Novanta Inc (NOVT)
Cash conversion cycle
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 79.19 | 81.25 | 85.27 | 87.61 | 89.80 | 87.43 | 86.63 | 82.90 | 78.25 | 81.21 | 67.69 | 66.47 | 69.42 | 73.62 | 76.07 | 78.05 | 80.99 | 83.61 | 79.85 | 75.98 |
| Days of sales outstanding (DSO) | days | 57.84 | 59.05 | 59.51 | 59.06 | 58.47 | 62.67 | — | — | 59.85 | — | — | — | 46.58 | — | — | — | — | — | — | — |
| Number of days of payables | days | 30.32 | 33.80 | 33.84 | 34.70 | 40.21 | 42.73 | 43.54 | 42.91 | 42.67 | 44.21 | 38.53 | 38.39 | 32.16 | 29.60 | 32.89 | 33.74 | 36.52 | 33.15 | 35.25 | 35.97 |
| Cash conversion cycle | days | 106.70 | 106.50 | 110.94 | 111.97 | 108.06 | 107.36 | 43.08 | 39.99 | 95.44 | 37.00 | 29.17 | 28.08 | 83.84 | 44.02 | 43.18 | 44.31 | 44.47 | 50.46 | 44.60 | 40.01 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 79.19 + 57.84 – 30.32
= 106.70
The cash conversion cycle of Novanta Inc has shown some variability over the past eight quarters, ranging from a high of 134.64 days in Q1 2023 to a low of 118.29 days in Q1 2022. The cash conversion cycle represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
A longer cash conversion cycle may indicate inefficiencies in managing inventory, collecting receivables, or paying suppliers, which can tie up a company's cash and affect its liquidity. On the other hand, a shorter cash conversion cycle implies that a company is efficiently managing its working capital and generating cash flows more quickly.
Novanta Inc's cash conversion cycle has generally been around 120-130 days, with some fluctuations both upward and downward. This suggests that the company may have some room for improvement in managing its working capital efficiency. Monitoring and potentially optimizing the components of the cash conversion cycle, such as inventory turnover, accounts receivable collection, and accounts payable turnover, could help Novanta Inc enhance its cash flow management and overall financial performance.
Peer comparison
Dec 31, 2023