ON Semiconductor Corporation (ON)

Cash conversion cycle

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Days of inventory on hand (DOH)	days	211.66	176.41	138.89	125.08	129.06
Days of sales outstanding (DSO)	days	59.79	41.37	36.92	43.83	46.95
Number of days of payables	days	54.24	60.61	73.20	57.59	59.08
Cash conversion cycle	days	217.21	157.16	102.61	111.33	116.93

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 211.66 + 59.79 – 54.24
= 217.21

Based on the provided data, ON Semiconductor Corporation's cash conversion cycle has witnessed fluctuations over the years. In December 2020, the cash conversion cycle stood at 116.93 days, indicating the number of days it takes for the company to convert its investments in inventory into cash receipts from customers.

By December 2021, the cash conversion cycle decreased to 111.33 days, implying an improvement in the efficiency of the company's working capital management. This trend continued in December 2022, with the cycle further declining to 102.61 days, suggesting ON Semiconductor Corporation was able to optimize its operations and convert inventory into cash more rapidly.

However, there was a significant increase in the cash conversion cycle by December 2023, reaching 157.16 days, which could signal challenges in managing inventory levels or delays in collecting cash from customers. Furthermore, by December 2024, the cycle further extended to 217.21 days, indicating a notable deterioration in the company's working capital efficiency.

Overall, ON Semiconductor Corporation's cash conversion cycle has experienced fluctuations, with periods of improvement followed by setbacks. It is crucial for the company to closely monitor and manage its inventory, accounts receivable, and accounts payable to enhance its working capital efficiency and maintain a healthy cash conversion cycle.