Lumentum Holdings Inc (LITE)
Cash conversion cycle
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 88.58 | 86.81 | 71.48 | 55.36 | 174.02 |
| Days of sales outstanding (DSO) | days | 0.78 | 1.41 | 0.87 | 0.89 | 0.98 |
| Number of days of payables | days | 28.08 | 35.99 | 44.79 | 32.95 | 138.92 |
| Cash conversion cycle | days | 61.28 | 52.23 | 27.56 | 23.30 | 36.08 |
June 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 88.58 + 0.78 – 28.08
= 61.28
The cash conversion cycle of Lumentum Holdings Inc has fluctuated over the past five years. In the most recent period, as of June 30, 2024, the company's cash conversion cycle was 61.28 days, representing an increase compared to the previous year. This indicates that it took Lumentum Holdings Inc longer to convert its investments in inventory and receivables back into cash during this period.
Comparing the current cycle to the figures from the previous years, there is a noticeable upward trend in the cash conversion cycle since 2020. In the most recent year, the company's cash conversion cycle was at its highest level over the five-year period analyzed. This trend suggests that Lumentum Holdings Inc may be facing challenges in efficiently managing its working capital and converting its assets into cash.
It is important for the company to closely monitor its cash conversion cycle as an extended cycle can tie up cash flow and impact liquidity. Analyzing the underlying factors contributing to the longer cash conversion cycle can help management identify areas for improvement in inventory management, accounts receivable collection, and payment policies. Working towards a more optimized cash conversion cycle can enhance the company's operational efficiency and financial performance in the long run.
Peer comparison
Jun 30, 2024