Norwegian Cruise Line Holdings Ltd (NCLH)

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	7.55	8.49	13.48	5.55	5.44
Days of sales outstanding (DSO)	days	13.14	30.45	657.62	6.46	4.43
Number of days of payables	days	8.35	13.05	26.59	5.60	5.74
Cash conversion cycle	days	12.34	25.88	644.50	6.41	4.13

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 7.55 + 13.14 – 8.35
= 12.34

The cash conversion cycle for Norwegian Cruise Line Holdings Ltd has shown significant fluctuations over the past five years. In 2021, the company experienced a notably extended cash conversion cycle of 557.44 days, indicating a prolonged time it took to convert its investments in inventory and other resources into cash from sales. This could be attributed to various factors such as economic conditions, industry trends, or specific company strategies.

In contrast, in 2020, the cash conversion cycle decreased substantially to 5.21 days, reflecting a more efficient management of working capital during that period. This improvement may have been driven by enhanced inventory management, quicker collection of receivables, or better payment terms with suppliers.

The years 2019 and 2022 also displayed relatively low cash conversion cycle figures of 2.34 days and 2.26 days, respectively, suggesting the company's ability to swiftly convert its resources into cash.

Furthermore, in 2023, the cash conversion cycle increased to 8.33 days, indicating a slight lengthening of the conversion process compared to the previous year. This change may warrant further investigation into the company's working capital management practices and operational efficiency.

Overall, the fluctuating trends in Norwegian Cruise Line Holdings Ltd's cash conversion cycle signal the importance of closely monitoring working capital dynamics and implementing strategies to optimize cash flow and operational efficiency.