Align Technology Inc (ALGN)

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	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Days of inventory on hand (DOH)	days	93.79	93.84	101.37	101.69	112.32	106.14	103.52	94.62	82.61	79.18	72.98	71.43	71.71	67.82	75.79	65.65	61.70	54.40	49.37	44.96
Days of sales outstanding (DSO)	days	98.96	86.69	88.72	87.14	97.75	81.20	85.25	86.10	82.85	83.09	84.90	93.20	97.91	102.23	83.57	85.64	90.98	89.41	94.31	84.16
Number of days of payables	days	35.74	31.59	35.71	42.57	42.40	45.95	48.62	64.02	58.81	66.87	91.89	58.94	73.20	65.67	54.84	39.44	48.04	36.33	37.70	41.04
Cash conversion cycle	days	157.02	148.95	154.39	146.26	167.67	141.39	140.16	116.70	106.66	95.40	65.98	105.69	96.42	104.38	104.52	111.84	104.64	107.48	105.98	88.09

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 fluctuated over the past eight quarters, indicating changes in the company's efficiency in managing its working capital.

In Q1 2022, the company had a relatively low cash conversion cycle of 128.92 days, which suggests that Align Technology was able to efficiently convert its inventory into cash. However, in the subsequent quarters, the cash conversion cycle increased, reaching a peak of 167.79 days in Q2 2023. This indicates that the company took longer to convert its investments in inventory into cash during that period.

In Q4 2023, the cash conversion cycle improved to 143.43 days compared to the previous quarter, which may suggest better management of accounts receivable and inventory. Overall, Align Technology should continue monitoring and managing its cash conversion cycle to ensure optimal efficiency in its working capital management.