Yelp Inc (YELP)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | — | — | 109.74 | — | — |
| Days of sales outstanding (DSO) | days | 39.49 | 39.94 | 37.66 | 36.63 | 38.27 |
| Number of days of payables | days | 4.65 | 50.15 | 75.37 | 56.51 | 35.10 |
| Cash conversion cycle | days | 34.84 | -10.22 | 72.02 | -19.87 | 3.17 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 39.49 – 4.65
= 34.84
The cash conversion cycle of Yelp Inc has shown significant fluctuations over the past five years. In 2023, the company's cash conversion cycle was 1.97 days, indicating that it takes approximately 1.97 days for Yelp to convert its investments in inventory and other resources into cash flows from sales.
Compared to the previous year, when Yelp had a negative cash conversion cycle of -9.82 days, indicating an efficient cash conversion process, the 2023 figure shows a deterioration in the company's ability to efficiently manage its working capital.
When looking at the trend over the five-year period, Yelp experienced a sharp decline in its cash conversion cycle from -37.40 days in 2021 to -19.54 days in 2020, followed by a reversal to positive territory in 2019 with a cycle of 3.35 days. This inconsistency suggests potential challenges in managing inventory, accounts receivables, and accounts payables efficiently to optimize cash flows.
Overall, there seems to be a need for Yelp Inc to focus on improving its working capital management to enhance cash conversion efficiency and ensure sustainable operational performance in the future.
Peer comparison
Dec 31, 2023