Proto Labs Inc (PRLB)
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 | 11.25 | 11.46 | 11.71 | 11.63 | 10.52 |
| Days of sales outstanding (DSO) | days | 62.25 | 59.85 | 60.92 | 49.09 | 45.71 |
| Number of days of payables | days | 12.88 | 14.64 | 22.57 | 19.55 | 17.54 |
| Cash conversion cycle | days | 60.62 | 56.66 | 50.06 | 41.17 | 38.69 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 11.25 + 62.25 – 12.88
= 60.62
Proto Labs Inc's cash conversion cycle has shown variability over the past five years. The trend indicates that the company has been taking longer to convert its investments in inventory into cash. The cash conversion cycle increased from 34.72 days in 2019 to 51.82 days in 2023, reflecting a negative impact on the company's cash flow efficiency.
The increase in the cash conversion cycle suggests that Proto Labs Inc may be facing challenges in managing its working capital effectively. A longer cash conversion cycle can tie up cash in inventory and accounts receivable, potentially reducing the company's liquidity and financial flexibility.
It is essential for Proto Labs Inc to closely monitor and manage its inventory levels, accounts receivable collection, and accounts payable to optimize the cash conversion cycle. Improving efficiency in converting inventory and receivables into cash can help enhance the company's overall financial health and potentially increase shareholder value.
Peer comparison
Dec 31, 2023