receivable collection, and accounts payable payment processes. Further analysis would be required to determine the root causes of these fluctuations and to develop strategies to optimize the company's cash conversion cycle for enhanced financial performance.