Benchmark Electronics Inc (BHE)

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	97.19	100.82	103.01	105.85	100.96	108.03	104.14	102.59	93.19	89.58	79.35	69.32	63.62	68.56	69.67	61.72	55.20	52.01	50.15	48.82
Days of sales outstanding (DSO)	days	57.78	60.33	59.96	57.25	62.21	63.17	63.44	58.44	57.65	53.38	50.52	49.50	55.07	54.90	53.37	53.40	52.39	52.73	53.05	57.86
Number of days of payables	days	52.23	53.12	56.84	57.37	58.86	75.57	78.23	77.11	75.97	75.12	72.63	63.48	54.85	54.90	58.35	57.58	53.10	48.70	59.01	57.51
Cash conversion cycle	days	102.74	108.03	106.13	105.73	104.31	95.63	89.35	83.92	74.87	67.84	57.24	55.34	63.84	68.55	64.69	57.54	54.49	56.05	44.19	49.17

December 31, 2023 calculation

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

The cash conversion cycle of Benchmark Electronics Inc. has shown a gradual increase over the past four quarters, indicating a lengthening time period between the company's cash outflows and inflows from its operating cycle.

In Q1 2022, the cash conversion cycle was at its lowest point, standing at 83.92 days. However, it has been steadily increasing since then, reaching 108.03 days in Q3 2023. This suggests that Benchmark Electronics Inc. is taking longer to convert its investments in inventory and accounts receivable into cash.

A longer cash conversion cycle may indicate inefficiencies in the company's operations, such as slow inventory turnover or delayed collection of accounts receivable. It could also tie up more of the company's funds in working capital, which could impact its liquidity and overall financial health.

Management should closely monitor and analyze the components of the cash conversion cycle to identify areas for improvement and implement strategies to shorten the cycle, enhance cash flow efficiency, and optimize the company's working capital management.