Cognex Corporation (CGNX)

Days of inventory on hand (DOH)

		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
Inventory turnover		3.05	7.02	7.41	7.45	8.58	5.57	6.61	4.55	5.20	5.38	5.81	6.51	6.32	9.35	9.28	8.43	6.61	6.09	5.63	5.20
DOH	days	119.76	52.00	49.24	48.98	42.55	65.57	55.25	80.26	70.15	67.89	62.86	56.04	57.79	39.03	39.31	43.30	55.26	59.91	64.86	70.19

December 31, 2023 calculation

DOH = 365 ÷ Inventory turnover
= 365 ÷ 3.05
= 119.76

Days of Inventory on Hand (DOH) is a crucial metric for Cognex Corp. that reflects the efficiency of managing its inventory levels. A higher number of days indicates a longer period of time that inventory sits before being sold, which may tie up financial resources and lead to potential obsolescence or storage costs.

Analyzing the trend in Cognex Corp.'s DOH over the past eight quarters, we observe fluctuations in the metric. The DOH has been on an upward trajectory, reaching a peak of 250.67 days in Q4 2023 compared to 157.31 days in Q4 2022. This increase might suggest a potential concern regarding the company's ability to efficiently convert inventory into sales.

The significant rise in inventory holding period from Q4 2022 to Q4 2023 indicates that Cognex Corp. may be experiencing challenges in managing its inventory levels effectively. It is crucial for the company to closely monitor and control its inventory to avoid excess accumulation that could impact its cash flow and profitability.

Further investigation into the underlying factors driving this increase in DOH is warranted to determine if it is a temporary anomaly or a persistent issue requiring strategic interventions. Effective inventory management practices are essential for Cognex Corp. to optimize its working capital, reduce carrying costs, and enhance overall operational efficiency in the long run.