KLA-Tencor Corporation (KLAC)
Cash conversion cycle
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 281.99 | 248.92 | 218.13 | 207.42 | 195.34 |
| Days of sales outstanding (DSO) | days | 68.14 | 62.65 | 73.12 | 68.93 | 69.76 |
| Number of days of payables | days | 33.40 | 32.10 | 45.04 | 45.04 | 39.38 |
| Cash conversion cycle | days | 316.73 | 279.47 | 246.21 | 231.31 | 225.73 |
June 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 281.99 + 68.14 – 33.40
= 316.73
Over the past five years, KLA-Tencor Corporation's cash conversion cycle has displayed an increasing trend, indicating a longer period required to convert its investments in inventory and accounts receivable into cash.
In Jun 2020, the company had a cash conversion cycle of 225.73 days, which has gradually risen to 316.73 days by Jun 2024. This trend suggests that KLA-Tencor is taking longer to sell its inventory and collect payments from customers, which can impact its liquidity and working capital management.
A longer cash conversion cycle may indicate inefficiencies in managing inventory levels, slow collections from customers, or extended payment terms to suppliers. The company may need to review its inventory management practices, credit policies, and overall operational efficiency to optimize its cash conversion cycle and improve cash flow.
Overall, the increasing trend in KLA-Tencor Corporation's cash conversion cycle over the past five years warrants attention and potential strategic adjustments to enhance working capital efficiency and financial performance.
Peer comparison
Jun 30, 2024