Power Integrations Inc (POWI)
Cash conversion cycle
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Days of inventory on hand (DOH) | days | 276.25 | 173.90 | 105.74 | 153.44 | 159.16 |
| Days of sales outstanding (DSO) | days | 12.05 | 11.68 | 21.48 | 26.84 | 21.06 |
| Number of days of payables | days | 44.68 | 38.64 | 46.57 | 51.77 | 48.31 |
| Cash conversion cycle | days | 243.62 | 146.94 | 80.65 | 128.51 | 131.91 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 276.25 + 12.05 – 44.68
= 243.62
The cash conversion cycle of Power Integrations Inc. has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle increased significantly to 243.62 days compared to 146.94 days in 2022. This indicates that the company took longer to convert its investments in inventory and accounts receivable into cash during the most recent year.
The increase in the cash conversion cycle in 2023 may be attributed to factors such as slower inventory turnover or longer accounts receivable collection periods. A longer cash conversion cycle can tie up funds in working capital and negatively impact the company's liquidity and overall financial health.
The fluctuations in the cash conversion cycle over the years suggest that Power Integrations Inc. may have experienced challenges in managing its working capital efficiently. It is important for the company to closely monitor and improve its inventory management, accounts receivable collection processes, and payment terms with suppliers to optimize its cash conversion cycle and enhance its financial performance.
Peer comparison
Dec 31, 2023