L3Harris Technologies Inc (LHX)

Cash conversion cycle

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Jun 30, 2019
Days of inventory on hand (DOH)	days	29.18	28.91	21.45	20.09	28.15
Days of sales outstanding (DSO)	days	152.35	128.80	122.59	27.39	25.15
Number of days of payables	days	41.75	43.56	38.60	29.03	41.05
Cash conversion cycle	days	139.79	114.15	105.44	18.45	12.25

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 29.18 + 152.35 – 41.75
= 139.79

The cash conversion cycle of L3Harris Technologies Inc has shown a fluctuating trend over the past five years. In December 2023, the company's cash conversion cycle was 139.79 days, which represents a notable increase from the previous year's 114.15 days. This indicates that the company took longer to convert its investments in inventory into cash during the most recent period.

Comparing to the data from December 2022 to December 2021, there was also an increasing trend in the cash conversion cycle, showcasing a slowdown in the conversion of inventory and receivables into cash.

However, we observed a significant jump in the cash conversion cycle from December 2020 to December 2021, where it increased from 18.45 days to 105.44 days. This points towards a substantial change in the company's working capital management efficiency during that period.

Looking further back to June 2019, we can see that the cash conversion cycle was notably lower at 12.25 days, indicating the company's ability to convert its inventory and receivables into cash much more quickly during that timeframe.

In conclusion, the analysis demonstrates a fluctuating trend in L3Harris Technologies Inc's cash conversion cycle over the past five years, with periods of both improvement and deterioration in working capital management efficiency. This could suggest varying levels of effectiveness in managing the company's cash flows and working capital components during these distinct timeframes.