LCI Industries (LCII)

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	93.22	93.86	94.37	93.74	95.54	95.96	101.78	107.68	116.63	93.27	81.23	83.19	86.25	69.24	67.07	68.28	78.41	66.93	59.36	62.17
Days of sales outstanding (DSO)	days	20.71	32.19	27.23	27.38	15.02	22.19	27.38	40.28	26.10	35.65	41.18	47.17	35.07	44.37	42.12	42.05	30.78	28.93	22.11	27.09
Number of days of payables	days	22.29	23.58	20.77	17.51	13.32	17.86	25.35	32.31	30.03	35.08	33.68	36.15	32.30	32.92	25.36	26.84	19.77	19.99	17.61	17.20
Cash conversion cycle	days	91.64	102.48	100.84	103.62	97.24	100.28	103.82	115.65	112.70	93.84	88.73	94.22	89.02	80.69	83.83	83.48	89.41	75.87	63.87	72.05

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 93.22 + 20.71 – 22.29
= 91.64

The cash conversion cycle of LCI Industries has shown fluctuations over the past eight quarters, with values ranging from 91.64 days to 115.65 days. It is a measure of how long it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

A lower cash conversion cycle indicates that the company is able to efficiently manage its working capital and generate cash from its operational activities more quickly. In contrast, a higher cash conversion cycle suggests that the company may be experiencing challenges in converting its assets into cash, potentially indicating inefficiencies in inventory management or delays in collecting receivables.

Analyzing the trend over the quarters, we observe that there have been fluctuations in the cash conversion cycle, with some periods showing improvements while others have seen increases. For example, the cycle decreased from Q1 2022 to Q4 2022 before rising again in Q1 2023. This volatility may be indicative of changes in the company's operational efficiency, inventory management practices, or customer payment behaviors.

Overall, a thorough analysis of the factors contributing to the fluctuations in the cash conversion cycle, such as inventory turnover, accounts receivable collection efficiency, and accounts payable management, can provide valuable insights into the company's financial health and operational effectiveness.