Clear Secure Inc (YOU)

Cash conversion cycle

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021
Days of inventory on hand (DOH)	days	32.95	24.98	25.57
Days of sales outstanding (DSO)	days	0.31	0.98	7.67
Number of days of payables	days	10.31	6.50	11.55
Cash conversion cycle	days	22.95	19.45	21.69

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 32.95 + 0.31 – 10.31
= 22.95

Clear Secure Inc's cash conversion cycle has shown some fluctuations over the past three years. In 2023, the company's cash conversion cycle increased to 22.95 days from 19.45 days in 2022. This indicates that, on average, it took Clear Secure Inc 22.95 days to convert its investments in inventory and other resources back into cash flow from sales.

Comparing this to the previous year, the company's cash conversion cycle had improved in 2022, reflecting a more efficient use of resources to generate cash flow, with a cycle of 19.45 days. While in 2021, the cycle was slightly higher at 21.69 days.

A longer cash conversion cycle suggests that Clear Secure Inc takes more time to generate cash from its investments in inventory and other operating activities, potentially tying up more working capital. Management should monitor this metric closely to ensure efficient management of working capital and to identify opportunities for improvement to optimize cash flow generation.