Sensata Technologies Holding NV (ST)

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	93.25	86.79	84.45	77.68	81.56
Days of sales outstanding (DSO)	days	70.07	67.99	65.50	69.11	59.01
Number of days of payables	days	63.03	71.54	65.91	67.85	60.68
Cash conversion cycle	days	100.28	83.24	84.04	78.94	79.89

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 93.25 + 70.07 – 63.03
= 100.28

The cash conversion cycle is a key metric that reflects the efficiency of Sensata Technologies Holding Plc in converting its investments in inventory and receivables into cash.

Over the past five years, the trend in Sensata Technologies' cash conversion cycle has been fluctuating. Starting at 79.89 days in 2019, it increased to 80.96 days in 2021 before declining slightly to 78.94 days in 2020. However, in 2022 and 2023, the cash conversion cycle jumped to 82.50 days and 97.21 days, respectively.

A longer cash conversion cycle indicates that the company is taking more time to convert its inventory and receivables into cash, which may lead to liquidity challenges or increased financing costs. Conversely, a shorter cash conversion cycle suggests stronger liquidity and more efficient operations.

Sensata Technologies Holding Plc should further analyze the reasons behind the recent increase in its cash conversion cycle to identify opportunities for improvement in its working capital management and overall operational efficiency.