Amphenol Corporation (APH)
Cash conversion cycle
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 92.15 | 93.38 | 88.91 | 92.49 | 89.93 |
| Days of sales outstanding (DSO) | days | 78.84 | 76.12 | 76.09 | 82.38 | 82.84 |
| Number of days of payables | days | 65.86 | 58.21 | 55.59 | 64.07 | 68.92 |
| Cash conversion cycle | days | 105.13 | 111.29 | 109.40 | 110.81 | 103.84 |
December 31, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 92.15 + 78.84 – 65.86
= 105.13
The cash conversion cycle of Amphenol Corporation has shown a slight increase over the past five years, starting at 103.84 days at the end of 2020 and rising to 105.13 days by the end of 2024. This indicates that the company's efficiency in managing its working capital has experienced some fluctuations during this period.
The cash conversion cycle is a measure of how long it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A longer cash conversion cycle may suggest that the company is taking longer to recover its investment in working capital, which could potentially affect its liquidity and overall financial health.
Amphenol Corporation's cash conversion cycle hovering around 100 days indicates that the company may be facing challenges in managing its inventory, receivables, and payables effectively. It is crucial for the company to strive for a shorter cash conversion cycle to improve its cash flow management and efficiency in converting its resources into cash.
Overall, while the fluctuations in the cash conversion cycle may be normal for a company of Amphenol Corporation's size and industry, continuous monitoring and improvement in working capital management practices could help enhance its financial performance and stability in the future.