Garmin Ltd (GRMN)

Cash conversion cycle

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Days of inventory on hand (DOH)	days	143.85	155.42	142.22	147.12	157.50	172.80	173.47	186.92	193.35	208.58	197.98	181.70	173.79	149.81	129.88	126.79	120.40	137.31	141.90	136.46
Days of sales outstanding (DSO)	days	57.15	56.17	52.19	46.24	56.63	51.57	52.87	—	49.43	47.84	51.46	43.27	62.17	47.51	55.44	46.30	74.20	61.12	51.29	47.75
Number of days of payables	days	35.07	38.61	35.77	27.46	29.70	32.17	31.40	26.39	27.11	36.55	43.51	40.56	52.39	42.87	42.06	37.95	40.90	39.36	33.71	34.59
Cash conversion cycle	days	165.93	172.98	158.64	165.90	184.43	192.20	194.94	160.53	215.67	219.87	205.93	184.42	183.57	154.46	143.26	135.14	153.70	159.07	159.48	149.62

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 143.85 + 57.15 – 35.07
= 165.93

The cash conversion cycle measures the time it takes for a company like Garmin Ltd to convert its investments in inventory and other resources into cash flows from sales. The trend analysis of Garmin's cash conversion cycle from March 31, 2020, to December 31, 2024, reveals fluctuations in the efficiency of Garmin's working capital management.

The cash conversion cycle for Garmin started at 149.62 days on March 31, 2020, and reached a peak of 219.87 days on September 30, 2022, before gradually declining. By December 31, 2024, the cash conversion cycle decreased to 165.93 days. This trend indicates fluctuations in managing inventory, accounts receivable, and accounts payable over the analyzed period.

Overall, Garmin's cash conversion cycle experienced periods of both improvement and deterioration. A lower cash conversion cycle indicates faster conversion of investments into cash, which can improve liquidity and operational efficiency. On the other hand, a higher cash conversion cycle may suggest inefficiencies in the company's working capital management. Further analysis of the underlying reasons for these fluctuations would provide insights into Garmin's financial health and operational effectiveness.