First Solar Inc (FSLR)

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	148.30	139.90	111.01	104.28	88.96	130.43	139.57	158.97	110.88	119.23	102.02	90.99	102.02	78.29	78.13	72.25	64.39	103.15	98.23	84.31
Days of sales outstanding (DSO)	days	147.64	89.49	83.32	38.92	45.20	47.06	66.91	43.05	53.62	34.53	71.67	96.69	39.41	30.94	39.07	46.12	78.76	81.75	58.27	107.31
Number of days of payables	days	37.47	17.56	36.09	39.66	48.88	30.29	27.72	27.65	32.18	31.31	25.09	30.77	32.96	21.22	23.94	26.17	31.66	39.00	40.62	40.69
Cash conversion cycle	days	258.47	211.83	158.25	103.54	85.28	147.20	178.76	174.37	132.32	122.45	148.59	156.91	108.48	88.00	93.26	92.20	111.49	145.90	115.89	150.93

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 significant fluctuations over the past eight quarters. The cycle peaked at 263.25 days in Q4 2023, indicating that it took the company approximately 263 days to convert its investments in raw materials into cash from sales. This signifies a significant elongation in the period between spending cash on inventory and receiving cash from selling products.

The trend in the cash conversion cycle indicates that First Solar Inc may be facing challenges in managing its working capital efficiently. The cycle decreased in Q3 2023 and Q2 2023 compared to the previous quarters, suggesting improvements in managing inventory, collecting receivables, and paying payables more effectively.

Overall, the cash conversion cycle for First Solar Inc has been fluctuating, with periods of improvement followed by increases. Analyzing this metric can help the company identify inefficiencies in its operations and work towards optimizing working capital management to improve cash flows and overall financial performance.