Cognex Corporation (CGNX)

Cash conversion cycle

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Days of inventory on hand (DOH)	days	84.87	87.15	92.71	104.03	102.38	47.73	45.19	44.99	42.55	65.57	55.25	80.26	70.15	67.89	62.86	56.04	57.79	39.03	39.31	43.30
Days of sales outstanding (DSO)	days	58.35	66.33	70.63	61.79	51.55	55.28	61.41	—	46.38	—	—	—	47.38	—	—	—	—	—	—	—
Number of days of payables	days	20.50	16.83	13.33	16.72	13.53	8.22	9.35	9.53	9.42	13.42	11.72	26.27	27.32	22.41	29.64	19.14	15.46	15.55	13.36	12.75
Cash conversion cycle	days	122.72	136.65	150.01	149.10	140.40	94.79	97.25	35.46	79.51	52.15	43.53	53.99	90.22	45.48	33.22	36.90	42.34	23.47	25.95	30.55

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 84.87 + 58.35 – 20.50
= 122.72

The cash conversion cycle of Cognex Corporation fluctuated over the period from March 31, 2020, to December 31, 2024. The cash conversion cycle is a measure of how long it takes a company to convert its investments in inventory and other resources into cash flows from sales.

In the case of Cognex Corporation, the cash conversion cycle ranged from a low of 23.47 days on September 30, 2020, to a high of 150.01 days on June 30, 2024. A shorter cash conversion cycle indicates that the company is efficiently managing its inventory, accounts receivable, and accounts payable, leading to quicker conversion of investments into cash. Conversely, a longer cash conversion cycle may indicate inefficiencies in managing cash flows, potentially leading to working capital challenges.

Throughout the period analyzed, there were fluctuations in the cash conversion cycle, indicating changes in the company's working capital management efficiency. For instance, a significant increase in the cash conversion cycle from December 31, 2023, to June 30, 2024, suggests potential challenges in managing working capital during that period.

Overall, a detailed analysis of Cognex Corporation's cash conversion cycle trends can provide valuable insights into the company's operational efficiency, financial health, and working capital management practices.