Teradyne Inc (TER)

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	99.29	92.11	59.36	60.72	75.16
Days of sales outstanding (DSO)	days	57.57	56.82	54.29	58.17	57.63
Number of days of payables	days	57.70	39.60	37.36	36.52	48.39
Cash conversion cycle	days	99.16	109.33	76.29	82.36	84.41

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 99.29 + 57.57 – 57.70
= 99.16

The cash conversion cycle of Teradyne, Inc. has exhibited fluctuations over the past five years. In 2023, the cash conversion cycle decreased to 99.16 days compared to 109.33 days in 2022. This indicates that the company took less time to convert its investments in inventory into cash during the most recent year. However, it is still longer than the levels seen in 2021, when the cycle was 76.29 days.

The cash conversion cycle in 2020 and 2019 was 82.36 days and 84.41 days, respectively. These figures suggest that Teradyne, Inc. improved its efficiency in converting inventory and receivables into cash in 2020 compared to previous years. Nonetheless, the cycle lengthened slightly in 2022 before decreasing again in 2023.

Overall, Teradyne's cash conversion cycle has shown some variability, but a downward trend was observed in 2023 compared to the prior year. This improvement indicates potential enhancements in the company's management of inventory, accounts payables, and accounts receivables, resulting in a more effective cash conversion process.