ON Semiconductor Corporation (ON)

Cash conversion cycle

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Days of inventory on hand (DOH)	days	211.66	204.71	193.95	180.72	176.41	173.88	164.43	153.79	138.89	137.57	140.30	134.87	125.08	122.36	125.26	130.46	129.06	133.36	132.64	128.84
Days of sales outstanding (DSO)	days	59.79	52.96	41.53	39.08	41.37	41.94	41.28	38.55	36.92	38.78	54.53	46.15	43.83	41.45	41.29	45.71	46.95	51.00	46.18	44.00
Number of days of payables	days	54.24	54.54	53.85	56.04	60.61	76.00	75.96	82.72	73.20	69.14	71.24	65.39	57.59	55.23	58.38	60.93	59.08	55.60	53.96	51.86
Cash conversion cycle	days	217.21	203.14	181.63	163.77	157.16	139.82	129.75	109.62	102.61	107.22	123.58	115.63	111.33	108.57	108.17	115.24	116.93	128.76	124.86	120.98

December 31, 2024 calculation

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

The cash conversion cycle of ON Semiconductor Corporation has shown fluctuations over the past few years. The company's cash conversion cycle measures the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

From March 31, 2020, to December 31, 2024, the cash conversion cycle ranged from a low of 102.61 days to a high of 217.21 days. Generally, a shorter cash conversion cycle indicates more efficient management of working capital and quicker cash generation from sales. Conversely, a longer cash conversion cycle suggests inefficiencies in managing inventory, accounts receivable, and accounts payable.

The trend in ON Semiconductor's cash conversion cycle is somewhat erratic, with fluctuations occurring from period to period. It is crucial for the company to analyze the reasons behind these fluctuations and take appropriate measures to streamline its working capital management. Improving inventory turnover, optimizing accounts receivable collection, and extending accounts payable payment terms may help in reducing the cash conversion cycle and enhancing liquidity management.

Monitoring and managing the cash conversion cycle effectively can contribute to the company's overall financial health and operational efficiency.