Benchmark Electronics Inc (BHE)

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	97.19	100.96	93.19	63.62	55.20
Days of sales outstanding (DSO)	days	57.78	62.21	57.65	55.07	52.39
Number of days of payables	days	52.23	58.86	75.97	54.85	53.10
Cash conversion cycle	days	102.74	104.31	74.87	63.84	54.49

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 97.19 + 57.78 – 52.23
= 102.74

Benchmark Electronics Inc.'s cash conversion cycle, a measure of how efficiently the company manages its working capital, has shown fluctuations over the past five years. The trend indicates an increasing cycle duration, from 54.50 days in 2019 to 102.74 days in 2023.

In 2023, it took Benchmark Electronics Inc. approximately 102.74 days to convert its investments in inventory, accounts receivable, and accounts payable into cash. This indicates a slower conversion process compared to previous years. The increase in the cash conversion cycle suggests inefficiencies in managing inventory levels, collection of receivables, and payment of payable obligations.

The company should focus on optimizing its inventory management, improving accounts receivable collection processes, and negotiating favorable payment terms with suppliers to potentially reduce the cash conversion cycle and enhance overall liquidity and operational efficiency.