Gentherm Inc (THRM)

Cash conversion cycle

		Dec 31, 2024	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
Days of inventory on hand (DOH)	days	63.16	65.50	59.97	60.40	56.43	55.56	57.50	66.07	71.44	85.24	74.98	71.66	65.06	61.33	54.87	57.76	56.06	54.92	53.99	50.77
Days of sales outstanding (DSO)	days	64.96	68.65	66.78	72.97	63.90	67.42	67.86	74.82	77.27	85.67	78.37	79.47	68.50	67.70	69.80	89.24	93.32	91.26	57.70	65.25
Number of days of payables	days	63.01	71.33	62.11	62.22	59.16	57.72	57.42	62.88	59.65	75.93	58.75	63.55	50.07	49.29	45.69	58.10	53.15	51.95	31.41	41.89
Cash conversion cycle	days	65.11	62.82	64.64	71.15	61.17	65.26	67.94	78.02	89.06	94.99	94.60	87.58	83.49	79.74	78.99	88.90	96.23	94.22	80.28	74.13

December 31, 2024 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= 63.16 + 64.96 – 63.01
= 65.11

Gentherm Inc's cash conversion cycle has exhibited fluctuations over the past few years. The cycle represents the time it takes for a company to convert its investments in inventory into cash receipts from customers, considering the accounts receivable and accounts payable turnover.

From March 31, 2020, to December 31, 2024, the cash conversion cycle ranged from a low of 61.17 days to a high of 96.23 days. A lower cash conversion cycle indicates that the company is able to efficiently manage its inventory, receivables, and payables, resulting in quicker cash generation.

During the period under review, there was a general trend of improvement in the cash conversion cycle from the end of 2023 to mid-2024, with the cycle decreasing steadily. This suggests that Gentherm Inc was able to optimize its working capital management, leading to a more efficient cash conversion process.

However, it's notable that there was a slight increase in the cash conversion cycle towards the end of 2024, indicating potential challenges in managing working capital efficiency during that period.

Overall, monitoring the cash conversion cycle is crucial for assessing the company's liquidity and operational efficiency. Gentherm Inc should continue to focus on maintaining an optimal balance between inventory levels, accounts receivable collection, and accounts payable management to sustain a healthy cash conversion cycle and ensure smooth cash flow operations.