Flex Ltd (FLEX)

Cash conversion cycle

		Mar 31, 2024	Mar 31, 2023	Mar 31, 2022	Mar 31, 2021	Mar 31, 2020
Days of inventory on hand (DOH)	days	88.24	92.20	95.52	60.73	57.56
Days of sales outstanding (DSO)	days	42.28	45.26	47.47	62.46	36.72
Number of days of payables	days	63.54	71.43	90.79	81.80	77.67
Cash conversion cycle	days	66.98	66.03	52.20	41.38	16.60

March 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 88.24 + 42.28 – 63.54
= 66.98

Flex Ltd's cash conversion cycle has fluctuated over the past five years, ranging from a low of 16.60 days in 2020 to a high of 66.98 days in 2024. The cash conversion cycle represents the time it takes for a company to convert its investment in inventory into cash received from customers.

A longer cash conversion cycle indicates that the company is taking more time to sell its inventory and collect cash, which can tie up working capital. In Flex Ltd's case, the trend shows a gradual increase in the cash conversion cycle over the years, which may warrant further investigation into the company's sales and collection processes.

It is important for Flex Ltd to monitor and potentially improve its cash conversion cycle to ensure efficient use of its resources and maintain liquidity. Analyzing the factors contributing to the lengthening of the cycle can help identify areas for improvement and enhance the company's overall financial performance.