Ultra Clean Holdings Inc (UCTT)
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 | 93.80 | 84.86 | 82.80 | 59.49 | 72.38 |
| Days of sales outstanding (DSO) | days | 38.05 | 39.00 | 43.44 | 37.97 | 38.58 |
| Number of days of payables | days | 48.32 | 48.46 | 72.69 | 40.00 | 55.88 |
| Cash conversion cycle | days | 83.53 | 75.40 | 53.55 | 57.46 | 55.08 |
December 31, 2023 calculation
Cash conversion cycle = DOH + DSO – Number of days of payables
= 93.80 + 38.05 – 48.32
= 83.53
The cash conversion cycle of Ultra Clean Holdings Inc has fluctuated over the past five years. In 2023, it increased to 83.53 days from 75.40 days in 2022, indicating a delay in the conversion of inventory into cash. This may imply inefficiencies in managing inventory or collecting receivables.
Comparing to 2021, the cash conversion cycle has significantly extended from 53.55 days to 83.53 days in 2023, suggesting a prolonged period in which the company's capital is tied up in the production process before being converted back to cash.
While there was a slight increase from 2020 to 2021, the cash conversion cycle in 2023 is higher compared to the levels seen in 2020 and 2019, indicating a potential need for the company to improve its working capital management practices.
Overall, the trend in the cash conversion cycle of Ultra Clean Holdings Inc suggests a recent deterioration in the efficiency of its cash conversion process, which may warrant further investigation and strategic adjustments to enhance liquidity and operational performance.
Peer comparison
Dec 31, 2023