Photronics Inc (PLAB)

Days of sales outstanding (DSO)

		Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019
Receivables turnover		4.03	4.24	3.40	4.03	4.09
DSO	days	90.56	86.11	107.48	90.49	89.33

October 31, 2023 calculation

DSO = 365 ÷ Receivables turnover
= 365 ÷ 4.03
= 90.56

The days of sales outstanding (DSO) ratio measures the average number of days it takes for a company to collect revenue after making a sale. A lower DSO indicates a shorter collection period and better liquidity management.

Analyzing Photronics, Inc.'s DSO over the past five years, there is a noticeable decrease from 2021 to 2023, indicating an improvement in the company's collection efficiency. This reduction suggests that Photronics, Inc. has been able to collect its accounts receivable at a faster pace, which may be attributed to enhanced credit and collection policies or a more efficient sales process.

The relatively high DSO in 2021 and 2019 may have been due to slower collections, potentially caused by changes in customer payment behavior, economic conditions, or ineffective credit and collection practices. However, with the subsequent decrease in DSO, it appears that Photronics, Inc. has taken measures to address these issues, leading to enhanced cash flow and a more efficient operating cycle.

Overall, the trend in DSO indicates that Photronics, Inc. has made improvements in managing its accounts receivable, which can positively impact its cash flow and working capital management. This suggests a potential strengthening of the company's financial position and operational efficiency.