Plexus Corp (PLXS)

Cash conversion cycle

		Sep 30, 2024	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020
Days of inventory on hand (DOH)	days	125.84	141.78	160.73	110.94	85.89
Days of sales outstanding (DSO)	days	28.27	28.42	34.87	27.76	25.59
Number of days of payables	days	58.19	58.69	80.79	72.45	58.08
Cash conversion cycle	days	95.92	111.51	114.81	66.25	53.40

September 30, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 125.84 + 28.27 – 58.19
= 95.92

The cash conversion cycle reflects how efficiently a company manages its working capital by measuring the time it takes to convert its investments in inventory and accounts receivable into cash. In the case of Plexus Corp, the cash conversion cycle has exhibited fluctuations over the past five years.

In the most recent fiscal year ending on September 30, 2024, Plexus Corp's cash conversion cycle stood at 95.92 days, indicating that it took the company approximately 96 days on average to convert its investments in inventory and accounts receivable into cash. This is a slight improvement compared to the prior year's figure of 111.51 days.

Looking back further, we can observe a general increasing trend in the cash conversion cycle for Plexus Corp from 66.25 days in 2021 to 114.81 days in 2022. However, there was a significant jump in efficiency in 2021 compared to 2020, as the cash conversion cycle decreased from 53.40 days to 66.25 days.

Overall, Plexus Corp's cash conversion cycle has shown some variability in recent years, with efforts to streamline working capital and enhance operational efficiency reflected in the fluctuations observed. The company may benefit from further scrutinizing its inventory management and accounts receivable processes to optimize its cash conversion cycle and improve liquidity management.