Arrow Electronics Inc (ARW)
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 | 65.38 | 70.13 | 63.65 | 62.94 | 60.13 | 58.00 | 56.90 | 55.25 | 50.66 | 46.68 | 45.78 | 43.82 | 47.09 | 48.27 | 51.38 | 48.73 | 49.54 | 49.10 | 49.85 | 51.91 |
| Days of sales outstanding (DSO) | days | 134.92 | 112.55 | 112.39 | — | 121.15 | — | — | — | 117.77 | — | — | — | — | — | — | — | — | — | — | — |
| Number of days of payables | days | 126.93 | 109.81 | 104.84 | 102.25 | 118.25 | 108.85 | 106.69 | 108.37 | 115.95 | 97.44 | 96.01 | 94.25 | 113.70 | 102.18 | 104.64 | 97.36 | 100.39 | 86.62 | 86.56 | 83.86 |
| Cash conversion cycle | days | 73.38 | 72.87 | 71.19 | -39.30 | 63.04 | -50.85 | -49.79 | -53.11 | 52.48 | -50.76 | -50.23 | -50.44 | -66.61 | -53.91 | -53.26 | -48.63 | -50.85 | -37.53 | -36.71 | -31.96 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 65.38 + 134.92 – 126.93
= 73.38
The cash conversion cycle of Arrow Electronics Inc. has shown a gradual but consistent increase over the past eight quarters, indicating potentially less efficient management of cash flows and working capital during this period. The company's cash conversion cycle has ranged from a low of 57.14 days in Q1 2022 to a high of 73.38 days in Q4 2023.
The trend of increasing cash conversion cycle suggests that the company may be taking longer to convert its investments in inventory and accounts receivable into cash. A longer cash conversion cycle could potentially tie up more of the company's cash in working capital, which may have implications for liquidity and capital efficiency.
It is important for Arrow Electronics Inc. to closely monitor and manage its cash conversion cycle to ensure optimal utilization of resources and maintain healthy cash flows. Strategies to improve the cash conversion cycle may include streamlining inventory management, enhancing accounts receivable collection processes, and negotiating favorable payment terms with suppliers.
Peer comparison
Dec 31, 2023