Littelfuse Inc (LFUS)
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 | 91.20 | 104.26 | 99.90 | 76.51 | 69.71 |
| Days of sales outstanding (DSO) | days | 45.34 | 45.43 | 49.14 | 59.01 | 50.02 |
| Number of days of payables | days | 33.35 | 39.70 | 49.77 | 43.29 | 34.44 |
| Cash conversion cycle | days | 103.20 | 109.98 | 99.26 | 92.23 | 85.29 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 91.20 + 45.34 – 33.35
= 103.20
The cash conversion cycle of Littelfuse Inc has shown a gradual increasing trend over the last five years, moving from 85.29 days in 2019 to 103.20 days in 2023. This indicates that the company is taking longer to convert its investments in inventory into cash receipts from sales.
The increase in the cash conversion cycle could be attributed to various factors such as a slowdown in inventory turnover, longer accounts receivable collection periods, or a decrease in accounts payable payment periods.
It is essential for Littelfuse Inc to monitor and manage its cash conversion cycle effectively as a longer cycle can tie up capital and negatively impact liquidity and working capital management. The company may need to focus on improving inventory management, streamlining accounts receivable processes, and negotiating favorable payment terms with suppliers to optimize the cash conversion cycle and enhance overall financial performance.
Peer comparison
Dec 31, 2023