Power Integrations Inc (POWI)

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 276.25 238.75 229.33 203.81 173.90 143.11 125.67 112.42 105.74 98.61 103.42 117.62 153.44 170.57 173.48 162.74 159.16 164.92 168.35 158.97
Days of sales outstanding (DSO) days 12.05 21.71 22.76 13.06 11.68 8.39 14.27 15.72 21.48 20.82 24.12 27.92 26.84 23.77 10.56 17.04 21.06 24.76 24.25 19.07
Number of days of payables days 44.68 45.37 62.07 49.64 38.64 35.18 46.77 39.44 46.57 43.38 48.34 49.61 51.77 71.00 71.54 62.57 48.31 56.78 67.92 62.47
Cash conversion cycle days 243.62 215.09 190.01 167.23 146.94 116.32 93.18 88.70 80.65 76.05 79.21 95.94 128.51 123.35 112.50 117.21 131.91 132.90 124.68 115.57

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 a fluctuating trend over the past eight quarters. The company's cash conversion cycle has gradually increased from 88.70 days in Q1 2022 to 243.62 days in Q4 2023, indicating a lengthening time taken to convert its investments in inventory and accounts receivable into cash.

A rising cash conversion cycle suggests that Power Integrations Inc. is taking longer to sell its inventory and collect payment from customers, which could potentially strain its liquidity and working capital management. It might also indicate inefficiencies in the company's operations or challenges in managing its accounts receivable and inventory levels effectively.

It is crucial for Power Integrations Inc. to closely monitor and manage its cash conversion cycle to ensure optimal cash flow and working capital efficiency. Analyzing the reasons behind the prolonged cash conversion cycle and implementing strategies to streamline operations, improve inventory management, and expedite receivables collection could help the company enhance its overall financial performance and liquidity position.


Peer comparison

Dec 31, 2023