Align Technology Inc (ALGN)

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	93.79	112.32	82.61	71.71	61.70
Days of sales outstanding (DSO)	days	98.96	97.75	82.85	97.91	90.98
Number of days of payables	days	35.74	42.40	58.81	73.20	48.04
Cash conversion cycle	days	157.02	167.67	106.66	96.42	104.64

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 93.79 + 98.96 – 35.74
= 157.02

The cash conversion cycle of Align Technology, Inc. has exhibited fluctuations over the past five years. In 2023, the company's cash conversion cycle decreased to 143.43 days from 153.94 days in 2022. This indicates that the company took fewer days to convert its investments in inventory and other resources into cash receipts from sales.

Comparing to the prior years, in 2021, the cash conversion cycle increased significantly to 106.66 days, compared to 105.40 days in 2020 and 104.04 days in 2019. This increase suggests a potential issue in managing the company's working capital efficiently.

Overall, while the cash conversion cycle shows variability, it is essential for Align Technology, Inc. to continue monitoring and managing its working capital effectively to ensure optimal utilization of resources and maintain healthy cash flow operations.