Sensient Technologies Corporation (SXT)

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	167.13	165.74	499.70	485.76	519.84
Days of sales outstanding (DSO)	days	69.43	77.53	69.70	64.87	59.68
Number of days of payables	days	36.62	41.83	152.37	136.71	116.46
Cash conversion cycle	days	199.95	201.45	417.03	413.91	463.07

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 167.13 + 69.43 – 36.62
= 199.95

The cash conversion cycle of Sensient Technologies Corp. has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle was 239.42 days, slightly higher compared to 2022 when it was 239.13 days. This indicates that the company took slightly longer to convert its investments in inventory into cash during the most recent year.

However, when compared to 2021, there was a notable increase in the cash conversion cycle from 181.88 days to 239.42 days in 2023. This suggests that the company may have faced challenges in managing its working capital efficiently during 2022 and 2023.

In contrast, the cash conversion cycle decreased from 174.28 days in 2020 to 181.88 days in 2021, indicating an improvement in the management of inventory, accounts receivable, and accounts payable during the period.

Furthermore, compared to 2019, there was an increase in the cash conversion cycle from 190.61 days to 239.42 days in 2023. This suggests that the company's efficiency in managing its cash flow may have deteriorated over the past four years.

Overall, Sensient Technologies Corp. should focus on optimizing its cash conversion cycle to ensure effective management of its working capital and improve its overall financial performance.