FormFactor Inc (FORM)

Days of sales outstanding (DSO)

		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	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Receivables turnover		7.11	7.44	7.12	—	8.46	7.11	7.38	6.86	6.65	7.20	6.92	6.95	6.44	6.95	7.35	6.84	6.00	6.44	7.57	6.53
DSO	days	51.33	49.04	51.25	—	43.16	51.33	49.47	53.18	54.87	50.71	52.72	52.52	56.65	52.48	49.66	53.35	60.82	56.63	48.24	55.89

December 31, 2023 calculation

DSO = 365 ÷ Receivables turnover
= 365 ÷ 7.11
= 51.33

The Days Sales Outstanding (DSO) ratio measures the average number of days it takes for a company to collect payment from its customers after making a sale. A lower DSO indicates that the company is collecting payments more quickly, which is generally favorable as it shows efficient accounts receivable management.

Analyzing FormFactor Inc's DSO over the past few quarters, we can see some fluctuations in the metric. As of December 31, 2023, the DSO stands at 51.33 days, which is slightly higher compared to the previous quarter, September 30, 2023, where it was 49.04 days. This increase may signal a potential delay in collecting payments from customers during that period.

Looking further back, we observe a decrease in DSO from December 31, 2022 (43.16 days) to March 31, 2023, where the data is not available. This decline suggests that the company had improved its receivables turnover and was collecting payments more swiftly during the first quarter of 2023.

It is important for FormFactor Inc to closely monitor its DSO trend to ensure efficient cash flow management. Consistent increases in DSO could indicate issues with credit policies, collection efforts, or potentially encountering difficulties with customers' payments. Conversely, a decreasing trend in DSO could be indicative of effective accounts receivable management practices.

Overall, a stable or decreasing DSO trend would generally be viewed positively by stakeholders as it signifies effective management of accounts receivable and cash flow within the company. Monitoring DSO alongside other financial ratios and operational metrics can provide a comprehensive understanding of FormFactor Inc's liquidity and overall financial health.