First Solar Inc (FSLR)

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	148.30	88.96	110.88	102.02	64.39
Days of sales outstanding (DSO)	days	147.64	45.20	53.62	39.41	78.76
Number of days of payables	days	37.47	48.88	32.18	32.96	31.66
Cash conversion cycle	days	258.47	85.28	132.32	108.48	111.49

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 148.30 + 147.64 – 37.47
= 258.47

The cash conversion cycle of First Solar Inc has shown variability over the past five years. In 2023, the cash conversion cycle increased significantly to 263.25 days compared to 89.55 days in 2022. This indicates that the company took longer to convert its investments in inventory and other resources back into cash during 2023.

The increase in the cash conversion cycle can be attributed to either a decrease in the efficiency of inventory management, longer accounts receivable collection periods, or a delay in paying accounts payable. This may suggest potential operational challenges or changes in the company's working capital management.

In contrast, the cash conversion cycle was at its lowest in 2022 at 89.55 days, indicating a more efficient management of working capital during that period. However, in 2021 and 2019, the cash conversion cycle was also relatively high at 135.47 days and 125.39 days respectively, indicating prolonged cash conversion periods compared to 2020.

Overall, First Solar Inc should continue to monitor and potentially improve its cash conversion cycle to ensure efficient working capital management and cash flow generation in the future.