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Shopify (NYSE:SHOP) Cash Conversion Cycle

: -33.67 (As of Sep. 2022)
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Cash Conversion Cycle is one of several measures of management effectiveness. It equals Days Sales Outstanding + Days Inventory - Days Payable.

Shopify's Days Sales Outstanding for the three months ended in Sep. 2022 was 32.16.
Shopify's Days Inventory for the three months ended in Sep. 2022 was 0.
Shopify's Days Payable for the three months ended in Sep. 2022 was 65.83.
Therefore, Shopify's Cash Conversion Cycle (CCC) for the three months ended in Sep. 2022 was -33.67.


Shopify Cash Conversion Cycle Historical Data

The historical data trend for Shopify's Cash Conversion Cycle can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Shopify Annual Data
Trend Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21
Cash Conversion Cycle
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -30.31 -16.39 -13.72 -12.48 -12.75

Shopify Quarterly Data
Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22
Cash Conversion Cycle Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -19.72 -10.66 -22.80 -28.20 -33.67

Competitive Comparison

For the Software - Application subindustry, Shopify's Cash Conversion Cycle, along with its competitors' market caps and Cash Conversion Cycle data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

   

Shopify Cash Conversion Cycle Distribution

For the Software industry and Technology sector, Shopify's Cash Conversion Cycle distribution charts can be found below:

* The bar in red indicates where Shopify's Cash Conversion Cycle falls in comparison to its industry or sector. The grey bar indicates the Cash Conversion Cycle's extreme value range as defined by GuruFocus.



Shopify Cash Conversion Cycle Calculation

Cash Conversion Cycle (CCC) measures how fast a company can convert cash on hand into even more cash on hand. This metric looks at the amount of time needed to sell inventory, the amount of time needed to collect receivables and the length of time the company is afforded to pay its bills without incurring penalties.

Cash Conversion Cycle is one of several measures of management effectiveness.

Shopify's Cash Conversion Cycle for the fiscal year that ended in Dec. 2021 is calculated as

Cash Conversion Cycle=Days Sales Outstanding +Days Inventory-Days Payable
=26.03+0-38.78
=-12.75

Shopify's Cash Conversion Cycle for the quarter that ended in Sep. 2022 is calculated as:

Cash Conversion Cycle=Days Sales Outstanding+Days Inventory-Days Payable
=32.16+0-65.83
=-33.67

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Shopify  (NYSE:SHOP) Cash Conversion Cycle Explanation

Generally, the lower this number is, the better for the company. Although it should be combined with other metrics (such as ROE % and ROA %), it can be especially useful for comparing close competitors, because the company with the lowest CCC is often the one with better management.


Be Aware

CCC is most effective with retail-type companies, which have inventories that are sold to customers. Consulting businesses, software companies and insurance companies are all examples of companies for whom this metric is meaningless.

The CCC is one of several tools that can help you evaluate management, especially if it is calculated for several consecutive time periods and for several competitors. Decreasing or steady CCCs are good, while rising ones should motivate you to dig a bit deeper.


Shopify Cash Conversion Cycle Related Terms

Thank you for viewing the detailed overview of Shopify's Cash Conversion Cycle provided by GuruFocus.com. Please click on the following links to see related term pages.


Shopify (NYSE:SHOP) Business Description

Shopify logo
Traded in Other Exchanges
Address
151 O'Connor Street, Ground Floor, Ottawa, ON, CAN, K2P2L8
Shopify offers an e-commerce platform primarily to small and midsize businesses. The firm has two segments: subscription solutions (43% of fiscal 2018 revenue) and merchant solutions (57% of fiscal 2018 revenue). The subscription solutions segment allows Shopify merchants to conduct e-commerce on a variety of platforms, including the company's website, physical stores, pop-up stores, kiosks, social networks (Facebook), and Amazon. Merchant solutions are add-on products for the platform that facilitate e-commerce and include Shopify Payments, Shopify Shipping, and Shopify Capital.

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