Fulgent Genetics Inc (FLGT)
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 | 11.51 | 6.20 | 20.67 | 67.02 | 7.17 |
| Days of sales outstanding (DSO) | days | 66.20 | 42.80 | 51.60 | 174.55 | 73.73 |
| Number of days of payables | days | 30.34 | 33.44 | 34.71 | 107.65 | 40.91 |
| Cash conversion cycle | days | 47.36 | 15.56 | 37.56 | 133.92 | 39.99 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 11.51 + 66.20 – 30.34
= 47.36
The cash conversion cycle for Fulgent Genetics Inc has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle was 34.19 days, indicating that it takes approximately 34 days for Fulgent Genetics to convert its investments in inventory into cash from sales. This represents an increase from 17.05 days in 2022 but is still more efficient than the cycle in 2021, which was 38.57 days.
The significant improvement in the cash conversion cycle in 2022 compared to 2021 suggests that Fulgent Genetics managed its inventory, accounts receivable, and accounts payable more effectively during that period. However, the cycle lengthened again in 2023, indicating a potential challenge in managing working capital efficiently during that year.
The drastic increase to 134.80 days in 2020 was a concerning sign as it indicated that the company took much longer to convert its investments in inventory into cash, which could have been due to various factors such as delays in receiving payments from customers, inefficient inventory management, or extended payment terms for suppliers. The quick improvement to 45.36 days in 2019 reflects a positive shift in the company's working capital management compared to the challenging year of 2020.
Overall, the trend in Fulgent Genetics Inc's cash conversion cycle suggests fluctuations in the efficiency of its working capital management over the years, with the company experiencing both improvements and setbacks in converting its operating cycle into cash inflows.
Peer comparison
Dec 31, 2023