IPG Photonics Corporation (IPGP)
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 | 222.15 | 212.69 | 219.99 | 201.33 | 196.21 |
| Days of sales outstanding (DSO) | days | 69.49 | 64.41 | 74.73 | 101.60 | 77.01 |
| Number of days of payables | days | 14.01 | 19.30 | 26.66 | 14.20 | 14.08 |
| Cash conversion cycle | days | 277.63 | 257.80 | 268.06 | 288.72 | 259.13 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 222.15 + 69.49 – 14.01
= 277.63
The cash conversion cycle of IPG Photonics Corp has shown fluctuations over the past five years. It increased from 248.34 days in 2019 to 270.24 days in 2023, reaching its peak in the most recent year. This indicates that the company takes longer to convert its investments in inventory into cash receipts from sales.
In general, a longer cash conversion cycle may suggest inefficiencies in managing inventory, collecting receivables, or delaying payment of payables. It could also reflect potential issues with liquidity and cash flow management.
It is important for IPG Photonics Corp to closely monitor and manage its cash conversion cycle to optimize working capital efficiency and ensure sufficient liquidity to meet its operational needs. Implementing strategies to shorten the cycle, such as improving inventory turnover, streamlining receivables collection, and extending payables payment terms, could help enhance the company's financial health and performance in the long run.
Peer comparison
Dec 31, 2023