Knowles Cor (KN)
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 | 168.99 | 126.67 | 109.87 | 96.30 | 98.25 |
| Days of sales outstanding (DSO) | days | 69.79 | 64.29 | 61.64 | 62.75 | 68.15 |
| Number of days of payables | days | 44.14 | 30.94 | 65.23 | 52.04 | 60.76 |
| Cash conversion cycle | days | 194.64 | 160.03 | 106.28 | 107.02 | 105.63 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 168.99 + 69.79 – 44.14
= 194.64
The cash conversion cycle for Knowles Corp has shown a varying trend over the past five years. In 2023, the cash conversion cycle increased to 191.40 days from 166.79 days in 2022. This suggests that the company took longer to convert its investments in inventory and accounts receivable into cash during the most recent period.
Comparing the latest figure to previous years, it is significantly higher than the 106.28 days in 2021, 107.22 days in 2020, and 105.75 days in 2019. The rising trend indicates potential inefficiencies in managing the company's working capital components.
A higher cash conversion cycle may point to challenges in inventory management, collection of receivables, or delays in paying suppliers. It may also suggest that the company is facing liquidity constraints or experiencing slower sales turnover.
Management should focus on optimizing inventory levels, accelerating the collection of receivables, and efficiently managing payables to potentially shorten the cash conversion cycle and improve the company's overall liquidity position.
Peer comparison
Dec 31, 2023