Gentex Corporation (GNTX)

Cash conversion cycle

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	94.27	88.03	102.68	94.17	69.11
Days of sales outstanding (DSO)	days	46.60	51.09	52.59	52.67	61.60
Number of days of payables	days	36.35	40.33	38.53	29.28	25.89
Cash conversion cycle	days	104.52	98.78	116.74	117.56	104.82

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 94.27 + 46.60 – 36.35
= 104.52

The cash conversion cycle of Gentex Corporation has shown some fluctuations over the years based on the provided data. In December 31, 2020, the company's cash conversion cycle was 104.82 days, which increased to 117.56 days by December 31, 2021. Subsequently, by December 31, 2022, the cash conversion cycle decreased slightly to 116.74 days. In the following year, by December 31, 2023, there was a noteworthy improvement as the cycle decreased to 98.78 days. However, in the most recent year ending December 31, 2024, the cash conversion cycle rose again to 104.52 days.

It is important to note that the cash conversion cycle indicates the effectiveness of the company's management in managing its operations, specifically in terms of managing its inventory, accounts receivable, and accounts payable. A longer cash conversion cycle may indicate that the company is taking longer to convert its investments in inventory and accounts receivable into cash, which could result in liquidity challenges. On the other hand, a shorter cash conversion cycle is generally favorable as it signifies that the company is efficiently managing its working capital.

Overall, Gentex Corporation's cash conversion cycle has shown variability over the years, and management should continue to focus on optimizing this cycle to enhance the company's overall operational efficiency and financial performance.