Silicon Laboratories Inc (SLAB)

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	220.47	96.06	60.91	80.85	137.76
Days of sales outstanding (DSO)	days	13.67	25.46	49.78	67.99	58.27
Number of days of payables	days	65.24	85.96	58.46	92.82	73.35
Cash conversion cycle	days	168.89	35.56	52.23	56.01	122.68

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 220.47 + 13.67 – 65.24
= 168.89

The cash conversion cycle of Silicon Laboratories Inc has shown fluctuations over the past five years. It increased significantly in 2023 to 168.89 days from 35.56 days in 2022. This suggests that the company took longer to convert its investments in inventory back into cash during the year.

The substantial increase in the cash conversion cycle in 2023 may raise concerns about the company's efficiency in managing its working capital. A longer cash conversion cycle can tie up resources and potentially strain a company's liquidity position.

It is important for Silicon Laboratories Inc to closely monitor its cash conversion cycle and work towards reducing it in order to improve cash flow efficiency and overall financial performance. This may involve optimizing inventory management, streamlining accounts receivable collection processes, and negotiating favorable payment terms with suppliers to shorten the cash conversion cycle in the future.