PDF Solutions Inc (PDFS)

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	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Days of sales outstanding (DSO)	days	98.83	90.48	137.82	147.93	136.77	171.45	128.76	147.24	170.53	149.06	134.69	181.47	171.38	194.36	157.11	198.01	204.93	197.42	296.25	324.80
Number of days of payables	days	18.06	19.09	17.11	47.54	48.67	39.61	26.65	32.83	45.87	27.66	63.35	9.06	43.67	22.44	28.64	51.69	83.26	23.56	18.33	23.49
Cash conversion cycle	days	80.77	71.39	120.71	100.39	88.10	131.84	102.11	114.41	124.66	121.39	71.34	172.41	127.70	171.92	128.46	146.32	121.66	173.86	277.92	301.31

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 98.83 – 18.06
= 80.77

The cash conversion cycle is a key indicator of a company's efficiency in managing its working capital. It represents the time it takes for a company to convert its investments in inventory and other resources into cash inflows from sales. A shorter cash conversion cycle indicates that the company is able to generate cash more quickly from its operations.

Analyzing PDF Solutions Inc.'s cash conversion cycle over the past few quarters, we can observe fluctuations in the efficiency of its working capital management. In Q4 2023, the cash conversion cycle increased to 80.77 days from 71.39 days in Q3 2023, suggesting a potential slowdown in the company's ability to convert its investments into cash.

Looking further back, the cash conversion cycle was significantly higher at 120.71 days in Q2 2023, indicating a longer period for the company to realize cash from its operations. Q1 2023 showed an improvement with a cash conversion cycle of 62.67 days, reflecting a more efficient working capital management during that period.

Comparing these results to previous quarters, we can see a general trend of variability in PDF Solutions Inc.'s cash conversion cycle. It is essential for the company to monitor and improve this metric consistently to optimize its working capital management and enhance cash flow generation efficiency.