Fabrinet (FN)
Cash conversion cycle
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 66.91 | 82.13 | 102.52 | 92.93 | 77.67 |
| Days of sales outstanding (DSO) | days | 75.01 | 73.38 | 70.88 | 65.36 | 66.02 |
| Number of days of payables | days | 63.82 | 60.25 | 80.90 | 76.29 | 63.09 |
| Cash conversion cycle | days | 78.09 | 95.26 | 92.50 | 82.00 | 80.61 |
June 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 66.91 + 75.01 – 63.82
= 78.09
The cash conversion cycle of Fabrinet has shown fluctuations over the past five years. In the most recent financial year, ending June 30, 2024, the company's cash conversion cycle decreased to 78.09 days. This represents an improvement compared to the prior year's figure of 95.26 days. However, it is worth noting that the cash conversion cycle was even lower in the fiscal year ending June 30, 2021, at 82.00 days.
The cash conversion cycle is a crucial metric that reflects the efficiency with which a company manages its working capital. A shorter cash conversion cycle indicates that Fabrinet is able to convert its investments in inventory and receivables into cash more quickly. This improvement in cash conversion cycle could suggest better inventory management or more efficient collection of receivables in the most recent fiscal year.
Overall, while there have been fluctuations in Fabrinet's cash conversion cycle over the past five years, the recent decrease to 78.09 days is a positive sign for the company's working capital management. Continuing to monitor and improve this metric can contribute to enhanced liquidity and financial performance for Fabrinet in the future.
Peer comparison
Jun 30, 2024