Cohu Inc (COHU)
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 | 112.70 | 104.42 | 88.45 | 94.37 | 86.66 |
| Days of sales outstanding (DSO) | days | — | — | — | — | — |
| Number of days of payables | days | 24.31 | 31.77 | 46.81 | 44.98 | 32.29 |
| Cash conversion cycle | days | 88.39 | 72.65 | 41.64 | 49.39 | 54.37 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 112.70 + — – 24.31
= 88.39
The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. Cohu Inc's cash conversion cycle has shown some fluctuations over the past five years, indicating changes in the efficiency of its working capital management.
In 2023, the cash conversion cycle increased to 88.39 days from 72.65 days in 2022. This suggests that Cohu Inc took longer to convert its investments in inventory and receivables into cash during the most recent year. The increase may be attributed to factors such as slower inventory turnover or prolonged collection periods for receivables.
Comparing 2023 to earlier years, the cash conversion cycle was substantially higher than in 2021 when it stood at 41.64 days. This indicates a significant deterioration in efficiency in converting investments into cash over this period. However, the cycle in 2023 was still lower than in 2020 and 2019, when it reached 49.39 days and 54.37 days, respectively. This suggests that Cohu Inc's working capital management was less efficient in 2023 compared to 2021 but better than in the two preceding years.
Overall, Cohu Inc should continue monitoring its cash conversion cycle closely to identify areas where improvements can be made in working capital management efficiency. Efforts to reduce the cycle time can lead to enhanced liquidity and financial performance for the company in the long run.
Peer comparison
Dec 31, 2023