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.