ADEIA CORP (ADEA)

Cash conversion cycle

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021
Days of inventory on hand (DOH)	days	13.00	—	8.44	—	—	3.12	4.15	3.82	2.95	6.67	6.47	5.80
Days of sales outstanding (DSO)	days	107.56	114.88	97.60	100.38	109.96	198.70	162.23	119.42	106.10	120.81	144.79	159.63
Number of days of payables	days	17.71	—	13.63	2.95	5.24	8.67	8.02	6.66	0.26	11.36	9.94	16.49
Cash conversion cycle	days	102.84	114.88	92.41	97.44	104.72	193.14	158.36	116.58	108.79	116.11	141.32	148.94

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 13.00 + 107.56 – 17.71
= 102.84

The cash conversion cycle is a key metric that indicates how efficiently a company manages its working capital. It represents the number of days it takes for a company to convert its investments in inventory and other resources back into cash.

ADEIA CORP's cash conversion cycle has fluctuated over the past few quarters. The trend indicates that the company's efficiency in managing its working capital has varied. A lower cash conversion cycle is generally preferred as it signifies that the company is able to quickly sell its inventory and collect cash from customers.

In the most recent quarter, the cash conversion cycle was 102.84 days, which was slightly higher than the previous quarter's value of 114.88 days. This increase suggests that ADEIA CORP took longer to convert its investments in inventory and accounts receivable back into cash.

Looking back at historical data, ADEIA CORP's cash conversion cycle has shown some volatility, with significant fluctuations in certain quarters. For instance, in the third quarter of 2022, the cash conversion cycle spiked to 193.14 days, indicating potential challenges in managing working capital efficiently during that period.

Overall, ADEIA CORP should focus on optimizing its cash conversion cycle to improve its liquidity and operational efficiency. Implementing better inventory management practices, speeding up accounts receivable collection, and negotiating favorable payment terms with suppliers could help reduce the cash conversion cycle and enhance the company's financial performance.