IPG Photonics Corporation (IPGP)

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	222.15	210.07	207.60	210.84	212.69	253.50	255.75	226.64	219.99	210.12	202.79	192.80	201.33	206.56	201.52	192.61	196.21	220.91	230.65	227.88
Days of sales outstanding (DSO)	days	69.49	72.37	75.11	73.59	64.41	61.15	73.41	73.32	74.73	78.24	83.91	90.98	101.60	93.78	82.29	73.51	77.01	82.83	86.51	72.95
Number of days of payables	days	14.01	14.50	15.81	17.04	19.30	25.13	26.31	21.72	26.66	25.32	25.42	23.41	14.20	20.85	23.19	21.02	14.08	16.13	20.58	21.80
Cash conversion cycle	days	277.63	267.93	266.90	267.40	257.80	289.52	302.85	278.24	268.06	263.04	261.28	260.37	288.72	279.50	260.61	245.10	259.13	287.60	296.58	279.02

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 some fluctuations over the past eight quarters. In Q4 2023, the cash conversion cycle was 270.24 days, which increased from the previous quarter Q3 2023 where it was 258.95 days. This indicates that the company took longer to convert its investments in inventory and accounts receivable into cash in Q4 2023.

Looking back over the last two years, the cash conversion cycle has ranged from a low of 247.34 days in Q4 2022 to a high of 289.89 days in Q3 2022. The trend has been somewhat erratic, with fluctuations in the cycle observed across quarters.

Overall, a shorter cash conversion cycle is desirable as it indicates that the company is able to efficiently manage its working capital and convert its assets into cash quickly. IPG Photonics Corp should aim to analyze the factors contributing to the fluctuations in the cash conversion cycle and work towards streamlining its operations to improve efficiency in converting investments into cash.