Flex Ltd (FLEX)

Cash conversion cycle

		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	Dec 31, 2019
Days of inventory on hand (DOH)	days	83.63	86.27	88.24	88.21	90.59	94.01	92.20	99.87	102.24	101.19	95.54	88.83	76.63	66.36	60.73	58.93	58.12	55.28	57.56	54.07
Days of sales outstanding (DSO)	days	48.98	39.93	39.58	45.04	46.47	45.58	45.27	48.61	50.75	—	47.46	50.31	—	—	62.31	63.84	60.24	51.73	36.78	44.01
Number of days of payables	days	78.70	69.83	63.54	68.50	72.41	73.58	71.43	84.48	90.22	93.52	90.81	89.33	86.72	81.36	81.81	82.19	81.22	72.93	77.67	79.70
Cash conversion cycle	days	53.91	56.37	64.28	64.75	64.65	66.01	66.04	64.00	62.77	7.67	52.19	49.80	-10.08	-14.99	41.24	40.58	37.14	34.08	16.66	18.37

September 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 83.63 + 48.98 – 78.70
= 53.91

The cash conversion cycle of Flex Ltd has shown some fluctuations over the past few quarters. The company's cash conversion cycle peaked at 66.04 days in the first quarter of 2023, indicating a longer period of time taken to convert its investments in inventory and other resources into cash inflows from sales.

However, the cash conversion cycle improved significantly to -10.08 days in the fourth quarter of 2021 and further to -14.99 days in the first quarter of 2022. A negative cash conversion cycle suggests that the company's payables are being settled before the collection of receivables, leading to a shorter operating liquidity cycle.

Subsequently, the cash conversion cycle increased to 64.75 days in the fourth quarter of 2023, indicating a reversal in the trend towards a longer operating cycle. Flex Ltd needs to focus on managing its working capital efficiently to reduce the time taken to convert its investments into cash flow from operations.

Overall, the cash conversion cycle of Flex Ltd has exhibited variability over the periods analyzed, highlighting the importance of closely monitoring working capital management practices to ensure optimal operational efficiency and liquidity.