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.