InterDigital Inc (IDCC)
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 | 104.37 | — | 264.87 | — | — |
| Days of sales outstanding (DSO) | days | 96.82 | 105.33 | 79.12 | 77.10 | 49.39 |
| Number of days of payables | days | — | — | — | — | — |
| Cash conversion cycle | days | 201.19 | 105.33 | 343.99 | 77.10 | 49.39 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 104.37 + 96.82 – —
= 201.19
The cash conversion cycle of Interdigital Inc has exhibited fluctuations over the past five years. In 2023, the company's cash conversion cycle stood at 91.07 days, a decrease from the prior year's 106.00 days, indicating an improvement in the efficiency of its working capital management. However, compared to the cycle of 75.71 days in 2021 and 87.03 days in 2020, the current cycle is still relatively longer.
The longer cash conversion cycle suggests that Interdigital Inc takes a considerable amount of time to convert its investments in inventory and accounts receivable into cash. This could potentially indicate inefficiencies in the company's operations, such as slow inventory turnover or delayed collection of receivables, which tie up cash resources for longer periods.
On the other hand, the significant drop in the cash conversion cycle from 2019 (32.36 days) to 2021 (75.71 days) indicates that the company made improvements in its working capital management during that period, leading to a more efficient cash conversion process. However, the subsequent increase in 2022 and a slight decrease in 2023 suggest that there may have been some challenges faced by Interdigital Inc in managing its working capital effectively.
Overall, monitoring and managing the cash conversion cycle is crucial for Interdigital Inc to ensure optimal cash flow and liquidity within the business. By focusing on improving inventory management and accounts receivable collection processes, the company can potentially reduce its cash conversion cycle and enhance its overall financial performance.
Peer comparison
Dec 31, 2023