Harmonic Inc (HLIT)
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 | 66.83 | 96.86 | 67.32 | 41.14 | 34.58 |
| Days of sales outstanding (DSO) | days | 85.56 | 63.84 | 64.41 | 67.73 | 90.66 |
| Number of days of payables | days | 30.69 | 54.02 | 60.92 | 27.65 | 48.73 |
| Cash conversion cycle | days | 121.71 | 106.68 | 70.81 | 81.22 | 76.50 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 66.83 + 85.56 – 30.69
= 121.71
The cash conversion cycle of Harmonic, Inc. has exhibited fluctuations over the past five years. From 2019 to 2021, there was a decreasing trend in the cash conversion cycle, indicating an improvement in the company's efficiency in managing its working capital. However, in 2022 and 2023, there was an increase in the cash conversion cycle, suggesting a potential deterioration in working capital management.
In 2023, the cash conversion cycle stood at 141.11 days, which was higher than the previous year. This indicates that it took Harmonic, Inc. approximately 141 days to convert its investments in inventory and accounts receivable into cash. The increase in the cash conversion cycle could be attributed to factors such as longer inventory holding periods or slower collection of receivables.
Comparing the 2023 figure to that of 2019, where the cash conversion cycle was 56.05 days, there has been a significant elongation in the cycle over the five-year period. This suggests a potential inefficiency in managing working capital compared to previous years.
Overall, Harmonic, Inc. should focus on optimizing its inventory levels, streamlining accounts receivable collections, and managing accounts payable efficiently to reduce the cash conversion cycle and improve its liquidity position in the future.
Peer comparison
Dec 31, 2023