FormFactor Inc (FORM)

Cash conversion cycle

		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
Days of inventory on hand (DOH)	days	79.95	75.04	78.04	73.78	73.84	81.16	89.87	78.20	68.49	69.57	68.56	67.39	66.00	66.15	64.13	58.22	63.44	68.77	67.50	67.67
Days of sales outstanding (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
Number of days of payables	days	45.71	41.40	41.37	40.36	41.55	46.12	38.16	40.71	35.53	39.24	38.26	43.58	41.27	43.98	32.38	29.59	31.18	40.76	21.13	25.66
Cash conversion cycle	days	85.57	82.68	87.92	33.42	75.45	86.37	101.18	90.67	87.83	81.04	83.01	76.33	81.38	74.65	81.42	81.98	93.09	84.64	94.61	97.90

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 79.95 + 51.33 – 45.71
= 85.57

FormFactor Inc's cash conversion cycle has shown fluctuations over the periods examined. The cash conversion cycle is a measure of how long it takes a company to convert its investments in inventory and other resources into cash flows from sales. A shorter cash conversion cycle indicates a more efficient management of working capital.

From December 2019 to December 2023, FormFactor Inc's cash conversion cycle ranged from 33.42 days to 101.18 days. The company experienced a peak in its cash conversion cycle in June 2022 at 101.18 days, indicating a longer period required to convert investments into cash. However, the company managed to improve its cycle significantly by December 2023, where it decreased to 85.57 days.

It is important for FormFactor Inc to maintain a balance between managing inventory levels, collecting receivables quickly, and managing payables effectively to optimize its cash conversion cycle. Overall, analyzing the trend of the cash conversion cycle can help assess the company's efficiency in managing its working capital and cash flow.