Knowles Cor (KN)
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 | 164.53 | 159.73 | 163.61 | 176.00 | 134.41 | 150.52 | 138.41 | 128.26 | 109.87 | 107.96 | 113.80 | 102.18 | 96.75 | 120.76 | 119.68 | 113.04 | 98.43 | 108.00 | 113.16 | 115.87 |
| Days of sales outstanding (DSO) | days | 69.79 | 62.99 | 62.19 | 56.48 | 64.29 | 58.58 | 54.45 | 60.14 | 61.64 | 54.02 | 50.17 | 52.19 | 62.75 | 60.53 | 47.23 | 52.52 | 68.15 | 70.17 | 58.66 | 57.51 |
| Number of days of payables | days | 42.98 | 45.38 | 41.35 | 59.65 | 32.83 | 45.09 | 47.21 | 58.91 | 65.23 | 50.55 | 50.94 | 58.16 | 52.28 | 51.97 | 55.24 | 55.75 | 60.88 | 52.79 | 46.20 | 52.15 |
| Cash conversion cycle | days | 191.35 | 177.34 | 184.45 | 172.83 | 165.87 | 164.00 | 145.64 | 129.49 | 106.28 | 111.43 | 113.02 | 96.21 | 107.22 | 129.32 | 111.68 | 109.81 | 105.70 | 125.39 | 125.62 | 121.23 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 164.53 + 69.79 – 42.98
= 191.35
The cash conversion cycle is a measure of how efficiently Knowles Corp manages its working capital, which includes receivables, inventory, and payables. A shorter cash conversion cycle indicates that the company is able to quickly convert its investments in inventory and accounts receivable into cash.
Looking at the data provided, we can see that there has been some fluctuation in Knowles Corp's cash conversion cycle over the past eight quarters. The cycle ranged from a low of 129.49 days in Q1 2022 to a high of 191.40 days in Q4 2023.
In general, Knowles Corp's cash conversion cycle has been trending upward over the past two years, indicating that the company may be taking longer to convert its investments in inventory and receivables into cash. This could be a concerning trend as a longer cash conversion cycle may tie up capital and hinder liquidity.
Management should closely monitor and analyze the drivers of this trend, such as changes in inventory management practices, collection period for receivables, and payment period for payables. By identifying areas for improvement and implementing strategies to shorten the cash conversion cycle, Knowles Corp can enhance its working capital efficiency and overall financial health.
Peer comparison
Dec 31, 2023