Sensata Technologies Holding NV (ST)

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	93.25	90.27	86.95	88.20	86.79	92.81	92.46	91.35	84.45	79.50	75.53	78.15	77.68	77.43	85.36	83.31	81.56	81.42	79.23	78.01
Days of sales outstanding (DSO)	days	70.07	71.34	71.70	71.40	70.37	70.01	73.27	68.92	65.50	66.12	71.57	73.83	69.11	69.09	53.15	58.37	59.01	63.11	66.74	65.90
Number of days of payables	days	63.03	68.01	69.02	70.97	71.54	68.84	75.64	69.24	65.91	61.58	71.08	71.91	67.85	56.44	43.69	56.02	60.68	59.23	61.19	59.04
Cash conversion cycle	days	100.28	93.60	89.63	88.62	85.62	93.98	90.09	91.02	84.04	84.05	76.03	80.06	78.94	90.08	94.81	85.66	79.89	85.31	84.78	84.87

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 of Sensata Technologies Holding Plc has shown some fluctuations over the past eight quarters. It measures how long it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

In Q4 2023, the cash conversion cycle increased to 97.21 days from 90.92 days in Q3 2023. This indicates that the company took longer to convert its investments into cash compared to the previous quarter.

Looking at the trend over the past two years, there is a general upward trend in the cash conversion cycle, with some fluctuations in between. However, the cycle has remained above 80 days consistently, indicating that Sensata Technologies Holding Plc may be facing challenges in efficiently managing its working capital and turning its investments into cash quickly.

It is essential for the company to closely monitor and improve its inventory turnover, accounts receivable collection, and accounts payable payments to shorten the cash conversion cycle. A shorter cycle indicates that the company is managing its working capital effectively and generating cash flows more efficiently.