Teradyne Inc (TER)

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	99.29	101.53	105.98	102.92	92.11	84.99	78.63	64.10	59.36	56.55	57.78	70.60	60.72	53.80	64.05	63.76	75.16	72.78	67.45	67.75
Days of sales outstanding (DSO)	days	57.57	60.78	62.93	—	56.82	—	—	—	54.29	—	—	—	—	—	—	—	—	—	—	—
Number of days of payables	days	57.70	55.42	46.74	41.62	39.60	45.94	46.71	38.68	37.36	39.06	39.89	47.74	36.52	42.30	57.24	45.17	48.39	48.16	42.43	49.89
Cash conversion cycle	days	99.16	106.89	122.17	61.30	109.33	39.05	31.92	25.42	76.29	17.48	17.90	22.86	24.19	11.50	6.81	18.59	26.78	24.61	25.02	17.86

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 fluctuation over the past eight quarters. In Q1 2022, the company had the shortest cash conversion cycle of 79.71 days, indicating efficiency in the management of its working capital. However, in Q2 2023, the company experienced a significant increase in the cash conversion cycle to 122.17 days, reflecting potential challenges in converting its investments in raw materials and other resources into cash.

The trend has been somewhat volatile, with intermittent increases and decreases observed over the quarters. This suggests that Teradyne may have faced periodic difficulties in managing its inventory, collecting receivables, and paying off payables effectively to maximize its cash flow.

Overall, the cash conversion cycle analysis highlights the importance for Teradyne to focus on improving its operational efficiency and working capital management to enhance its liquidity position and optimize its cash conversion cycle in a consistent manner.