Photronics Inc (PLAB)

Cash conversion cycle

		Jan 28, 2024	Oct 31, 2023	Jul 30, 2023	Apr 30, 2023	Jan 29, 2023	Oct 31, 2022	Jul 31, 2022	May 1, 2022	Jan 30, 2022	Oct 31, 2021	Aug 1, 2021	May 2, 2021	Jan 31, 2021	Oct 31, 2020	Aug 2, 2020	May 3, 2020	Feb 2, 2020	Oct 31, 2019	Jul 28, 2019	Apr 28, 2019
Days of inventory on hand (DOH)	days	29.26	29.01	32.98	32.86	42.48	41.33	40.94	48.40	39.70	36.08	35.50	38.19	38.88	39.20	37.46	39.95	35.29	36.11	31.65	28.70
Days of sales outstanding (DSO)	days	93.39	90.56	86.06	89.13	94.70	86.10	92.32	—	86.98	107.48	—	—	84.51	90.40	—	—	—	—	—	—
Number of days of payables	days	50.19	48.79	60.46	55.43	68.25	64.80	66.91	65.44	60.80	53.24	50.51	56.41	48.85	51.59	64.70	53.50	60.18	68.52	69.60	66.27
Cash conversion cycle	days	72.46	70.79	58.57	66.56	68.93	62.63	66.35	-17.04	65.87	90.32	-15.01	-18.22	74.54	78.01	-27.24	-13.55	-24.89	-32.41	-37.96	-37.57

January 28, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 29.26 + 93.39 – 50.19
= 72.46

The cash conversion cycle of Photronics, Inc. has shown a fluctuating trend over the past eight quarters. In Q2 2022, the company had the longest cash conversion cycle of 78.71 days, indicating that it took the company nearly 79 days to convert its investments in inventory and accounts receivable into cash. From Q2 2022 to Q1 2024, the cash conversion cycle gradually decreased, reaching its lowest point of 55.00 days in Q3 2023.

A lower cash conversion cycle is generally preferred as it signifies that the company is efficiently managing its working capital. However, the increase in the cash conversion cycle in Q1 2024 to 59.11 days suggests potential challenges in efficiently converting investments into cash during that period.

It is important for Photronics, Inc. to analyze the components of the cash conversion cycle, such as days inventory outstanding, days sales outstanding, and days payables outstanding, to identify areas for improvement and enhance overall liquidity and operational efficiency. Regular monitoring and management of the cash conversion cycle are essential for maintaining a healthy cash flow within the organization.