Aptiv PLC (APTV)

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	44.98	50.51	48.83	42.55	40.08
Days of sales outstanding (DSO)	days	69.45	76.13	70.86	84.25	71.92
Number of days of payables	days	59.92	68.00	71.59	84.34	76.77
Cash conversion cycle	days	54.50	58.65	48.10	42.46	35.24

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 44.98 + 69.45 – 59.92
= 54.50

The cash conversion cycle for Aptiv PLC has shown a fluctuating trend over the past five years. The cycle indicates the number of days it takes for the company to convert its investments in inventory and other resources into cash inflows from sales.

In 2023, the cash conversion cycle increased to 52.18 days from the previous year's 56.23 days. This suggests that Aptiv took slightly longer to convert its resources into cash during this period. However, it is important to note that this metric can be influenced by various factors such as inventory management, accounts receivable collection, and accounts payable terms.

Comparing to the previous years, the cash conversion cycle was relatively higher in 2022, indicating possible inefficiencies in managing working capital. In 2021 and 2020, the cycle was below 50 days, showing an improvement in efficiency in converting resources into cash. The lowest cycle was recorded in 2019 at 35.24 days, indicating a swift conversion of investments into cash inflows.

It is essential for Aptiv PLC to monitor and manage its cash conversion cycle effectively to ensure optimal utilization of resources and maintain liquidity levels. Any significant deviations from the norm should be thoroughly analyzed to identify potential areas for improvement in working capital management.