Plexus Corp (PLXS)

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	148.40	143.49	147.44	150.45	154.39	205.05	219.82	205.70	272.92	149.84	131.38	114.35	113.08	111.64	183.08	176.18	114.95	113.64	92.62	100.54
Days of sales outstanding (DSO)	days	33.34	32.59	33.90	—	32.38	34.87	—	—	—	27.76	—	—	—	—	—	—	—	—	—	—
Number of days of payables	days	60.99	59.40	62.61	66.50	70.74	103.06	120.13	114.88	163.68	97.85	87.05	78.30	72.34	75.49	123.60	111.22	80.53	72.13	52.67	59.71
Cash conversion cycle	days	120.75	116.69	118.73	83.94	116.02	136.86	99.69	90.82	109.24	79.74	44.33	36.05	40.74	36.14	59.49	64.96	34.42	41.50	39.95	40.83

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 148.40 + 33.34 – 60.99
= 120.75

The cash conversion cycle of Plexus Corp has shown variability over the past few quarters, ranging from as low as 34.42 days to as high as 136.86 days. The cash conversion cycle measures the number of days it takes for a company to convert its investments in inventory and other resources into cash flows from sales to customers. A shorter cash conversion cycle indicates that the company is more efficient in managing its working capital.

In the recent quarter, ending December 31, 2023, Plexus Corp had a cash conversion cycle of 120.75 days, which was higher compared to the previous quarter but lower than the peak observed in the quarter ending September 30, 2022. This increase suggests that the company may be taking longer to convert its working capital into cash.

Analyzing the trend over the past year, the company experienced a significant drop in its cash conversion cycle in the quarter ending June 30, 2021, followed by fluctuations in subsequent quarters. The substantial decrease in the cash conversion cycle in the second quarter of fiscal year 2022 indicates improved efficiency in managing inventory and receivables.

Overall, Plexus Corp should continue monitoring its cash conversion cycle to ensure efficient working capital management, which can positively impact its liquidity and financial performance. Efforts to streamline operations, optimize inventory levels, and accelerate receivables collection could help in reducing the cash conversion cycle and enhance cash flow generation for the company.