Cognex Corporation (CGNX)

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	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
Days of sales outstanding (DSO)	days	51.58	55.31	61.44	—	46.38	—	—	—	47.38	—	—	—	—	—	—	—	—	—	—	—
Number of days of payables	days	15.83	8.95	10.19	10.38	9.42	13.42	11.72	26.27	27.32	22.41	29.64	19.14	15.46	15.55	13.36	12.75	16.38	11.72	10.44	18.19
Cash conversion cycle	days	155.51	98.35	100.50	38.60	79.51	52.15	43.53	53.99	90.22	45.48	33.22	36.90	42.34	23.47	25.95	30.55	38.88	48.19	54.42	52.00

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 119.76 + 51.58 – 15.83
= 155.51

The cash conversion cycle of Cognex Corp. has exhibited some fluctuations over the past eight quarters. The trend indicates a general increase over the quarters studied, starting at 146.95 days in Q2 2022 and reaching a peak of 268.33 days in Q4 2023. This suggests a potential slowdown in the company's ability to convert its resources into cash efficiently.

The cash conversion cycle measures how long it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A longer cash conversion cycle may indicate inefficiencies in managing inventory, collecting receivables, or paying creditors, which can potentially lead to reduced liquidity and profitability.

Cognex Corp. should monitor its cash conversion cycle closely and strive to optimize its working capital management to improve operational efficiency and financial performance. A focus on reducing the cycle time by streamlining processes related to inventory management, accounts receivable, and payables could enhance the company's overall financial health.