TE Connectivity Ltd (TEL)
Cash conversion cycle
Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
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Days of inventory on hand (DOH) | days | 73.90 | 78.27 | 79.60 | 78.85 | 71.13 | 76.45 | 76.62 | 81.39 | 75.42 | 88.85 | 89.69 | 86.28 | 76.70 | 74.46 | 70.62 | 65.41 | 63.73 | 73.22 | 63.27 | 67.63 |
Days of sales outstanding (DSO) | days | 70.54 | 66.93 | 66.58 | 64.73 | 67.88 | 67.22 | 67.92 | 65.45 | 64.49 | 72.92 | 72.57 | 68.45 | 71.89 | 76.06 | 81.84 | 77.17 | 71.49 | 64.34 | 69.01 | 64.51 |
Number of days of payables | days | 50.74 | 48.74 | 46.35 | 47.88 | 43.56 | 44.11 | 45.74 | 48.69 | 44.90 | 56.25 | 59.40 | 59.56 | 58.37 | 60.33 | 59.33 | 51.58 | 41.70 | 41.79 | 43.95 | 48.38 |
Cash conversion cycle | days | 93.71 | 96.46 | 99.83 | 95.70 | 95.44 | 99.56 | 98.80 | 98.15 | 95.02 | 105.52 | 102.87 | 95.17 | 90.21 | 90.20 | 93.12 | 91.00 | 93.52 | 95.77 | 88.33 | 83.75 |
September 30, 2024 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 73.90 + 70.54 – 50.74
= 93.71
TE Connectivity Ltd's cash conversion cycle, a key measure of efficiency in managing working capital, has exhibited some fluctuations over the past several quarters. The cash conversion cycle indicates the time it takes for a company to convert its investments in inventory and accounts receivable into cash flows from sales.
From the data provided, we observe that the cash conversion cycle has ranged from a low of 83.75 days in March 2020 to a high of 105.52 days in June 2022. A downward trend in the cash conversion cycle is generally considered positive as it implies that the company is able to generate cash more quickly from its operations.
In the most recent quarter, the cash conversion cycle stood at 93.71 days, showing a slight improvement from the previous quarter. However, it is essential for TE Connectivity Ltd to continue monitoring and managing its cash conversion cycle effectively to ensure efficient utilization of its working capital and maximize cash flow generation.
Overall, fluctuations in the cash conversion cycle can be influenced by factors such as inventory management, accounts receivable collection efficiency, and payment terms with suppliers. Continuous analysis and improvement in these areas can help TE Connectivity Ltd optimize its cash conversion cycle and enhance its liquidity position in the long term.
Peer comparison
Sep 30, 2024