FormFactor Inc (FORM)

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	74.63	73.84	68.42	66.00	62.53
Days of sales outstanding (DSO)	days	51.24	43.20	54.98	56.65	60.89
Number of days of payables	days	42.67	41.55	35.49	41.27	30.73
Cash conversion cycle	days	83.20	75.48	87.91	81.38	92.69

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 74.63 + 51.24 – 42.67
= 83.20

The cash conversion cycle of FormFactor Inc has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle was 83.20 days, a slight increase from the prior year. This metric indicates the average number of days it takes for FormFactor Inc to convert its investments in inventory and other resources into cash inflows from sales, then back into cash payments for inventory or other expenses.

Compared to 2022, the increase in the cash conversion cycle in 2023 may suggest that FormFactor Inc took longer to convert its resources into cash during the year. This could be influenced by changes in inventory management, sales practices, or payment terms with suppliers and customers.

Despite the fluctuations seen in recent years, it is essential for FormFactor Inc to monitor and manage its cash conversion cycle effectively to ensure efficient use of its resources and optimize cash flows within the business operations. Addressing areas within the cycle that contribute to delays can help enhance overall financial performance and liquidity management going forward.