Ichor Holdings Ltd (ICHR)

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 110.57 110.25 96.64 88.29 87.52 90.67 97.26 92.35 85.67 73.26 64.53 58.68 56.89 61.44 72.26 77.32 77.36 70.06 70.11 63.95
Days of sales outstanding (DSO) days 30.76 42.36 33.25 37.36 39.21 53.25 — — 47.89 42.39 42.96 41.73 40.70 44.74 49.35 46.14 50.75 50.09 26.03 28.38
Number of days of payables days 27.20 30.57 23.19 22.12 33.99 44.27 49.46 50.01 57.95 52.12 58.16 57.30 49.25 48.07 57.28 64.06 80.12 57.57 38.67 36.23
Cash conversion cycle days 114.13 122.05 106.70 103.53 92.74 99.65 47.79 42.35 75.61 63.53 49.33 43.11 48.34 58.11 64.32 59.40 47.99 62.58 57.47 56.09

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 110.57 + 30.76 – 27.20
= 114.13

Ichor Holdings Ltd's cash conversion cycle has shown fluctuations over the past years, indicating changes in the efficiency of its working capital management. The cash conversion cycle represents the time it takes for the company to convert its investments in inventory and accounts receivable into cash inflows from sales.

On Dec 31, 2023, the cash conversion cycle was 114.13 days, which increased compared to the previous quarter. This indicates that the company took longer to convert its investments in inventory and accounts receivable into cash during that period.

In analyzing the trend, we observe that the cash conversion cycle peaked at 122.05 days on Sep 30, 2023, reflecting a significant increase from the previous period. Subsequently, there was a slight improvement on Jun 30, 2023, with a cycle of 106.70 days.

Notably, on Jun 30, 2022, the cash conversion cycle was notably lower at 47.79 days, suggesting more efficient management of working capital during that period. This was followed by a remarkable decrease on Mar 31, 2022, with a cycle of 42.35 days.

Overall, the company has experienced fluctuations in its cash conversion cycle, indicating varying efficiency in managing its working capital and converting investments into cash. It is essential for Ichor Holdings Ltd to closely monitor and optimize its cash conversion cycle to ensure optimal liquidity and operational efficiency.