Sensient Technologies Corporation (SXT)

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	167.13	168.75	169.93	205.90	267.09	341.49	567.79	510.30	499.70	460.62	428.38	457.45	485.76	689.14	670.61	649.62	754.80	668.01	652.30	648.81
Days of sales outstanding (DSO)	days	69.44	72.54	76.64	79.61	77.52	74.02	77.16	75.54	69.70	70.72	70.39	70.77	64.88	62.45	64.85	67.06	59.73	68.24	74.79	73.68
Number of days of payables	days	36.62	31.90	34.46	43.53	67.41	90.52	176.78	138.62	152.37	145.50	137.14	132.19	136.71	160.65	167.88	154.62	169.09	147.14	152.58	150.15
Cash conversion cycle	days	199.95	209.39	212.11	241.97	277.20	324.99	468.17	447.22	417.03	385.84	361.63	396.03	413.93	590.94	567.58	562.06	645.44	589.11	574.50	572.33

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 167.13 + 69.44 – 36.62
= 199.95

The cash conversion cycle of Sensient Technologies Corp. has exhibited some fluctuations over the past eight quarters. In the most recent quarter, Q4 2023, the cash conversion cycle stood at 239.42 days, a slight improvement compared to Q3 2023 which recorded 247.97 days.

Overall, the trend indicates a general increase in the cash conversion cycle from Q1 2022 to Q3 2023, where it peaked at 251.52 days. This suggests that Sensient Technologies Corp. may be taking longer to convert its investments in inventory back into cash during this period.

It is worth noting that there was a significant decline in the cash conversion cycle in Q3 2022 to 198.89 days, which was the lowest point in the data provided. However, the cycle increased in the subsequent quarters before showing some improvement in the most recent quarter, Q4 2023.

The cash conversion cycle is an important metric as it reflects the efficiency of a company's operations in managing its working capital. A longer cash conversion cycle may indicate inefficiencies in inventory management, accounts receivable collection, or accounts payable payment, which could lead to potential cash flow challenges. On the other hand, a shorter cycle indicates a more efficient use of resources. Sensient Technologies Corp. should continue to monitor and manage its cash conversion cycle effectively to optimize its working capital management.